Prieur’s readings (Mei 3, 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): The future of public debt, April 30, 2010.
Everyone and their brother intuitively knows that the current government fiscal deficits in the developed world are unsustainable. They have to be brought under control, but that requires some short-term pain. Today we look at a rather remarkable piece of research from the Bank of International Settlements (BIS) on what the fiscal crisis may morph into in the future, how much pain will be needed, and what will happen if various countries stay on their present courses. Some countries could end up paying north of 20% of GDP just on the interest to serve their debt, within just 30 years.

• John Hussman (Hussman Funds): Violating the no-Ponzi condition, May 3, 2010.
Over the past few months, the stock market has been characterized by an overvalued, overbought, overbullish, rising yields syndrome that has historically proved unrewarding and often particularly dangerous for investors. It’s important to underscore that even in post-war data, and even if we assume that the economy is in a typical post-war recovery, this particular syndrome has been unrewarding, on average.

• Wolfgang Münchau (Financial Times): Europe’s choice is to integrate or disintegrate, May 2, 2010.
he experiment of a monetary union without political union has failed. The EU is thus about to confront a historic choice.

Bob Davis (The Wall Street Journal): New life for “the Volcker Rule”, May 1, 2010.
But as the Senate moves toward the biggest rewrite of financial rules since the 1930s, Mr. Volcker’s ideas are having a profound impact on the debate.

The Senate is considering writing into law what Mr. Obama calls “the Volcker rule,” which would effectively bar banks from the risky and often lucrative practice of trading for their own accounts.

Floyd Norris (The New York Times): As recession ebbs, many still see gloom, April 30, 2010.
Through recession after recession over the last four decades, Americans remained more optimistic than pessimistic about their own futures, even when they grew very worried about the overall economy. But that ended during the 2007-9 downturn. More people thought their own financial situation was going to get worse than thought it would improve.

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