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

• OUPblog: Oxford Word of the Year 2009: Unfriend, November 16, 2009. Every year the New Oxford American Dictionary prepares for the holidays by making its biggest announcement of the year.  This announcement is usually applauded by some and derided by others and the ongoing conversation it sparks is always a lot of fun, so I encourage you to let us know what you think in the comments.

Without further ado, the 2009 Word of the Year is: “unfriend”. “Unfriend” - verb - to remove someone as a “friend” on a social networking site such as Facebook.

• Martin Wolf (Financial Times): Grim truths Obama should have told Hu, November 17, 2009. Obama

...

Our Chairman, Who Art At Goldman, Blankfein Be Thy Name. The Rally’s Come. God’s Work Be Done On Earth As There’s No Fear Of Correction. Give Us This Day Our Daily Gains, And Bankrupt Our Competitors As You Taught Lehman and Bear Their Lessons. And Bring Us Not Under Indictment. For Thine Is The Treasury, The House And The Senate Forever and Ever. Goldman.

Hat tip: Bill King (The King Report), November 12, 2009.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

American Refiners Have a Problem… And the Government is Making it Worse

by Sheena Martin, Investment U Contributing Editor

America’s refining companies are under severe financial pressure.

As the recession has blanketed the markets, demand for petroleum products has collapsed, causing refiners to scale back production.

And a bill currently working its way through Congress could also have an adverse effect. Democrats support less reliance on foreign crude, but the hotly debated Climate Change bill would do just the opposite. The burden of carbon cap-and-trade provisions for refiners makes it reasonable for U.S. companies to consider moving production overseas.

Why? Because foreign refiners will enjoy a significant cost advantage. Assuming even a modest carbon allowance of $26 per ton, the American refining industry will be spending an additional $58 billion annually.

And recent studies put this closer to

...

U.S. stocks posted modest gains Friday even as a surprisingly weak jobs report failed to deter investors from taking a broader view that the economy is improving.  Analysts’ upgrade of General Electric and Amazon.com helped the market keep its head above water as many on the Street averred the worst for the labor market was over.  Although the unemployment rate – at its highest level in 26 years – aggravated concerns about consumer spending, it nevertheless reassured some investors that the Federal Reserve will keep interest rates near historically low levels in the near future.      

On Friday, the Dow Jones industrial average rose 17.46 points, or 0.2%, to 10,023.42 and the Standard & Poor's 500 index added 2.67 points, or 0.3%, to 1,069.30.  The Nasdaq composite index advanced 7.12 points, or 0.3%, to 2,112.44.  For the week, the Dow and the S&P 500 index advanced 3.2%, while the Nasdaq

...

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

• Economist.com: Jobs gloom, with glimmers, November 6, 2009. America’s jobless rate passes 10% but the job market should start to improve soon.

• Paul Krugman (The New York Times): Why not a WPA? November 6, 2009. A question I’m occasionally asked at public events is, why aren’t we creating jobs with a WPA-type program? It’s a very good question. As it is, job-creation efforts are generally indirect. Tax cuts and transfers in the hope that people will spend them; aid to state governments in the hope of averting layoffs. Even infrastructure spending is routed through private contractors. You can make a pretty good case that just employing a lot of people directly would be a lot more cost-effective.

•

...

While I touched on unemployment duration at the end of my last blog, this is a very important subject and deserves a bit more elaboration. Quite simply being out of work for three or four weeks is a very different experience with very different economic implications than being out of work for six months to a year or more. The focus on the total number of unemployed obscures that reality. The thing that makes this recession so much different than the ones that have gone before it is how long people are staying out of work once they become unemployed. Yeah if you get laid off for a few weeks, it can be a pain in the butt, but essentially it is just an unplanned vacation. It does not really affect your long term financial solvency, nor do your job skills diminish significantly. After six months, regular state unemployment ...

Baltimore-(TFN):Time to panic? If you are part of the Obama administration the answer is yes. If you are an American investor, hold off on the freaking out for at least another month or so.

With the nation’s unemployment rate officially in double-digit territory and the under-employed rate ready to the 20% mark, the politicians that promised bliss in the days ahead are eating their words today.

And that means Wall Street is eating its recent gains.

For nearly a month, the Dow has hovered around the 10,000 mark. After hundreds of billions of dollars were withdrawn earlier this year, it was relatively easy to put that money back to work and send the equities market higher.

But now that the economic data is showing facts of slower-than-expected expansion rather than “ideas” of growth, investors are forced to explain their logic. The Dow doesn’t want to budge from 10k.

So far, I’ve heard very

...

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

• Mohamed El-Erian and Ramin Toloui (Financial Times): How to fill the gaps left by dollar decline, November 5, 2009. We should expect to see more discussion in the next few years on new types of reserve assets.

• James West (GoldSeek): Gold price is no bubble, November 4, 2009. The price performance of gold recently has all sorts of armchair economists waxing philosophical on the idea that this is the advent of a price “bubble”. While certainly everyone has and is entitled to their opinion, there are other features of humanity that we all possess, and much like many opinions, are best obscured from view. Declaring that gold is in a “bubble” demonstrates complete ignorance of or disregard for

...

Initial claims for unemployment insurance fell by 20,000 this week to 512,000. Last week's numbers were revised slightly higher, so arguably the drop was 18,000, but that's still a nice improvement. The four-week moving average dropped by 3,000 to 523,750. Since new claims can be volatile from week to week, the four-week moving average is generally considered a better gauge of where we are. The graph below (from http://www.calculatedriskblog.com/) shows the history of that average. We are now 135,000 below the peak set back in April. This is a key piece of evidence that the recession is over. However, we remain above the highest levels seen in either of the last two recessions. The level indicates that we are still losing jobs, but at a slower rate than we had been. In the past we did not start to see actual increases in the number of ...

U.S. stocks ended mixed Wednesday after a late-session profit taking almost wiped off a 156-point rally in the Dow average that was fueled by the Fed’s encouraging assessment of the economy and its decision to keep interest rates low for an extended period.  The optimism was short-lived as investors appeared jittery ahead of the October jobs report on Friday. Fresh concerns over bank earnings resurfaced after the House of Representatives passed a bill curbing credit card rate increases.

After the house vote, financials slumped 1.5% and led the decliners among the S&P 500 industry groups.  Analyst Meredith Whitney noted the biggest U.S. banks may face declining values on home-loan bonds with government backing as the Fed moves towards ending its $1.25 trillion purchase program.  Whitney said bank earnings are far from approaching "normalcy," and will reflect regulatory changes for an extended period.  JPMorgan (NYSE:JPM) fell 1.2% to $42.21 and

...