Prieur’s readings (January 11, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Michael Klare (The Huffington Post): The blowback effect: 2020, January 5, 2010.
By the end of the second decade of this century, however, our world is likely to have a genuinely different look to it. Momentous shifts in global power relations and a changing of the imperial guard, just now becoming apparent, will be far more pronounced by 2020 as new actors, new trends, new concerns, and new institutions dominate the global space.
• John Mauldin (Thoughts from the Frontline via Investors Insight): 2010 forecast: The year of uncertainty, January 8, 2010.
• John Authers (Financial Times): Two tribes divided by a common credit crisis, January 9, 2010.
A year ago, there was a sharp disjunction between inflationists and deflationists. By the end of the year there was a clear winner: the deflationists. The ones to make money were the inflationists. The timing of the removal of government support for bond markets will be critical – for inflationists and deflationists alike.
• John Hussman (Hussman Funds): Green shoots, weak roots, January 11, 2010.
We begin the year with the expectation of at least somewhat better valuation, and significantly better clarity, in the coming months. Whether we clear the current overvalued, overbought, overbullish, yields-rising condition with a major decline or a minor one, the flexibility we obtain from improved economic clarity should allow us more flexibility to accept market risk as opportunities arise. Here, however, we remain defensive on the basis of observable conditions.
• William Hester (Hussman Funds): A view from the NBER Recession Indicators, January 2010.
The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) sets the official dates for the beginning and end of recessions. One might imagine that these are not exciting meetings, but the next few may be livelier. That’s because the major indicators they follow to determine whether the economy is in expansion or is contracting are sending off conflicting messages. One of the major indicators that the group follows is consistent with an economic recovery. One is unimpressive, but not strongly at odds with a recovery. The two remaining indicators imply that the economy may still be in recession.
• Ian Bremmer and David Gordon (Foreign Policy): US financial regulatory reform, January 8, 2010.
Both the Americans and Europeans are aware of the risk of driving the financial industry into the ground with too much (or too drastic) regulation or taxation. But as reform becomes an election-year domestic battleground, the need to serve political interests will be increasingly at odds with the need to create an efficient framework for regulatory reform.
• Henry Blodget (The Huffington Post): One thing is clear, Tim Geithner must go, January 8, 2010.
The latest revelations about the New York Fed’s actions in the AIG bailout make one thing clear: Treasury Secretary Tim Geithner must go. Geithner must go not just because of the emails showing that his New York Fed ordered AIG to keep details of the bailout secret, but because of many other decisions and policies he has championed in the past two years.
• Simon Johnson (The New Republic): How should Goldman Sachs cover its ass this bonus season? January 8, 2010.
Anxiety levels about the financial sector are on the increase, even on Capitol Hill. The tension between high profits in banking and stress in the rest of the economy becomes increasingly a topic of discussion across the nation. Goldman’s management should come to its senses and pay no bonuses of any kind to anyone; no good people would leave. Fortunately, while the executives who run Goldman are smart, they are not that smart. The bonuses they announce on January 18 and pay in early February will become the rallying point for real reform.
• Nick Godt (MarketWatch): TrimTabs suggests government manipulated stocks, January 5, 2010.
The unusual circumstances that led the US market to rally powerfully in 2009 might be explained by secret government moves to buy stocks, according to Charles Biderman, the founder and chief executive of TrimTabs, a research firm that tracks liquidity flows in the market.
• David Barboza (The New York Times): Contrarian investor sees economic crash in China, January 7, 2010.
As most of the world bets on China to help lift the global economy out of recession, Jim Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 – or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8%.
• The Economist: Voting away your debts, January 7, 2010.
There are many ways to decide whether to repay your debts but a national referendum is surely a first. The Iceland saga is a harbinger of crises to come.
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