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

• Nelson Schwartz (HeraldTribune.com): Inside the global gold frenzy, November 8, 2009. Long considered the ultimate refuge for nervous investors, gold has climbed as the dollar has steadily weakened, budget deficits have expanded in the United States and Europe, and central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop. “It’s not that gold has changed, but gold buyers have changed,” said Suki Cooper, a precious-metals strategist for Barclays Capital. “It’s a structural shift we’re seeing on the investing side, from Asian central banks right down to individual investors buying ingots and coins.”

• William Rees-Mogg (Times Online): Which will come out on top: paper or gold? November

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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.

• Andy Xie (Caijing.com.cn): Why one bubble burst deserves another, September 28, 2009. The financial crisis taught crucial lessons about the dangers of bubbles, loose regulation and debt. It’s a pity we didn’t learn.

• John Hussman (Hussman Funds): Zen lessons in market analysis, October 11, 2009. The best way of preparing for the future is to take good care of the present, because we know that if the present is made up of the past, then the future will be made up of the present.

• John Authers (Financial Times): Manufactured surprises will keep stocks rolling, October 10, 2009. A stronger recovery would help earnings but would also bring the risk of higher interest rates to

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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 Ehrmann and Panagiota Tzamourani (European Central Bank): Memories of high inflation, September 2009. Inflation has been well contained over the last decades in most industrialized countries. This implies, however, that memories of high inflation are likely to fade, because over time larger parts of the population have never experienced high inflation, whereas those who have might forget. This paper tests whether memories of high inflation affect agents’ preferences about the importance attached to price stability, using a large database covering over 52,000 survey responses from 23 countries over the years 1981-2000. It finds that memories of hyperinflation are there to last, whereas those of less drastic inflation experiences tend to erode after around 10 to 15 years. The recent decline in

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Michael Pettis, professor of finance at Peking University’s Guanghua School of Management and author of the China Financial Markets blog, has just been interviewed by the Geoff Dyer, FT’s Beijing Bureau Chief on a number of China-related issues. The three-part interview is not only topical, but also excellent viewing material.

Part 1:

Pettis discusses where China may diversify its foreign exchange reserves and whether the renminbi will become the global reserve currency.

Click here or on the image below to view the video.

Part 2:

Pettis discusses the lessons other countries can learn from China’s growth model and its handling of the financial crisis.

Click here or on the image below to view the video.

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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.

• John Hussman (Hussman Funds): Profiting from the tooth fairy, August 3, 2009. It is a general investment rule that by the time that a particular thesis makes it to the cover of national news magazines, it is largely discounted by the markets. Momentum-based, trend-following, simplistic thinkers with a speculative bent generally do very well during bubble periods (though not over the full cycle). Such analysts are often able to do what we can’t bring ourselves to do, which is to risk other people’s financial security on raw price momentum, or on speculative themes that are contradicted by historical data, or that logically cannot be true.

• Edmund Conway (Telegraph): Economic crisis, and a crisis for economics, July 29, 2009.

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p style="text-align: left;"By Claus Vistesen: Copenhagenbr /emspan/span/em/pp style="text-align: center;"emspanbr //span/em/pp style="text-align: center;"emspanChina! China! burning bright /span/em/p p style="text-align: center;"emspanIn a bubble, Day and Night /span/em/p p style="text-align: center;"emspanIs it Bust or is it Boom/span/em/p p style="text-align: center;"emspanThat frames thy fearful asymmetry?* /span/em/p pbr //p pspanbr //span/ppspanCan you feel it? That calm and soothing feeling of low volatility and heaven bound risky assets driven by green shoots and second derivatives. Well, if you can't you are excused since neither can yours truly, or more precisely; he has a distinctly difficult time seeing from where people get the idea that we are headed for a broad based global recovery. However, beauty as always lies in the eye of the beholder and whichever way you look at it would be difficult to completely deny that the three key ingredients for a global recovery (and a resurgence of carry trade) in the form of ...

China! China! burning bright

In a bubble, Day and Night

Is it Bust or is it Boom

That frames thy fearful asymmetry?*

 (click on pictures to enlarge)

Can you feel it? That calm and soothing feeling of low volatility and heaven bound risky assets driven by green shoots and second derivatives. Well, if you can't you are excused since neither can yours truly, or more precisely; he has a distinctly difficult time seeing from where people get the idea that we are headed for a broad based global recovery. However, beauty as always lies in the eye of the beholder and whichever way you look at it would be difficult to completely deny that the three key ingredients for a global recovery (and a resurgence of carry trade) in the form of low volatility, steadily climbing risky assets, and benign credit wholesale market credit

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

• William Poole (Financial Times): A market solution to secure banks’ future, May 21, 2009. Would bankers rather face the discipline of subordinated debt or much heavier Washington regulation, including opaque and changing rules?

• The Economist: That kitchen-sinking feeling, May 20, 2009. Japan’s woeful economic peformance may mean that things can’t get any worse.

• Michael Pettis (Financial Times): Asia needs to ditch its growth model, May 19, 2009. The basic assumption that implicitly underlay Asian development – that American households had an infinite ability to borrow and spend – has been seen as false.

• Ambrose Evans-Pritchard (Telegraph): Asia will author its own destruction if it triggers a crisis over US bonds, May 18, 2009. Japan beware, crashes

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This is an interesting development.

One thing that has been talked about quite a bit is a potential “race to the bottom” of currency devaluations.

Simon Heapes of Anglo Far-East has said numerous times that the “symphony of inflation” would ultimately end up in a race to the bottom.

Uncanny how accurate that guy has been over time.

If we see this unfold, we are looking at a failure of fiat…which means real disciplined money (gold and silver) will revalue to equal the amount of currency created.

Since I own gold and silver, I sure wouldnt mind the wealth transfer!

1930s beggar-thy-neighbour fears as China devalues

China has begun to devalue the yuan for the first time in over a decade, raising fears that it will set off a 1930s-style race to the bottom and tip the global economy into an even deeper slump.

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 10:39AM GMT 04 Dec

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Is an RMB (yuan) depreciation in the offing?  Michael Pettis, a professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets, noted Monday that President Hu Jintao’s speech at this past weekend’s Politburo meeting leaves some wondering. According to today’s People’s Daily, besides warning “that the global financial turmoil will make it harder for China to maintain the pace of its economic development in the near future”, [Hu] said, in a widely noted comment, that “with the spread of the global financial crisis, China is losing its competitive edge in the world market as international demand is reduced.” What exactly does this mean? It is worth noting that this has come in the context of recent RMB weakness. According to a Bloomberg piece today, “China’s yuan fell by the most in seven weeks, three days ...