Prieur’s readings (January 12, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• The Economist: Bubble warning, January 7, 2010.
The effect of free money is remarkable. A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009. That’s largely thanks to interest rates of 1% or less in America, Japan, Britain and the euro zone, which have persuaded investors to take their money out of cash and to buy risky assets. Markets are too dependent on unsustainable government stimulus. Something’s got to give
• Michael Santoli (Barron’s): Dispelling some common new year’s notions, January 11, 2010.
A good way to cut through all the forced good cheer of the holiday season is to enter the New Year with a peevish and disputatious spirit. As an excuse to take up a few relevant market themes, here are a couple of complaints about some notions that are getting far more play than they deserve.
• Steven Abrahams (Forbes): The top 10 items shaping interest rates in 2010, January 8, 2010.
Where will interest rates go this year? Keep an eye on the economy, the banks and foreign investors, for starters.
• John Taylor (The Wall Street Journal): The Fed and the crisis: A reply to Ben Bernanke, January 10, 2010.
In his recent speech, the Fed chairman denied that too-low interest rates were responsible. Does this mean we’re headed for a new boom-bust cycle?
Considering the short-term technical picture of US stock markets, Brad Stafford (in Adam Hewison’s absence) (INO.com) provides valuable insight with short analyses of gold, silver and platinum respectively. Click here to access the presentations.
• Gideon Rachman (Financial Times): Bankruptcy could be good for America, January 11, 2010.
If the US keeps running huge deficits, sooner or later the country will start flirting with bankruptcy. Oddly, it might be best if the crisis came sooner rather than later. For a surprising number of countries, running out of money has been the prelude to national renewal.
• Henny Sender (Financial Times): US commercial property attracts new wave of money, January 10, 2010.
The beleaguered US commercial real estate sector has been attracting a new wave of money from sources including foreign banks, US private equity firms, and a leading Chinese sovereign wealth fund.
• Paul Krugman (The New York Times): Learning from Europe, January 10, 2010.
Europe has its economic troubles; who doesn’t? But the story you hear all the time – of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation – bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.
• Desmond Lachman (Financial Times): Why Greece will have to leave the eurozone, January 11, 2010.
Much like Argentina a decade ago, Greece is approaching the final stages of its currency arrangement. There is every prospect that its euro membership will end with a bang.
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