Prieur’s readings (January 25, 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.

• John Mauldin (Thoughts from the Frontline via Investors Insight): Thoughts on the end game, January 22, 2010.
As I wrote in my 2010 forecast, this year is a waiting game. There are so many choices we must make, and the paths we will take from those choices vary wildly. But make no mistake, we are coming close to the end game. Some countries and economies are closer to that point than others, but the entire developed world is lurching, in almost drunken fashion, towards our economic denouement.

• Krishna Guha and Gillian Tett (Financial Times): Man in the news: Paul Volcker, January 22, 2010.
This week the towering former Fed chief stood by Barack Obama’s side as the president embraced what he dubbed the “Volcker rule” banning proprietary trading – over the reservations of some of his most senior economic advisers. However, Mr Volcker’s supporters insist he understands risk better than most contemporary whizz-kids and that his proposal is aimed at preventing the next crisis, not the last one. In any case, this back-to-basics, frugal image now resonates well with many Republicans and Democrats alike.

• John Hussman (Hussman Funds): A blueprint for financial reform, January 25, 2010.

• Jason Zweig (The Wall Street Journal): Will new rules tame the Wall Street tiger? January 23, 2010.
There is an old saying that good politics makes bad laws …

reading250110

Source: The Wall Street Journal, January 23, 2010.

• Neil Irwin and Lori Montgomery (The Washington Post): Populist backlash puts Federal Reserve Chairman Ben Bernanke under siege, January 23, 2010.
The populist brushfire that has burned through Democratic fortunes this week threatened Friday to claim Federal Reserve Chairman Ben Bernanke, imperiling his nomination for a second term and sending an unsettled stock market tumbling for the third straight day.

• Bespoke: How to kill a rally by Washington DC, January 22, 2010.
On Tuesday the S&P 500 made a new bull market high, which put the index up 70% since the March 9th low. In just two days, the folks in Washington have done a number of things to stop this rally dead in its tracks and put the recovery in question.

Reading break:

Considering the short-term technical picture of the S&P 500 Index, Adam Hewison (INO.com) provides a short analysis advocating that one should be out of the market at the moment. Click here to access the presentation.

• Michael Santoli (Barron’s): Is this the big one? January 25, 2010.

Is this the start of a bearish trend? Probably not.

• Rob Arnott (Research Affiliates): Was it really a lost decade? January 2010.
Overconfidence gets human beings into big trouble. Fueled by new developments in science and ready access to current and past knowledge and theory, old cautionary rules are thrown out the window at considerable peril.

• David Pilling (Financial Times): Reason vs emotion in China’s growth story, January 20, 2010.
A surging money supply and excess investment threaten asset bubbles and overcapacity. But simultaneous fears of inflation suggest a middle road may be possible.

• Michael Spence (Financial Times): The west is wrong to obsess about the renminbi, January 21, 2010.
The singular focus on the exchange rate appears to be based on the assumption that it is the key cause of the surplus and the main policy instrument for removing it.

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2 comments to Prieur’s readings (January 25, 2009)

  • Happy B’day and welcome back. Hope you had a great time.
    Since several of your readings were pointed at the reform issue might I chime in with a more hard-nosed look at the actual evidence.
    The question of reform should ultimately hinge on the question of performance, both public and private. The public case for the Industry is that it’s necessary for the efficient allocation of capital while the private case is based on the argument that the businesses, as businesses, are well run.
    A brief summary of these “business cases” and the evidence is summarized in:
    <http://llinlithgow.com/bizzX/2010/01/comes_round_goes_round_hasteni.htmlComes ’round, Goes ’round: Hastening Forward Slowly to Finance Reform while a bigger picture is drawn in Banks As Businesses: Performance, Reform and Blindsidedness . As it happens it turns out that, on the evidence, both fail. As investors (as Ritholz recently suggested) it’s incumbent on us to look at the data and not let ideologies distort our interpretations. I’d submit that Herr Faber and others have yet to apply their own disciplines to a deeper examination of the regulatory reform issues.

  • Vince V

    THE HUSSMAN LETTER SHOULD BE POSTED ON BILLBOARDS AND INUNDATE EVERY SENATOR AND CONGRESSMANS’ INBOX.

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