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

• Robert Reich (Robert Reich’s Blog): The great disconnect between stocks and jobs, November 18, 2009. How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise. Where is this heading? No place good. Without a major shift in policy - both at the Fed and in the White House - the economics point to a big stock-market correction and a double dip. The politics point to substantial losses for Democrats

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

• Robert Reich (Robert Reich’s Blog): The great disconnect between stocks and jobs, November 18, 2009. How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise. Where is this heading? No place good. Without a major shift in policy - both at the Fed and in the White House - the economics point to a big stock-market correction and a double dip. The politics point to substantial losses for Democrats

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Martin Wolf (Financial Times): The rumours of the dollar’s death are much exaggerated, October 13, 2009. Recent figures have proved that the dollar’s fall is a symptom of success, not of failure. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.

• E.S. Browning (The Wall Street Journal): Dow at 10000 as crisis ebbs, October 14, 2009. The Dow Jones Industrial Average surged to 10015.86, passing the symbolic 10000 level much faster than expected and racking up a 53% gain in just seven months. Wednesday’s trading marked the first time the Dow touched 10000 since October last year, when markets were unraveling after the collapse of Lehman Brothers

“Words from the Wise” this week comes to you in a shortened format as I do not have access to my normal research resources while on the road in Europe (also see my post “Gone A.W.O.L. - to Slovenia and Switzerland“). Although very little commentary is provided, a full dose of excerpts from interesting news items and quotes from market commentators is included.

While investors’ hopes of an economic recovery might have got ahead of reality, the cartoonists continually reminded us of worrisome issues …

Source: Signe Wilkinson, Washington Post,  June 18, 2009.

The past week’s performance of the major asset classes is summarized by the chart below - a mixed bag so to speak.

Source: StockCharts.com

A summary of

What happens to the relationship between the small-cap investor and the unemployed consumer during a recession? Greg Gunner of Whiskey and Gunpowder has advice, buy low and sell high. Here he gives you three ways to profit from the jobless Bud-drinking misery that plagues our country.

This from Greg:

The market has been kind to no one lately. Look no further than yesterday’s close for all the evidence most investors need to pack it up and hide their savings under the mattress for the next few years.

Unfortunately, most investors get it wrong. We all fight to pile into a hot stock, retreating once the share price plummets. Of course, that’s the exact opposite of what a savvy investor should be doing. Remember — it’s not about calling a bottom. It’s about buying low and selling high. It’s a simple concept that’s goofed seemingly every day when we let our emotions creep into

Hedge Fund Managers, which have been the most highly paid financial professionals in the industry, easily topping CEO compensation by a wide margin, are currently struggling in this volatile market. Gone are the days of the fat hedge fund which can keep a stock between their preferred levels, with a bet on each side of the fence. New rules and regulation “game-changers” are affecting the hedge funds in unexpected ways.

Todd Harrison, CEO of Minyanville.com and a former hedge fund trader, stated that the hedge fund community is going through a “cleansing process” and 50% of existing funds won’t likely survive. Companies like Citadel Investment Group, Inc., whose funds fell 30% this year because of losses on convertible bonds, stocks and corporate debt, could possibly be in danger.

Mr. Harrison expects that the $43 billion that came out of hedge funds in September alone is only a taste of what’s to

Hedge Fund Managers, which have been the most highly paid financial professionals in the industry, easily topping CEO compensation by a wide margin, are currently struggling in this volatile market. Gone are the days of the fat hedge fund which can keep a stock between their preferred levels, with a bet on each side of the fence. New rules and regulation “game-changers” are affecting the hedge funds in unexpected ways.

Todd Harrison, CEO of Minyanville.com and a former hedge fund trader, stated that the hedge fund community is going through a “cleansing process” and 50% of existing funds won’t likely survive. Companies like Citadel Investment Group, Inc., whose funds fell 30% this year because of losses on convertible bonds, stocks and corporate debt, could possibly be in danger.

Mr. Harrison expects that the $43 billion that came out of hedge funds in September alone is only a taste of what’s to

With this announcement, the US has stepped into a realm formerly reserved for such lofty icons of global financial dominance as the Wiemar Republic, Argentina, and Zimbabwe.

We are now officially directly monetizing debt, and creating money out of thin air.

God forgive us for what we are about to do to our children.

September 17, 2008 HP-1144

Treasury Announces Supplementary Financing Program

Washington- The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week.  To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.

The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the