September 24 2011.
Welcome to our weekly roundup of the stuff we read that was interesting to us and hopefully to you.
Obviously a week where markets were in a funk and the Dow dropped its most since October 2008 and where people are rationally panicking. Here is a snapshot of some articles of interest.
Global Economy on the Brink from the FT. Here
Robert Shiller of Yale on how the debt debate has hit confidence in the US. this is interesting in suggesting it is going to be a long time before things turn around. the narrative must change but there is no sign of that. Link here
“You can’t run the economy on BMWs alone,” Grantham said. “If the average person is in a pickle, how do you have a healthy economy?”
This cartoon is too true to be funny – particularly in America but also creeping elsewhere
Probably the most important article non-professional investors should read this weekend and us professionals should always remember. From the Big Picture Blog,
“What should investors be doing NOW? That is the wrong question. The proper one is: What should investors have done in the past to prepare for an event like TODAY?
That’s what we try to do and I think readers know we’ve managed to do that again this year however read the rest of the article here
Gold is getting hammered, it dropped another 4.79% yesterday and now sits at 1650 down from the high of USD 1920 odd. Why? position squaring but also because a weak USD was so much a part of commodities and growth currency rallies over the past couple of years. Gold doesn’t like a stronger USD. Chart here
The Australian Dollar is also getting hit hard. Links to two of my articles are here and here. These were cross posted with Macrobusiness the growing powerhouse of Australian Business, Economics and Markets coverage.
An update to Reinhard and Rogoff here
Interesting article on risk management from the FT in the wake of UBS’ 2.3 bln dollar loss from its rogue trader. Here
S&P cut Italy’s debt rating. This was not really a surprise to anyone but markets acted as though it was on Tuesday. Reuters story from then here.
I’m a long term China bull rather than a China bear and even though I believe, strongly, that China will not be immune from the normal business cycle that economies have this is a really interesting piece from Forbes. “How can China save Europe when it is defaulting on its own debt?”
And here is a piece from the NY Times showing China is slowing at present. This has important implications for Australian economic growth, interest rates, equities and the currencies. Not good implications either.
Inner geek time again – I heard on Newsradio this week that Einstein might be wrong and things can travel faster than the speed of light based on some new experiments at CERN. Here is a link to an FT article I found. If only economics and finance professors tested and rebutted their theories like the hard sciences do – we may not be in the mess we are in. Oh well!
And of course the FT’s week in review
Have a great weekend