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 ( New bubble threatens a V-shaped rebound, August 20, 2009.
Instead of a V-shaped recovery, we may instead get a W curve. A dip next year, although perhaps not statistically deep, could deliver a profound psychological shock. Financial markets are buoyant now because they believe in the government. The second dip would demonstrate the limits of government power. The second dip could send asset prices down – and keep them down for a long time.

• U, V or W for recovery, August 20, 2009.
The world economy has stopped shrinking. That’s the end of the good news.

• Ambrose Evans-Pritchard (Telegraph): There’s no quick fix to the global economy’s excess capacity, August 15, 2009.
There is one overwhelming fact about the world economy that cannot be wished away. Excess capacity in industry is hovering at levels not seen since the Great Depression.

• Nouriel Roubini (Forbes):Stop asking when the recession will end, August 20, 2009.
Growth will be below potential for several years.

• Damien Hoffman (Wall St Cheat Sheet): Is Nouriel Roubini a false prophet?, August 19, 2009.
Roubini is clearly an intelligent fellow who has produced some interesting works. However, just as clearly, he is not a prophet or anything close. More accurately, Roubini has disingenuously promoted himself as nailing the crisis, when truthfully he was wrong until other hard working analysts fixed his broken crystal ball.

• Paul Kasriel and Asha Bangalore (Northern Trust): Will the fall economic “holiday celebrations” come early this year?, August 14, 2009.
We had been expecting that real economic growth would emerge in the fourth quarter of this year, coinciding with the celebrations of the Thanksgiving and Christmas holidays. We now think that it might emerge, albeit, just barely, in the third quarter, in time for the Labor Day celebration – although labor will have little to celebrate. We arrive at this conclusion from observing some economic variables that typically signal the end of a recession.

• Andrew Balls (Pimco): The recession is over  – now what?, August 20, 2009.
Growth in US industrial production points toward continued growth in the second half of the year.

• Curtis Mewbourne (Pimco): Emerging markets in the new normal, August 2009.
At Pimco’s most recent secular forum we analyzed the significant changes to the global economy and concluded we were entering a New Normal. This New Normal will mean lower potential growth for the global economy overall and especially so for the highly levered developed economies. For the emerging economies this presents a challenging environment, with lower export demand and a reversal of leverage induced global capital flows. But it also presents significant opportunities, not only to shift from export led growth to domestic demand but also to strengthen their position within the new economic order.

• Gillian Tett (Financial Times): Eliminate financial double-think, August 20, 2009.
… if regulators and politicians are to have any hope of building a more effective financial system in future, it is crucial that they start thinking more about power structures, vested interests and social silence. That might sound like an irritatingly abstract or pious plea. However, it has some very practical implications about how policy is formulated.

• Glenn Hubbard, Hal Scott and John Thornton (Financial Times): The Fed’s independence is at risk, August 20, 2009.
It should have no authority, even with the approval of the Treasury, to lend against insufficient collateral.

• Philip Stephens (Financial Times): A friendless Russia is held hostage to Putin’s vanity, August 20, 2009.
The prime minister’s compulsion to flaunt his torso offers an unfortunate metaphor for Russia: a great, but waning power deluding itself that a show of muscle is the way to cling on to past glory. But Russian power will wither as surely as will Mr Putin’s physique.

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