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Sunday, January 6

6th Jan - Weekender: Economics & Markets

IMF admits austerity has failed - but what does it mean: will we get money printing, fiscal transfers or nothing at all? Remember, politicians are slow to accept mistakes, especially their own.

Previously on MoreLiver’s:                  

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ECONOMICS
The useful justification for fiscal deficits at a time of recession is the Keynesian one of supporting demand. But in the current crisis, one could argue that governments were simply providing a service - supplying a sufficient quantity of safe assets to meet the demands of investors.

Why a gold standard is a bad idea (III)Humble Student

The End of Economists' ImperialismHBR

The big issues in macroeconomics: the fiscal multiplierCrooked Timber

Ideology, Business Cycles and MacroeconomicsWorthwhile

Monetary RageKrugman / NYT

Ideology and EconomicsKrugman / NYT

Why a “free” market changes everythingalphaville / FT
Something very significant may be happening to labour and the capital reallocation process. And arguably it’s down to technology and crowd-sourcing.

  IMF’S MISTAKE
IMF: Coping with High Debt and Sluggish GrowthThe Big Picture

IMF Austerity Mea Culpa?The Big Picture
A number of folks are looking at the latest IMF paper as a startling admission of the failure of austerity

IMF admits more mistakesMacrobusiness

The IMF: we were right about being wrong. But normally we aren’t.The World / FT

IMF Details Errors in Calling for AusterityEconomics / WSJ
The International Monetary Fund is revising its metrics on how fast governments should cut their budgets, with the IMF's top economist making the case that Europe's fiscal diets were too severe.

An amazing mea culpa from the IMF's chief economist on austerityWonkblog / WP


MARKETS & TRADING
Big Banks Are “Black Boxes,” Disclosure is “Woeful”The Big Picture
This month’s must read cover story of The Atlantic was written by two of my favorite writers: Pulitzer Prize winner Jesse Eisinger of Pro Publica (and Portfolio, WSJ, and TSCM) and Frank Partnoy of University of San Diego School of Law, author of F.I.A.S.C.O., Infectious Greed, The Match King, and – most recently – WAIT: The Art and Science of Delay.

What’s Inside America’s Banks?The Atlantic
Some four years after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as “black boxes” that may still be concealing enormous risks—the sort that could again take down the economy. A close investigation of a supposedly conservative bank’s financial records uncovers the reason for these fears—and points the way toward urgent reforms.

Eunuchs of the Universe: Tom Wolfe on Wall Street TodayThe Daily Beast
Tom Wolfe headlines Newsweek’s first digital-only issue with a return to Wall Street 25 years after his classic novel The Bonfire of the Vanities. Read his searing indictment of how the world of finance went wrong and who the new Masters of the Universe are.

Do reporters make good stock pickers?MarketWatch
How last year’s picks by media big shots fared over the past year

Book BitsThe Capital Spectator

Narula’s No. 1 Hedge Fund Gains 38% Betting on MortgagesBloomberg Markets

The 100 Top-Performing Large Hedge FundsBloomberg Markets

The 20 Top-Performing Large Hedge FundsBloomberg Markets

IBS reversion edge with QuantShareIntelligent Trading

Weekend Reading for Financial Advisers: Fiscal Cliff, Behavioral Finance, and PokerCFA Institute

Beancounters, having resolved not to resolve differences in derivatives netting, instead have cool new footnotesalphaville / FT
Netting of the mark-to-market of derivatives positions is attractive. It’s more efficient when it comes to posting and receiving margin, decreasing the amount of operational and counterparty risk.

Sundheim, Taking Smart RisksReading The Markets
Playing it safe (alternatively stated, staying in your comfort zone) is fraught with dangers: to wit, you don’t win, you don’t grow, you don’t create, you lose confidence, and you don’t feel alive.

Generalized Momentum and Flexible Asset Allocation (FAA): An Heuristic ApproachSSRN
The effects of combining momentum, volatility and correlation selection criteria to form an equally weighted portfolio of the three best funds


2013 (also see my earlier Preview of 2013)
Entering Into 2013 - Part 1The Short Side of The Long
The global economy has been showing a bit of resilience as of late, with the manufacturing index recovering back towards 50.2 in December from 49.6 in November. Stabilisation is seen in US and China at present, while Eurozone and Japan continue to deteriorate. However, the question is weather or not the 2011/12 economic soft patch is a bottom from which another expansion period will re-start?

10 Surprises for 2013: BlackstoneEconmatters

What's Going To Matter In 2013Moneybox / Slate

2013 Outlook & ForecastKiron Sarkar / The Big Picture
I believe that the current year should be positive for equity markets, in particular in H2 2013, subject to adverse geopolitical issues.

The Year AheadWorthwhile
I am cautiously optimistic about the year ahead based on what I have seen to date and what I can see.  Even Europe should see some improvement. 

2013 calendar of important eventsLighthouse IM

Entering Into 2013 - Part 1The Short Side of The Long

2013 Starts with 50 Bold PredictionsEconMatters

A Year on the BrinkProject Syndicate
Joseph E. Stiglitz: The two main surprises in 2012 were the slowdown in emerging markets, which was slightly sharper and more widespread than anticipated, and Europe’s embrace of some truly remarkable reforms – though still far short of what is needed. Looking to 2013, the biggest global economic risks are there and in the US.

The Political Economy of 2013Project Syndicate
Mohamed A. El-Erian: Watching America’s national leaders scramble in the closing days of 2012 to avoid a “fiscal cliff” that would plunge the economy into recession was yet another illustration of an inconvenient truth: messy politics remains a major driver of global economic developments. This will become even more evident worldwide in 2013.

2012 (also see my earlier Review of 2012)
Almost All of Wall Street Got 2012 Market Calls WrongBB

A Year on the BrinkProject Syndicate
Joseph E. Stiglitz: The two main surprises in 2012 were the slowdown in emerging markets, which was slightly sharper and more widespread than anticipated, and Europe’s embrace of some truly remarkable reforms – though still far short of what is needed. Looking to 2013, the biggest global economic risks are there and in the US.