Daily Reading – Tuesday, June 28, 2011

The Big Picture: Analysts Exist to Make Economists Look Respectable

“The only function of economic forecasting is to make astrology look respectable.”

-John Kenneth Galbraith

The Big Picture: Go Swedish, part 47

For many years, I have been an advocate of going Swedish. In addition to a surplus of beautiful Scandinavian blondes, Sweden understands what to do in a financial crisis. They do not rescue banks, they rescue the banking systems. They do not bailout creditors but instead, ensure credit can move freely through the economy. Lastly, they do not place the burden of failure on taxpayers, but rather leaves it where it belongs — with bond and equity holders.

FT Alphaville: Presenting … the French proposal in full

FT Alphaville: What’s wrong with markets in seven easy slides

The bank’s credit strategists Hanz Lorenzen and Matt King have some simple advice for investors seeking to deal with modern (QEased) markets; “what feels wrong is probably right.”

FT Alphaville: Sino-Forest as Russian love story

Sino-Forest homework done for the evening, FT Alphaville returned to some extra-curricular reading. But, flicking to Part Two, Chapter 16 of Leo Tolstoy’s Anna Karenina (as one does), we soon felt confused. Have we picked up the wrong book? I thought this was supposed to be a love story?

Business Insider: In A New Poll Of Stock Forecasters, You Literally Can’t Find One Single Bear

There’s 26 names on the list, from various firms like Goldman Sachs, Morgan Keegan, Cumberland Advisors, and Wells Fargo, and not one — not one — sees the market lower at the end of the year than it is today.

Bronte Capital: Sino Forest: some ancient history

If Muddy Waters is right then we might be able to tell by going back to the early press releases (say 1995-1999) and seeing what the company said then. The small China frauds are not very sophisticated (they do not have sophisticated stories) and a careful reading of the promotional material often gives the game away. I have successfully identified fraud in many without doing anything more than reading the promotional material. When Sino Forest was a small fraud (if it was a small fraud) it would not have required the complex intermediary structure – after all nobody much checks small companies. As it got bigger the story would have had to get more complex.

Bronte Capital: The Paulson Sino Forest loss

Whilst I am sympathetic to Paulson’s mistake I am more concerned about his excuses.

Common Dreams: What Happened to Media Coverage of Fukushima?

While the U.S. media has been occupied with Anthony Weiner, the Republican presidential candidates and Bristol Palin’s memoir, coverage of Japan’s Fukushima Daiichi nuclear power plant disaster has practially fallen off the map.

Star Simpson’s Blog: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

Some people claim that Bitcoin isn’t a “real currency,” that it is “imaginary,” or a Ponzi scheme — for a number of reasons, but perhaps mostly because there’s no obvious way to use them in most people’s daily lives. I have a different perspective because last week I paid for lunch with Bitcoins. Here’s how it happened.

Cassandra Does Tokyo: Limey Beans

The English are moaning about how expensive things are. They don’t know the half of it.



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