Finance Trends Letter

Get set for Friday links in our, "Features of the Week".  1. Jim Rogers : only a crisis can solve US debt problem - WSJ. 2. What Keith Richards' 'Life' as a Rolling Stone tells us about economics - Forbes. 3. An example of why Illinois is screwed up - Points and Figures. 4. The ultimate China fraud linkfest - Abnormal Returns.  5. Was it a "There it was" stock ? - Crosshairs Trader. 6. Jeff Bezos on innovation : Amazon is "willing to be misunderstood for long periods of time." - Geekwire.   7. Another story on hedge funds "grabbing land" in Africa - BBC. 8. Ron Paul: more people have died in the drug war than from drugs - Liberty Underground.  9. 2010 Oil story : drawing down the inventories - Gregor Macdonald.  10. Why comedians make great investors - Financial Philosopher. 11. Learn to overcome your obstacles - Kirk Report. That's all for this week. Enjoy your weekend and keep us on your RSS and...

A few weeks ago on Twitter, we shared this interview with Sebastian Mallaby , who speaks to UC Berkeley about the future of the hedge fund industry for their "Conversations with History" series. For those who may not know, Mallaby is the author of a recent book on hedge funds and the financial crisis called, More Money Than G-d: Hedge Funds and the Making of a New Elite .  One point that really caught my interest early on in the interview is an anecdote Mallaby shares regarding Paul Tudor Jones and the factors he attributed to his own success as a trader and hedge fund manager. As Mallaby tells it, PTJ's explanation for his success is not at all the real reason why he is successful, but it is part of a common theme of professionals misattributing causes to explain their colleagues' and their own successes. Enjoy the discussion; it should prove especially interesting to those who are in the business or watching the hedge fund space closely. Related articles and pos...

During last week's MacroTwits discussion on StockTwits TV, Eric Jackson of Ironfire Capital posed a very worthwhile question to the group: who are the top global macro traders & investors of the day and what can we learn from them? For those who may not know, global macro is a term used to describe a largely "top-down" approach to speculating and investing across multiple asset classes and locales. Macro traders and hedge funds often take a big picture view of emerging trends and geopolitical events and express their positions accordingly by speculating in any number of markets, be they debt, futures, currencies, or international shares. The names of some now-legendary macro traders are probably familiar to most investors: George Soros, Jim Rogers , Stanley Druckenmiller , Louis Bacon, Paul Tudor Jones . But who are the rising stars and top practitioners of this investing style today? That's a question we're going to examine a bit further in the weeks ahead....

Well I'm a bit skeptical that any modern news outlet will accurately pinpoint the true value of gold , but let's give the Financial Times points for trying in this latest piece (hat tip: James Rickards ): " The Baird & Co warehouse sits in a dreary business park, half a mile east of London’s City airport. A black Mercedes and a blue Jaguar near the entrance are the sole touch of glamour. Step inside, and men in overalls are fashioning medallions, bars and rings from molten gold, purified in vats next door. From an office upstairs, Tony Baird, the company’s managing director, and a former coin dealer, presides over the hubbub. “Gold is stable,” he says. “It’s the value of money that goes up and down.” Baird & Co sells gold to everyone from pension funds to jewellers, and as the MD says: “Our machines can’t work fast enough these days...” Gold is still hot with investors, especially with leading hedge funds who have entered the trade in recent years, and with...

The Financial Times reports that the financial reform bill is nearing a final vote in Senate : " The US reform of financial regulation will go to a final vote in the Senate as early as Wednesday as big banks engaged in a last-ditch effort to change it. Senators argued in public over a broad range of measures, including an attempt to prevent California getting federal bail-out money, while aides worked in private to hammer out a single “manager’s amendment” that will be the last opportunity for changes. The legislation, which would be the second major new law of President Barack Obama’s tenure after healthcare reform , provides for a sweeping overhaul of US finance that would force the largest institutions to spin off their riskier operations. .." The FT goes on to note that an attempt by New Hampshire Republican senator, Judd Gregg, to place limits on federal bailouts to states was voted down by Senators who opposed the proposal. You'll also find details on measures in t...

Ron Paul's latest "Texas Straight Talk" update deals with Treasury Secretary Tim Geithner's scheme to cover up details of AIG's "backdoor bailout" of large investment banks, and also covers the much-debated issue of the Fed's "independence". Here's what Congressman Paul had to say about the recent backroom dealings by the Treasury and the Fed, and "Why the Fed Likes Independence ": " This claim that the Fed should have “independence” is a canard. They very much enjoy their comfortable pattern of bailing out friends and devaluing the currency with no oversight and no accountability. Geithner specifically asked officials at AIG not to disclose to the SEC or to the public particulars about this special deal for his friends. We only know these details now because AIG was eventually forthcoming when Congress demanded some answers. We should be getting this information, and information on all such dealings, straight from the ...

Bloomberg has been doing a great job of showcasing the "transparency" of the Federal Reserve over the past year or so, in spite of many attempts by the Fed and bailed out banks to block the news outlet's progress in procuring data on a $2 trillion loan program initiated by the Fed during the 2008 financial panic. Here's Bloomberg's latest on the Fed's bailout secrets : "The Federal Reserve will ask a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history. The U.S. Court of Appeals in Manhattan, after hearing arguments in the case today, will decide whether the Fed must release records of the unprecedented $2 trillion U.S. loan program launched after the 2008 collapse of Lehman Brothers Holdings Inc. In August, a federal judge ordered that the information be released, responding to a request by...

Time magazine has seen fit to honor Fed Chairman Ben Bernanke as its "Person of the Year" . Rather than waste my time (and yours) regurgitating their nonsense, I thought we'd take a quick look at some of the more interesting reactions to, and accurate appraisals of, this news. A short linkfest of Bernanke & Fed realism follows: 1. Person of the Year, My Foot! Bernanke "Failed Miserably", Says Chris Whalen - Tech Ticker. 2. A More Honest Look at Time Person of the Year Ben Bernanke - Wall St. Cheat Sheet. 3. Time Magazine's Kiss of Death: "You!" - Mish. 4. Time on Bernanke: The Peak of Central Banking? - Minyanville. 5. Ron Paul on Bernanke and the Fed - Jesse's Cafe. 6. Impoverisher of the Year - Mises Blog. We should note that the Senate Banking Committee is backing Bernanke for a second term as Federal Reserve Chairman, with the debate over his renomination heading to the full senate in January. What do you think? Should Bernanke s...

Ron Paul addresses America's ever-expanding foreign wars (mentioned here last week) and the outsized influence of the military-industrial complex in his latest talk, "Who Wants War? Follow the Money" : " If anyone still doubted that this administration’s foreign policy would bring any kind of change, this week’s debate on Afghanistan should remove all doubt. The President’s stated justifications for sending more troops to Afghanistan and escalating war amount to little more than recycling all the false reasons we began the conflict. It is so discouraging to see this coming from our new leadership, when the people were hoping for peace. New polls show that 49 percent of the people favor minding our own business on the world stage, up from 30 percent in 2002. Perpetual war is not solving anything. Indeed continually seeking out monsters to destroy abroad only threatens our security here at home as international resentment against us builds. The people understand this ...

Over the weekend, I started reading what has to be the article of the week, and very possibly, one of the top choices for Article of the Year: Jim Grant's latest WSJ opinion piece, "Requiem for the Dollar" . Here's an excerpt from that piece: " Ben S. Bernanke doesn't know how lucky he is. Tongue-lashings from Bernie Sanders, the populist senator from Vermont, are one thing. The hangman's noose is another. Section 19 of this country's founding monetary legislation, the Coinage Act of 1792, prescribed the death penalty for any official who fraudulently debased the people's money. Was the massive printing of dollar bills to lift Wall Street (and the rest of us, too) off the rocks last year a kind of fraud? If the U.S. Senate so determines, it may send Mr. Bernanke back home to Princeton. But not even Ron Paul, the Texas Republican sponsor of a bill to subject the Fed to periodic congressional audits, is calling for the Federal Reserve chairman...

Some of you may have read Bloomberg's article on the Federal Reserve this week entitled, "Bernanke may redefine Fed mission in financial-market stability" . I found it to be an appallingly misleading piece of pro-Fed boosterism. If you're looking for one more piece of mainstream writing that supports the idea of increased powers for the Fed in the wake of the global financial crisis, you've found it: " Ben S. Bernanke ’s renomination allows him to redefine the Federal Reserve’s mission as he expands its power over financial markets and pulls back on a credit surge the central bank used to keep the economy from collapse, economists say. Bernanke’s agenda during the next four years will include elevating the Fed’s role in reducing excessive risk in major financial institutions, figuring out how to curtail asset bubbles, and scaling back $1.2 trillion of monetary stimulus. “He will have the opportunity to permanently change the structure of the Federal Reserve s...

Thanks to everyone who participated in this week's blog contest . I really appreciate all the feedback and suggestions that were offered to help us improve the blog. Also, thanks to Aaron at MagsDirect.com for his help in sponsoring the contest giveaway, 2 free 1-year subscriptions to The Economist. I'm sure our contest winners will appreciate the prize. I've selected Maria at Bear Mountain Books and John at Controlled Greed as this week's contest winners. Thanks for voicing your suggestions along with our other commenters (they were ALL great!), and I will email you to confirm your prize and pass your mailing info along to the publisher. Now for some Friday links; our "Features of the Week" . 1. Financial media coup d'etat - Wall St. Cheat Sheet. 2. John Paulson buys banks hit by credit crisis - Bloomberg. 3. Charting the markets: "Where to look next" - Quint Tatro. 4. Natural gas: down and out and unloved - Frank Barbera. 5. America: fat...

I've seen some very surprising recent coverage of Ron Paul's movement to audit the Federal Reserve, via the HR 1207 and S 604 bills . Here's a quick look at what I've found in recent days via Twitter and my fellow bloggers. Tech Ticker featured an article entitled, "Ron Paul is Right! We Should Audit the Fed" , with an accompanying interview clip questioning the constitutional legality of the Federal Reserve bank's ever-growing power and the total lack of transparency in the Fed's operations and in its balance sheet. Slate's Big Money site highlights Paul's legislation to audit the Fed in, "Ron Paul Strikes Gold" . What's interesting about this piece is that it starts off with a tally of Paul-sponsored bills that failed to gain traction, and then shifts its focus to the growing support for HR 1207 and the challenge that Paul's bill represents to President Obama's plan to "make the Fed a super-regulator". Do give...

This year's Independence Day theme (at least as I see it): getting our country back on track by rediscovering the principles which made us great. Liberty, a spirit of independence (among individuals and the nation as a whole), commerce and trade, striving for peaceful relations with all nations & no entangling foreign alliances or policing the world. Can it be done? There is a fantastic, recent essay from Ron Paul in The Washington Times that addresses some of these themes. While I am not a regular reader of said paper, I found this piece entitled, "'Fight them over there vs. over here' a false choice" , to be highly worthwhile and extremely informative. I hope you'll take a moment to read this piece during the July 4th weekend. Please share it with your family and friends, be they American or interested readers living abroad. We also posted some very worthwhile articles and audio clips about the Founding Fathers and America's fight for liberty and i...

There is a growing buzz over the possibility that the IMF will create a new global reserve currency based on special-drawing rights (SDRs) to replace the US dollar. Bloomberg reports on the proposed new reserve currency : "The International Monetary Fund said it’s possible to take the “revolutionary” step of creating a new global reserve currency to replace the dollar over time. The IMF’s so-called special drawing rights could be used as the basis for a new currency, First Deputy Managing Director John Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today... ...The SDRs would have to be delinked from other currencies and issued by an international organization with equivalent authority to a central bank in order to become liquid enough to be used as a reserve, he said. As much as 70 percent of the world’s currency reserves are held in dollars, according to the IMF, leading to calls for nations to diversify their cashpiles to av...

For those who missed it, Niall Ferguson was the featured interview in the latest issue of Barron's magazine. Ferguson shared his thoughts on the global economy and offered a historically reasoned view on whether or not we face another Great Depression-style downturn. Here are some excerpts from that interview : " Barron's : Is the worst over for the global stock markets and the economy? Ferguson : It may look that way, but appearances can be deceptive. The stock market has actually tracked almost perfectly its downward movements between 1929 and 1931. Now that doesn't mean that we are going to repeat the Great Depression. I don't think we will, because the policy responses have been different. It would be excessively optimistic, however, to conclude from a relatively small set of green shoots in the economic data that we are all going to live happily ever after. It is certainly way too early to say the Obama administration is right that the economy is going to gro...

Marc Faber told a CNBC Europe "Squawk Box" panel that capitalism may fail like communism did if corporate enterprises and the financial system are not purged of the excesses and losses of the recent past. Some excerpted (see above article link) comments from Marc: "A sustainable recovery will occur only when the corporate system will be cleaned of losses and capitalism risks collapsing if this does not happen, Marc Faber, the author of "The Gloom, Boom & Doom Report," told CNBC Friday. The central banks will continue to print money at full speed, but long-term this strategy will lead to a fall in purchasing power and living standards, especially in developed countries, Faber said... ..."I think the final low in markets will occur when the system is cleaned out," Faber said. Unless the system is cleaned out of losses, "the way communism collapsed, capitalism will collapse," according to Faber. "The best way to deal with any economi...

The Financial Times reports that the US will put conditions on TARP bailout repayments from banks who say they are ready to pay back the government. "Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times. “Our general objective is going to be what is good for the system,” the senior official said. “We want the system to have enough capital.” His comments come as Goldman Sachs , JPMorgan Chase and other relatively strong banks are pressing to be allowed to repay their bail-out funds..." Pretty amazing, isn't it? Some of these banks were strong-armed into taking TARP funds in the first place (so as not to "stigmatize" banks that truly needed the money). Now the government is trying to control the repayment schedule of said funds, or at least give the impression that...

Here are some of the news items and blog posts that I'm checking out today. We've got: political drama and executive defections at GM, AIG gifts profitable trades to the major banks, a look at the recent stock market rally, and more. Have a look. 1. Obama says GM, Chrysler have last chance to survive - Bloomberg. See also: Obama gives GM, Chrysler ultimatums; GM's Wagoner to resign - Greentech Media. 2. Bear Market Rally - Carl Swenlin. 3. Market bottom? "Follow the Money" - Janice Dorn, Trading Doctor. 4. AIG was responsible for banks' profitable months - Zero Hedge. See also: AIG funnels taxpayer funds to counterparties - Finance Trends. 5. Bankruptcy is economic stimulus - Ron Paul. 6. Revisiting the global savings glut thesis - Doug Noland. 7. The Dangers of Printing Money (photo essay) - Time. 8. Giving in on mark-to-market accounting rules - Bear Mountain Bull. 9. Taken for the ride of our life - Best Minds Inc. In addition to the above articl...

A taste of what's to come in this Friday's, "Features of the week". From BusinessWeek, Maria Bartiromo's recent interview with Jim Rogers : "MARIA BARTIROMO What do you think of the government's response to the economic crisis? JIM ROGERS Terrible. They're making it worse. It's pretty embarrassing for President Obama, who doesn't seem to have a clue what's going on—which would make sense from his background. And he has hired people who are part of the problem. [Treasury Secretary Tim] Geithner was head of the New York Fed, which was supposedly in charge of Wall Street and the banks more than anybody else. And as you remember, [Obama's chief economic adviser, Larry] Summers helped bail out Long-Term Capital Management years ago. These are people who think the only solution is to save their friends on Wall Street rather than to save 300 million Americans. So what should they be doing? What would I like to see happen? I'd like to see...