Weekend Reading – Stuff we found interesting this week

Welcome to our weekly roundup of the stuff we read that was interesting to us and hopefully to you.

The US tapped its strategic petroleum Reserve this week for only the second time. This is really big news and pushed the price down – seems to us and others that this is more about monetary policy and the effectiveness of Zero interest rates then anything. Here is FTAphaville’s take

If you don’t know about Sino-Forest you should have a quick look at it. We hope this is an isolated Enron style debacle some an indicator of something endemic in Chinese companies. The CEO of the Hong Kong Exchange says its not endemic.

The RBA is caught a little flat-footed at the moment trying to explain why it has a structural bias to tighten arising from its central tendency but is on hold now because the domestic economy is weak. Phil Lowe had another go yesterday but most people think they are messing up their communication. Here’s the SMH’s take on his speech, News.com’s version and his actual speech is here  – the last paragraph is the important one. No hikes soon. 

Default is not the end of the world, just ask Argentina. This article, (HT Naked Capitalism) is worth a read. Argentina and Iceland are both doing ok compared to the terrible Irish and greek austerity. A default effectively makes the investors who funded the debt binge partly responsible for the solution insofar as they take a haircut, or loss, on their bonds and they will lose competitiveness via an exchange rate devaluation. Seems fair to me.

Here is ZeroHedge’s take on Greece and default

I think this is going to be a recurring theme – Stall Speed is a piece we wrote earlier in the week after taking Nouriel Roubini’s lead but we just found a recent paper from the Fed on “forecasting recessions using stall speeds” Only for the more economic wonkish types. Better to read the FTAphaville Summary on the topic or just leave it to us. But remember the word Stall Speed, we think you’ll hear it a bit.

And of course the FT’s week in review

Have a great weekend

Greg McKenna

greg@lighthousesecurities.com.au

www.twitter.com/gregorymckenna

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