This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Jason Clenfield and Norihiko Kosaka (Bloomberg): US risks Japan-like “lost decade” on stimulus exit, Koo says, October 23, 2009. US officials contemplating an exit from record fiscal stimulus are in danger of repeating mistakes that plunged Japan into its lost decade of stagnant growth, according to Richard Koo of Nomura Research Institute. “This isn’t a cold, its more like pneumonia,” said Koo, author of “Balance Sheet Recession,” a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.”

• Brad DeLong (Caijing.com.cn): A moment too soon after the financial crisis, October 23, 2009. Examining the recovery paths of major industrial powers in the 1930s tells us that thoughts of reversion to normal policies – whether monetary, exchange rate, fiscal or banking – need to be delayed until global recovery to normal is nearly completed.

• Neil Hume (FT Alphaville): The US stock market is overvalued by 40%, October 23, 2009. Andrew Smithers, of London-based research house Smithers & Co, is not a man who has any truck with nonsense. Particularly when it comes from the mouths of stockbrokers. In his latest report, The US Stock Market: Value and Nonsense About It, he takes to task those who claim US equities are still cheap.

• John Authers (Financial Times – The Long View): Question of maturity in developing economies, October 23, 2009. So far this year, investors in these markets have been repaid amply. What are the reasons for this and are those reasons valid for the future?

• Rob Arnott (Research Affiliates): Rip Van Winkle’s investment lesson, October 2009. Most investment committees would have been better off, like Rip, sleeping through the past 21 months of tumultuous activity. Of course, an even better course of action would have been to embrace risk-in distressed asset classes and sectors within equities-during the dark days. Admittedly, such a step up is near impossible given the human tendency to shy from pain unless, of course, it was previously embedded in a portfolio through a disciplined global tactical asset allocation process or an automatically contra-trading Fundamental Index approach.

• Robert Reich (Robert Reich’s Blog): Why Wall Street reform is stuck in reverse, October 21, 2009. Eight months ago it looked as if Wall Street was in store for strong financial regulation – oversight of derivative trading, pay linked to long-term performance, much higher capital requirements, an end to conflicts of interest (i.e. credit rating agencies being paid by the very companies whose securities they’re rating), and even resurrection of the Glass-Steagall Act separating commercial from investment banking. Today, Congress is struggling to produce the tiniest shards of regulation that would at least give the appearance of doing something to rein in the Street. What happened in the intervening months?

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Last 5 posts by Prieur du Plessis

• Gold bullion – overdue for a pullback? - November 25th, 2009
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