Prieur’s readings (March 2, 2010)

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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.

• Peter Brimelow (MarketWatch): Parsing 200 years of gold trades, March 1, 2010.
What is the gold chart saying about the future price?

• Doug Kass (TheStreet.com): Buffett still has got it, March 1, 2010.
There will never be another Warren Buffett, and I always qualify my Berkshire Hathaway observations, especially when there is some questioning of strategy involved, by saying that I literally worship the Oracle’s body of work, his unprecedented investment success in compounding Berkshire’s book value and his wealth!
Ambrose Evans-Pritchard (Telegraph): Don’t go wobbly on us now, Ben Bernanke, February 28, 2010.

• Why has Bernanke broken ranks … and begun to flirt with disaster by tightening too soon? Has he lost control to regional hawks, as in mid-2008? Have critics in Congress and the media got to him? Has China vetoed QE, fearing a stealth default on Treasury debt? Don’t go wobbly on us now, Ben. If the governments of America, Europe, and Japan are to retrench – as they must – their central banks must stay super-loose to cushion the blow. Otherwise we will all sink into deflationary quicksand.

• Mish Shedlock (Mish’s Global Economic Trend Analysis): I’m sure glad the recession ended, March 1, 2010.

Reading break:

Considering the short-term technical picture of the euro/dollar exchange rate, Adam Hewison (INO.com) provides a video analysis, expecting a reversal before too long (i.e. euro up; dollar down). Click here to access the presentation.

• Gretchen Morgenson (The New York Times): It’s time for swaps to lose their swagger, February 27, 2010.
Concerns are growing about swaps – securities that offer insurance-like protection and helped tip over the American International Group in 2008 when it couldn’t pay mounting claims on the contracts. Now, there are fears that the use of these swaps may also help propel entire countries – think Greece – to the precipice.

• Paul Krugman (The New York Times): Financial reform endgame, February 28, 2010.
So here’s the situation. We’ve been through the second-worst financial crisis in the history of the world, and we’ve barely begun to recover: 29 million Americans either can’t find jobs or can’t find full-time work. Yet all momentum for serious banking reform has been lost. The question now seems to be whether we’ll get a watered-down bill or no bill at all. And I hate to say this, but the second option is starting to look preferable.

• Gillian Tett (Financial Times): Japan is pathfinder back from crisis, March 1, 2010.
Western central banks mull the same questions that faced the Japanese four years ago: namely, is it possible to remove emergency policies smoothly, after a banking crisis?

• Barton Biggs (Newsweek): Not quite so exotic, February 26, 2010.
When the financial world fell apart in 2008, hedge funds started to run for cover. Huge losses were rumored, the Madoff Ponzi scandal unfolded, a thousand hedge funds closed, and a number of large and famous funds raised “gates,” or rules that block investors from getting their money back, at least for a while. Others turned to “side pockets,” a trick that allows funds to move money-losing bets out of their portfolios for performance reporting. All this evasion enraged investors, and the demise of the business was forecast …

• Willem Buiter (Financial Times): Britain’s lack of credibility hurts sterling, March 1, 2010.
The currency is weakening and if the election does not deliver a strong government, markets will be panicked. Political parties should work together to reduce that risk.

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