Prieur’s readings (January 9, 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.

• Bernard Gwertzman (Council on Foreign Relations): Obama’s first year: “great expectations”, “daunting realities“, December 30, 2009.
An expert on politics and foreign policy, CFR Director of Studies James Lindsay summarizes President Barack Obama’s first year in office as “great expectations running smack into daunting realities.” Meanwhile, Lindsay says, “Getting U.S.-Chinese relations right is going to be one of the biggest challenges President Obama faces.”

• Paul Krugman (The New York Times): Bubbles and the banks, January 7, 2010.
Health care reform is almost (knock on wood) a done deal. Next up: fixing the financial system. I’ll be writing a lot about financial reform in the weeks ahead. Let me begin by asking a basic question: What should reformers try to accomplish?

• The Economist: Bubble warning, January 7, 2010.
Markets are too dependent on unsustainable government stimulus. Something’s got to give.

• Bruce Bartlett (Forbes): How deficit hawks could derail the recovery, January 8, 2010.
According to press reports, the Obama administration plans to put forward a budget on Feb. 1 containing significant deficit reduction measures. Some liberal economists are warning that it is grossly premature to implement deficit reduction. Indeed, they believe that additional fiscal stimulus is necessary to prevent a double-dip recession. They argue that there is a danger we will make the same mistake that Franklin Roosevelt made in 1937, which crippled the economy’s recovery.

• Stephen Gandel (TIME): Bank lending is still down. Should we be worried? January 8, 2010.
The falling number of bank loans is emerging as the No. 1 economic concern of 2010. But while many expect the credit crunch to continue, falling bank loans might not be as bad a problem as many people think. “If the economic indicators were not recovering, then bank lending would be prime culprit,” says top Wall Street strategist Edward Yardeni. “The weak borrowing market just doesn’t seem to be stopping the economic turnaround.”

• Felix Salmon (Reuters): The next real estate bust, January 7, 2010.
Houses are still more expensive to buy than to rent, in most of the country, and of course financing is all but impossible to come by, except for that provided by the government, which means that if and when the government prop is taken away, prices are liable to plunge. If that happens, expect a lot more walking away into cheaper rentals than we’re seeing right now, and a whole new vicious cycle of price declines and foreclosures.

• Ryan Sager (SmartMoney): The lulling effect of expert financial advice, January 8, 2010.
Given this hate-love relationship with expert advice – we can’t help listening to it but we know we’ll regret it in the morning – how can we keep our heads screwed on straight when it’s on offer? When are we most susceptible to the charm and ease of listening to the experts? And what happens to our brains when we do?

• Alexandra Zendrian (Forbes): Ron Paul’s golden rule, January 8, 2010.
The Federal Reserve should answer to the government and dollars should be good as gold.

• William Cohan (The New York Times): The three magi of the meltdown, January 7, 2010.
Just because hindsight is 20/20 doesn’t mean we shouldn’t occasionally avail ourselves of it. The upcoming second-year anniversary of the collapse of Bear Stearns provides just such an opportunity to look back with a degree of analytical wisdom not available at the time of the firm’s shocking demise in March 2008

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