Prieur’s readings (May 25, 2011)

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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.

•  James Saft (Reuters): Welcome to the global slowdown, May 24, 2011.
With QE2 set to end in five weeks and with Greece rolling downhill towards default, the world is not best placed to withstand a weakening economy. That, however, is exactly what looks to be happening, as Asian demand is hit by a cooling China and a struggling Japan.

•  Robert Wenzel ( A sign of desperation at the Fed, May 23, 2011.
Thanks to Ben Bernanke’s new monetary “tools”, the Federal Reserve continues to operate in panic mode. Specifically, because the Fed now pays interest on reserves held by banks at the Federal Reserve, excess reserves are piling up at the Fed at a remarkable rate. There are now $1.5 trillion in excess reserves just sitting there that could explode and hit the economy at anytime and cause huge price inflation. There has never, ever, before Bernanke started paying interest on reserves so much of an overhang in excess reserves.

•  ForeFront (Federal Reserve Bank of Cleveland): New ideas on economic policy, Spring 2011.
Economic policy is in the forefront of a lot of people’s minds today. Forefront, the Cleveland Fed’s showcase of policy ideas, is devoted to critical policy issues facing the region and the nation at-large.

•  Neil Hume (FT Alphaville): Goldman warns of significant China slowdown, May 24, 2011.
More on those China slowdown fears, which played a part in Monday’s sell-off.

•  John Thomas (Minyanville): Why Jim Chanos is wrong on China, May 24, 2011.
Careful policymaking in the Chinese economy and housing markets could be pointing the country in the right direction for the next five or so years. Hedge fund titan, Jim Chanos, is well known for his extremely bearish views on China. He says that the cracks are spreading on the façade, real estate sales are falling, and that the economic engine is starting to sputter.

•  David Weidner (MarketWatch): Hedge-fund secrets to beat the market, May 24, 2011.
Do you ever wonder how guys like John Paulson and Steve Cohen so easily produce 15%, 20%, even 30% returns on an annual basis? Could you use some extra income to buy a second home, an island in the Caribbean, a Degas, Warhol, Van Gogh or other work of art, or do you just want to live and eat well?

•  Izabella Kaminska (FT Alphaville): Terry Smith doesn’t like ETFs, May 24, 2011.
Terry Smith, City veteran, pugnacious former director of Collins Stewart and manager of the Fundsmith Equity Fund, has turned a critical eye onto one of our favourite subjects — exchange traded funds. And … it turns out … he doesn’t like what he sees.

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