By Natasha Brereton LONDON -(Dow Jones)- Bank of England Governor Mervyn King said Tuesday that heightened regulation can’t prevent the financial speculation that results in bank failures, and called for a serious review of the structure of the banking sector whose goal would be to eliminate institutions that are too important to fail. In a speech to business people in Scotland, King championed the idea of separating banks’ utility functions as a means of minimizing the government’s effective subsidy of risky activities and reducing the U.K.’s reliance on a small number of very big banks. Turning briefly to the economy, he noted that there was likely to be “significant” fiscal tightening in the years ahead, and stressed the need to boost broad money growth, but gave no clear indication on whether he would favor extending the bank’s bond buying policy. “The sheer creative imagination ...

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

• Caroline Baum, Bloomberg Bond traders are boubters, lemmings or sissies, September 28, 2009. Where are those gunslingers of yesteryear, ready at a moment’s notice to assert themselves in the marketplace, challenge the Fed on its easy-money stance and punish the federal government for its profligate spending? Why are bond traders so blasé when short-term interest rates have nowhere to go but up, the US economy is recovering, the Fed is ending its purchases of Treasury notes and bonds, the Treasury is continuing to sell notes and bonds, the dollar is sinking, and foreign central banks are making noises about the out-of- control US budget deficit?

• Jeremy Warner (Telegraph): The dollar is dead - long live the renminbi, September 25, 2009.

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Stocks push the currencies higher…Norway pulls out of recession…Jackson Hole boondoggle…Oil helps rally commodity currencies…And Now… Today’s Pfennig!

Good day… We had more rain here last night, but the storms have cooled things off and it is starting to feel a bit like fall around here. Chuck flies off to San Francisco today to speak at the Money Show, so I will be bringing you the Pfennig for the next few days. The dollar has rallied just a bit overnight, clawing back some of the losses which occurred mid morning yesterday.

And what, you might asked, caused the dollar to rally yesterday? You can re-read a bit of yesterday’s Pfennig for the answer: “The data cupboard has been emptied out and is looking to get restocked today… So the only thing besides sentiment moving the markets today will be the direction of stocks…” Yes, Chuck was right on in predicting what would

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Currencies trade in a tight range. Pound Sterling, the star performer? Something smells fishy…Do you see trend with Gov. Reports? And Now… Today’s Pfennig!

Good day… And a Wonderful Wednesday to you! We had a very tight range trading day yesterday in the currencies, which have left them trading in about the same clothes they were wearing when I signed off yesterday! We’ve got that to talk about, and… Another $2 Billion for the CARS program has been allocated…

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If inflation doesn’t get us, incompetent government action will. This is the view of one of our favourite common sense Economist, Willem Buiter, professor of European Political Economy at the London School of Economics and Political Science.

Buiter warns that the “the next big crisis … will be a crisis of state ‘overreach’ and of government failure” and that “stultifying state capitalism, initiative-numbing over-regulation and overambitious social engineering may well be the defining features of the next socio-economic system to fail.” We’ll drink to that.

What follows is the conclusion of the Den Uyl lecture Buiter gave in Amsterdam on 15 December 2008 (emphasis added). Print it out and stick it to the door of your fridge. It’s one of the best accounts we’ve read of the brave new world will be ushered in by the recent financial

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Geithner Calls For Regulatory Reform; Fed President Sees 2009 Rebound; Bank of China Posts 59% 4Q Profit Drop; Goldman Plans to Repay TARP money quickly; U.K. Inflation up 3.2% in February; Major Exchanges Want New Curbs on Short-Selling; Lloyd’s Says Insurance Rates to Rise; Copper Prices Take Breather After Rising 30% on China Demand; Mexico’s Inflation Holds Up Rate Cut

Treasury Secretary Timothy Geithner said the U.S. regulatory system must impose constraints on companies using risky strategies that could cause them to collapse, posing danger to the financial system. In prepared testimony for the House Financial Services Committee, Geithner said rules must be in place to keep companies from causing “grave damage” to the economy, citing the failure to rein in excesses at American International Group Inc. (AIG) and other companies. Chicago Federal Reserve President ...

“Substantial doubt,” say auditors at Deloitte & Touche. They’ve been studying GMs figures. The numbers make them wonder whether the automaker can continue as a “going concern.”

Here at The Daily Reckoning, we’ve got substantial doubt about a number of things.

As to GM, we share the auditors’ concern. The world is full of car factories. Most of them can make cars better, faster, and cheaper than GM. Meanwhile, demand for autos is not growing as quickly as the global growth in auto-making capacity – especially in America. Not that we’re trying to pass judgment. Let the Mr. Market do that!

But GM has friends in high places…ready to lean on the scales of Mr. Market’s justice. The automaker has already borrowed $13.4 billion. It is asking for another $30 billion. But what kind of a dope would lend $30 billion to a company whose own auditors say they’re worried

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Gold didn’t do much in Far East trading until later in the day in Hong Kong. A small rally started that got hit shortly after London opened. Every little rally attempt [including the little one in Hong Kong] got sold off by some not-for-profit seller before it could develop any legs to the upside. The top in the gold price was at the London open…and the low of the day was at the London close. From the London close, gold rallied about $15 right into the close of electronic trading on the Globex at 5:15 in New York.

Silver, which I mentioned yesterday was the metal that the bullion banks are really after, got it in the neck again. It traded exactly the same as gold through Far East trading…smallish rally into the London open…hit for 30 cents…and then proceeded to trade sideways until the London p.m. gold fix. From that

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Well, the bottom for gold on Wednesday was about 2:00 p.m. in Hong Kong…1:00 a.m. in New York. From there it rose in fits and starts until the Comex open…where it got sold off for about an hour or so. Then, at precisely 9:00 a.m., away it went to the upside…until it ran into some opposition at the London p.m. fix [3:00 p.m. London...10:00 a.m. New York.] The London close occurred an hour later…and that was obviously it for the day. Volume was extremely heavy…170,000 contracts were traded…and that’s net of what few switches there were.

The silver chart was almost a mirror image of its golden cousin…with the top silver price coming at the close of London trading.

The open interest number for gold on Tuesday was a big surprise. Even though gold rose about $18 on that day, there was actually a decline of 99 contract in open interest to

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In the currency market, the dollar was off slightly against the euro. Late Wednesday, the euro was trading at $1.2872 vs. $1.2856 on Tuesday.

Sterling continued to take a pounding, so to speak, falling nearly to $1.36 before edging back over $1.37.

With the UK’s financial system in shambles, Bank of England Gov. Mervyn King said that the central bank is considering buying up a range of assets in the coming weeks, in an attempt to re-start stalled lending to businesses and households.

King also promised “quantitative easing” measures that could be used to boost the money supply (i.e., roll the printing presses), considering the economic contraction that threatens to push inflation below the central bank’s 2% target.

Back home, Timothy Geithner, Barack Obama’s embattled Treasury secretary-designate, told the Senate Finance Committee that the president is working on a comprehensive bank-rescue package that will be unveiled in the next few weeks.

Geithner refused

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