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

• Randall Forsyth (Barron’s): Synchronicity and stock prices, November 3, 2009. In a post-bubble world, equities move in sync with the cycle - worrying given the loss of momentum. As albert Edwards concludes, “the trend is your friend until it hits a bend. Beware, we may have just hit one.”

• Judy Chen (Bloomberg): Stiglitz says US is paying for failure to nationalize banks, November 2, 2009. Nobel Prize-winning economist Joseph Stiglitz said the world’s biggest economy is suffering because of the US government’s failure to nationalize banks during the financial crisis. “If we had done the right thing, we would be able to have more influence over the banks,” Stiglitz told reporters. “They would be lending and

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

• John Authers (Financial Times): Financialisation genie set loose, October 7, 2009. Not long ago, there were three asset classes: stocks, bonds and cash. Some were not even sure if cash counted as an asset class. The last few decades, however, have seen the “financialization” of swathes of the world economy where prices were not previously set by markets, or at least not by markets led by the same investors who also set the prices of stocks and bonds. But financialization has led to controversy since last year’s crisis.

• Randall Forsyth (Barron’s): Away from Wall Street, credit keeps contracting, October 8, 2009. Financial markets party on Fed largesse, little of which flows to Main Street.

• Eamon Javers

The Dow Jones industrial average moved up 132 points on Tuesday and all major indicators rose more than 1% as the Australian central bank’s decision to raise interest rates boosted optimism about the world economy.   Investors' show of confidence ahead of a flood of corporate earnings reports came as Australia became the first major country to raise interest rates since the onset of the financial crisis last year.  The move signals that policymakers see that country's economy as strong enough to withstand higher borrowing costs. That touched off hopes that other economies might also be growing.

Australia's decision dented demand for the U.S. dollar, which, in turn, raised commodities prices.  US energy and materials stocks moved up, oil also rose, and gold reached a record high.  Stock investors cheered the drop in the dollar because it boosts corporate profits by making U.S. goods cheaper for overseas buyers.

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

• Robert Fisk (Independent): Secret plan to ditch the US dollar’s dominance uncovered, October 6, 2009. Arab states have launched a secret plan with China, Russia and France to stop using the US currency for oil trading.

• Ambrose Evans-Pritchard (Telegraph): China calls time on dollar hegemony, October 6, 2009. You can date the end of dollar hegemony from China’s decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners.

• John Hussman (Hussman Funds): Defensive, but a measure of equanimity, October 5, 2009. My view continues to be that the intrinsic condition of the US economy has not improved, and that the green shoots we’ve observed are a transient artifact

James Surowiecki spoke with Professor Joseph Stiglitz, the Nobel Prize-winning economist, about the mishandling of the financial crisis, the relationship between government and markets, and the future of capitalism around the world. They met last month at Stiglitz’s office at Columbia University.

Source: James Surowiecki, The NewYorker, September 28, 2009.

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This week marks the one-year anniversary of the Lehman bankruptcy. The media struggles to say something meaningful about it. Here at the Daily Reckoning we will not even attempt meaningfulness. We’ll be satisfied with a few snide remarks.

What is most remarkable about the world a year after Lehman fell is that so little seems to have changed. Even the papers have noticed.

“A year after Lehman, little change on Wall Street,” says the headline on today’s International Herald Tribune. “Backed by huge U.S. government guarantees, the biggest banks have re-structured only around the edges. Employment [on Wall Street] has fallen just 8% since last September.”

“Obama to push banking overhaul,” says another headline at the Telegraph. Yes, the pols will try to convince the world that they have regulated risk out of the market. Perhaps they will limit salaries… or insist on more disclosure… or require that the

Currencies trade in a tight range…  G-20 to shun an exit from stimulus?  Gold and Silver and Oil… A new trend? Loonies follow the commodities higher… And Now… Today’s Pfennig! Good day… And a Happy Friday to one and all! Well… Once again, my day didn’t turn out exactly as planned, but as they say… A bad day at the ballpark is better than a good day and then you plug in the place… It could be work… It could be cutting the grass… Etc..

OK… I heard a great song on the radio this morning on my way to work… And I said to myself… Chuck, now that’s a great song to start a day with, that everyone should hear each day! It’s a song from the 60’s (of course!), by the Rascals, called… It’s a Beautiful Morning… Here’s the first verse, and if you know the song, I’m sure you’ll want to sing

Say goodbye to the US dollar as the world’s reserve currency. Writing in the Washington Post, Nobel Prize-winning economist Joseph Stiglitz says America’s massive deficit means a new global reserve system is approaching.

The domino effect is straightforward: Higher deficits spark market concerns over future inflation; concerns of inflation contribute to a weaker dollar; and both come together to undermine the greenback’s role as a reliable store of value around the world. Right now, with so much unused capacity in the American economy and so much unemployment – likely to persist for at least another year or two – the more pressing worry is deflation (a general decrease in prices), not inflation. But as the economy eventually recovers, the possibility of inflation will loom, and with forward-looking markets, worries about the future often play out in the present. Anxieties about future inflation can lead to a weaker dollar today.

Of course, a new

European orders increase more than expected… Was Cash for Clunkers necessary?… Roubini sees a ‘W’ not a ‘V’… Lessons from Mary Poppins…And Now… Today’s Pfennig!

Good day… And welcome to another week, the last one in August! The weather here in St. Louis has shifted toward fall, which is my favorite season. Chuck is flying back home from San Francisco today and will be back in the saddle tomorrow. Both he and the big boss, Frank Trotter, sent me some great Pfennig pfodder over the weekend so lets get right to it.

The dollar continued to drift lower throughout the trading day on Friday, with the commodity currencies of Australia, South Africa, and New Zealand leading the way. Confidence is returning to the markets, and investors are once again moving out of the ’safe havens’ of the Japanese yen and US dollar. The reports coming out of Jackson Hole indicate that central bankers believe