Prieur’s readings (December 17, 2009)

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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.

• Michael Grunwald (Time): Person of the Year 2009, December 16, 2009.
The story of the year was a weak economy that could have been much, much weaker. Thank the man who runs the Federal Reserve, our mild-mannered economic overlord.

• Todd Harrison (MarketWatch): A decade of decadence, December 16, 2009.
Time can be measured many ways but through a pure financial lens, the last ten years have been nothing short of remarkable.

• Nouriel Roubini (Project Syndicate): The gold bubble and the gold bugs, December 15, 2009.
Gold prices have been rising sharply, breaching the $1,000 barrier and in recent weeks rising towards $1,200 an ounce and above. Today’s “gold bugs” argue that the price could top $2,000. But the recent price surge looks suspiciously like a bubble, with the increase only partly justified by economic fundamentals.

• Joe Weisenthal (The Business Insider – The Money Game): Why Roubini’s case against gold is wrong on every count, December 15, 2009.
Earlier this week we noted Nouriel Roubini’s five reasons that the “barbarous relic” gold is due to fall. Obviously this raised the hackles of the metal’s biggest fans, including QBAssetManagement, which (via has produced a long rebuttal. In short, they presnt a ponzi-like view of the global currency system, call out Roubini for being intentionally provocative, and accuse him of a cherry-picked reading of history.

• Mark Thoma (Economist’s view): “We face a real challenge in dealing with that feeling that the crisis is over”, December 13, 2009.
Interview with Paul Volcker.

• Simon Johnson (Baseline Scenario): Wake up, gentlemen, December 15, 2009.
The guiding myth underpinning the reconstruction of our dangerous banking system is: Financial innovation as-we-know-it is valuable and must be preserved.  Anyone opposed to this approach is a populist, with or without a pitchfork. Single-handedly, Paul Volcker has exploded this myth.  Responding to a Wall Street insiders’ Future of Finance “report“, he was quoted in the WSJ yesterday as saying: “Wake up gentlemen.  I can only say that your response is inadequate.”

• Alan Blinder (The wall Street Journal): The case for optimism on the economy, December 15, 2009.
The credit markets are healing and net job creation may be only a month or two away.

• Claudio Borio and Piti Disyatat (Bank for international Settlements): Unconventional monetary policies: an appraisal, November 2009.
The recent global financial crisis has led central banks to rely heavily on “unconventional” monetary policies. This alternative approach to policy has generated much discussion and a heated and at times confusing debate. The debate has been complicated by the use of different definitions and conflicting views of the mechanisms at work. This paper sets out a framework for classifying and thinking about such policies, highlighting how they can be viewed within the overall context of monetary policy implementation.

• Financial Times: US needs less haste and more thought, December 15, 2009.
The US will only benefit from another financial regulator if it consolidates existing ones. Above all, the content of any new rules matters more than the apportioning of responsibilities.

• Jeffrey Sachs (Financial Times): How to hold the rich to their word, December 15, 2009.
Developed countries at Copenhagen want to sneak by on minimalist commitments, not ones consistent with global needs or international obligations.

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