Prieur’s readings (January 14, 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.

• The Economist: The danger of the bounce, January 7, 2010.
Once again, cheap money is driving up asset prices.

• George Magnus (Financial Times): Insight: Sovereign default risks loom large, January 13, 2010.
The sustainability of sovereign debt hangs heavily over bond markets, and the prospects for economic and financial stability. Governments have to commit to credible details for fiscal stabilisation, and to structural reforms that address demographic issues, and the need for new growth drivers. The war on waste, raid on the rich, and other slogans will no longer do.

• Paul Vigna (Dow Jones Market Talk): The United States of fantasyland, January 13, 2010.
With the heads of four of the nation’s big banks (and why isn’t Citi represented?) testifying in Washington today to the Financial Crisis Inquiry Commission, it’s a good time to look at one of the root causes of the crisis, something I guarantee won’t be explored by the commission.

• Tom Braithwaite and Francesco Guerrera (Financial Times): Wall Street titans face the flak, January 13, 2010.
Four of Wall Street’s biggest names offered both contrition and a defence of their actions as the Financial Crisis Inquiry Commission promised to use its subpoena power to probe the causes of the crisis.

• Sarah Morgan (SmartMoney): Making bankers pay: It’s happened before, January 13, 2010.
The question for observers is how much today’s Financial Crisis Inquiry Commission will follow in Pecora’s footsteps, in rallying popular anger or in paving the way for reform.  It “depends on whether the leaders of it have the kind of gumption that Pecora did.”

• Thomas Frank (The Wall Street Journal): Bring back Glass-Steagall, January 12, 2010.
Banks that behave like hedge funds don’t deserve guarantees.

• Caroline Baum (Bloomberg): Obama, Bernanke need miracles to weather 2010, January 13, 2010.
If 2009 was a year for massive government intervention in the private economy and a full-court press on health-care reform, 2010 will be a time for weaning the nation from life support and evaluating what worked and what didn’t, and hopefully doing less of the second.

• Daniel Gross (Slate): Bottom dollar, January 11, 2010.
Conservatives claim Obama’s policies are weakening the dollar. Let’s examine the evidence.

Thomas Friedman (The New York Times): Is China the next Enron, January 12, 2010.
China’s markets may be full of bubbles ripe for a short-seller, and if Jim Chanos can find a way to make money shorting them, God bless him. But after visiting Hong Kong and Taiwan this past week and talking to many people who work and invest their own money in China, I’d offer Mr. Chanos two notes of caution.

Ambrose Evans-Pritchard (Telegraph): A global fiasco is brewing in Japan, January 12, 2010.
Will it happen, this week, this month, this year, or will Tokyo keep the illusion of solvency going for years longer? Who knows. Japan is an endlessly mystifying society. But as Dylan Grice puts it, if you are sitting on a tectonic fault line, expect an earthquake.

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