Prieur’s readings (August 8, 2010)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• James Mackintosh (Financial Times): Ingot we trust for that element of insurance, August 7, 2010.
There is something almost mystical about the effect gold has on the human psyche. Hold a one-ounce Krugerrand coin in your hand and it is easy to see why people have hoarded the metal through the ages. Now, though, it is starting to pop up in institutional portfolios – not just rich families preparing for guns-and-tinned-food scenarios or the racier type of hedge fund, but even at a handful of otherwise staid pension funds and endowments. Does this make sense?
• John Hussman (Hussman Funds): Corporate “cash” – cheering the asset and ignoring the liability, August 8, 2010.
Analysts are pointing to an apparent pile of corporate “cash on the sidelines” as these holdings of debt securities somehow make new corporate spending more likely. In order to evaluate this argument, it’s necessary to understand that what is being called cash is actually a stack of IOUs for money that has generally already been spent by other companies or by the government.
• John Mauldin (Thoughts from the Frontline and Investors Insight): The problem with pensions, August 6, 2010.
This article offers a peek into a very sobering report on how badly underfunded public pension are. The situation is worse than you think.
• Edward Luce (Financial Times): The crisis of middle-class America, July 30, 2010.
Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
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