Prieur’s readings (April 19, 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.

• John Mauldin (Thoughts from the Frontline via Investors Insight): First, let’s kill the angels, April 16, 2010.
When you draft a 1,300-page “financial reform” bill, various special interests get language tucked into the bill to help their agendas. However, the unintended consequences can be devastating. And the financial reform bill has more than a few such items. Today, we look briefly at a few innocent paragraphs that could simply kill the job-creation engine of the US.

• John Hussman (Hussman Funds): Earning more by setting aside less, April 16, 2010.

• Matt Taibbi (Rolling Stone): Looting Main Street, March 31, 2010
How the nation’s biggest banks are ripping off American cities with the same predatory deals that brought down Greece.

• Aaron Pressman and Joseph Giannone (Reuters): Goldman CDO case could be tip of iceberg, April 17, 2010
The case against Goldman Sachs over a 2007 mortgage derivatives deal it set up for a hedge fund manager could be just the start of Wall Street’s legal troubles stemming from the subprime meltdown. The U.S. Securities and Exchange Commission charged Goldman with fraud for failing to disclose to buyers of a collateralized debt obligation known as ABACUS that hedge fund manager John Paulson helped select mortgage derivatives he was betting against for the deal. Goldman denied any wrongdoing.

• Louise Story and Gretchen Morgenson (The New York Times): For Goldman, a bet’s stakes keep growing, April 17, 2010
For Goldman Sachs, it was a relatively small transaction. But for the bank – and the rest of Wall Street – the stakes couldn’t be higher. Accusations that Goldman defrauded customers who bought investments tied to risky subprime mortgages have only just begun to reverberate through the financial world. The civil lawsuit that the Securities and Exchange Commission filed against Goldman on Friday seemed to confirm many Americans’ worst suspicions about Wall Street: that the game is rigged, the odds stacked in the banks’ favor. It is the first big case – but probably not the last, legal experts said – to delve into a Wall Street firm’s role in the mortgage fiasco.

• Gregory Zuckerman ( Paulson point man on CDO deal emerges as key figure, April 19, 2010
In 2004, Paolo Pellegrini was out of a job, living in a one-bedroom apartment in Westchester County, N.Y., with little money in the bank. He soon managed to land a gig working for hedge-fund manager John Paulson. Today, after helping Paulson & Co. score $20 billion with a bet against housing and pocketing about $175 million for himself, Mr. Pellegrini is an unnamed but key character in the government’s lawsuit against Goldman Sachs, according to people familiar with the matter.

• Carl Bialik (The Wall Street Journal): It is 90% certain that unemployment rose. Or fell. April 17, 2010
It isn’t all that simple to work out how many Americans are out of work. The ranks of unemployed individuals grew by 134,000 last month from February, to 15 million, the Department of Labor’s Bureau of Labor Statistics says. But it also is plausible, the agency says, that the number of unemployed rose by 500,000. Or, it could have fallen by 200,000.

• Tyler Durden (Zero Hedge): Second whistleblower emerges – a deep insider’s walkthru to silver market manipulation, April 13, 2010.
A second whistleblower speaks. As the topic of physical delivery has gained prominent attention recently, it is crucial to complete the circle and show how this weakest link in the PM market is (ab)used by the big boys: Phibro and Warren Buffet. Pay particular attention to the analogues between the methods employed in the 90’s commodity market and how the PM (and equity) market is being gamed currently. And to think that each new generation of traders believes it has discovered something new…

• Clive Crook (Financial Times): America and Europe meet midway, April 18, 2010.
There are many different Europes. What if America should converge on the wrong one.

• Wolfgang Münchau (Financial Times): Greece’s bail-out only delays the inevitable, April 18, 2010.
By my calculations, we should focus not on whether we can avoid a Greek default but on how best to manage it.

• Li Yanping, Paul Panckhurst (Bloomberg): China’s rules to curb property “madness” will take effect now, April 17, 2010.
China’s central bank pledged to immediately implement new lending rules to cool real-estate speculation and one of its policy advisers said the market is having its “last madness.”

• David Pilling (Financial Times): Japan’s splendid isolation may be at risk, April 14, 2010.
The world has fallen out of love with Japan and Japan with the rest of the world. Aside from discussions with Japanophiles – who wax with justifiable lyricism about the country’s efficiency, marvellous cuisine and exquisite sense of beauty – mention of the country these days is likely to provoke a raised eyebrow or a gently suppressed yawn. Investors regard Japan as resistant to their attempts to spread the gospel of shareholder value. Such is the lack of interest that one Tokyo-based broker toyed with the idea of removing the word “Japan” from the title of his investment notes in order to lure more clients into reading them.

• Michael Martin (The Huffington Post): How Maria Bartiromo may become the best teacher you’ve ever had, April 15, 2010.
A good teacher will help aggregate information and condense it for you in an organized manner. A great teacher will passionately help you discover the ability you have inside yourself and help you culture that pearl, so that your feelings and intellect become your allies. Such is the approach Maria Bartiromo has taken in her new book, 10 Laws of Enduring Success, written with Catherine Whitney. The book details the events that Bartiromo had to overcome and the manner in which she had to persist from her days as a young girl in Brooklyn, to becoming the woman the world knows her as today. The result is an inspiring and highly motivational book that is perfectly timed for today’s business environment.

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