Links: 2009-05-23

If you are in the States, have a great holiday wekend.

• Friday Night Videos: Inflation or Deflation; Lost Vegas – Mish

  Very sobering account. By the way, the part about no notice evictions is scary and must be stopped.

• Don’t Get Carried Away Now! – Edward Hugh

  Interesting look into the difference between recessions caused by financial crises and garden-variety sorts plus a view into why this means better things for emerging economies than for the G-7

• Governor plans to completely eliminate welfare for families – LA Times

  hat tip Rolfe Winkler. I think this shows you what is coming down the pike in other bubble markets. California is clearly in Depression with a Capital D.

• It’s the writedowns, stupid – Credit Wrtedowns

  I wrote this in March saying that writedowns would be large and all the attempts to keep asset prices up and avoid this were destined to fail. I no longer think this is the case. Have a look at what I said and decide whether you think things have changed.

• Regional Federal Reserve Banks Think the Geithner-Bernanke-Summers Plan Is Failing the Real Economy

  Comments from Tom Hoenig. Hat tip Yves Smith. “To those who might be surprised at such forthright criticism from a senior official, he reminded his listeners that the 12 regional banks were set up by Congress “specifically to address the populist outcry against concentrated power on Wall Street.” He added: “Its structure reflects the system of checks and balances that serves us well at all levels of government, and it is the reason I am here today able to express an alternative view.””

• Oil rises on China demand, dollar

  “Oil prices rose on Friday as data showing a big increase in Chinese demand, along with a weak dollar, offset persistent worries about the fiscal outlook for top energy consumer the United States.”

• Building societies’ ratings cut

  The agency has cut the long-term issuer default ratings at the Chelsea, Newcastle, Principality, West Bromwich and Yorkshire building societies.

• Dollar Slips Beyond $1.40 per Euro for First Time Since January

  “The dollar declined beyond $1.40 against the euro for the first time since January on concern U.S. creditworthiness deteriorated and near-zero borrowing costs made the nation’s assets less attractive to investors.”

• FT.com / Lex – The US dollar

  One reason yields are ballooning at the longer end is right here: “China, for one, has made clear it views the Federal Reserve’s decision to print money to buy US Treasuries as a “policy mistake”. With $2,000bn of reserves, Beijing has already taken some defensive steps. Over the past eight months, it has increasingly bought short-dated US Treasuries over longer maturities, insulating itself against an increase in bond yields should the Fed’s quantitative easing backfire. Spreads between two- and 10-year maturities have ballooned during this period.”

• FT.com – China has long way to go to dislodge dollar

  “China and Brazil are to begin talks on a scheme for bilateral trade to be settled in the renminbi and the real, rather than the dollar. Beijing has found a willing partner in the Brazilian government, which mixes conservatism in economic policy at home with developing worldist flourishes abroad”