Before we get to the good reads!
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A Few Good Reads
Here are a few of my favorite reads from the past week.
1. What the Senate Didn’t Do on the Debt Ceiling:
With both chambers of Congress back in session on Tuesday, budget theatrics returned to Capitol Hill. In the legislative equivalent of a double negative, the Senate voted down a resolution blocking the president from extending the country’s borrowing limit. In other words: The Treasury can still borrow money to pay the country’s bills.
Capping a month of high-stakes brinkmanship over the debt, the Senate voted 45-54 along party lines Tuesday not to proceed to a resolution disapproving of President Barack Obama’s suspension of the debt ceiling until Feb. 7. The procedure, devised by Senate Minority Leader Mitch McConnell (R., Ky.) during the 2011 debt ceiling crisis, enabled Republican lawmakers to express their unhappiness over extending the country’s borrowing limit without actually halting it. Only Sen. James Inhofe (R., Okla.), who has been recovering from surgery, did not vote. Open this article
2. Convalescent eurozone seeks to escape debt overhang:
As the eurozone’s weakest members crawl out of their longest recession in modern history, their prospects of recovery are weighed down by a crushing mountain of debt far heavier than before four years of financial crisis.
Italy, Greece, Ireland and Portugal all have public debt well in excess of annual economic output and risk a Japanese-style «lost decade» of grindingly low growth and high unemployment as they slowly repay their way out of trouble. Open this article
3. Margin Debt: Move Along, Nothing to See Here:
NYSE Margin Debt just reached another record high, and an increasing number of market skeptics are expressing concerns. They reason as follows. A willingness to buy stocks on margin suggests confidence and optimism. But markets don’t perform well when investors are already confident and optimistic. Moreover, people invested on margin are less able to tolerate price fluctuations. As their presence in a market grows, so does the risk that otherwise healthy challenges to the market’s advance will provoke rapid, self-fulfilling unwinds of positions.
To ground these concerns, the skeptics appeal to history. They point out that extreme margin borrowing was the primary cause of the 1929 stock market crash, and that the market crashes of 2000 and 2007 both involved blow-off peaks in margin debt. Open this article
4. Could an Architecture Peace Corps Be the Answer to Student Debt?
Graduating architecture students are welcomed to the professional world with few job opportunities, lots of competition, and, for many, shockingly high student debt. Barring winning the lottery, there’s nothing for it but to work the decades it takes to pay them off. But what if there was another way? Shervan Sebastian, of AIArchitect, explores a new possibility for student debt relief designed specifically for architects in “Proposal Combines Student Debt Relief with Community Design Support,” reprinted here. Read on to see how you could one day pay off your student debt and help your community at the same time. Open this article
5. NYSE Margin Debt at Record High:
I keep seeing NYSE margin debt showing at record high as somehow a bearish indicator. This may not be supported by the historical data.
Merrill’s Stephen Suttmeier points out that, to the contrary, Margin Debt and S&P500, have often moved together. Indeed, when we look at the rate of change, this has in the past corresponded to a secular breakout in markets. Open this article
Recent Posts On This That and the MBA
This That and The MBA was included in several carnivals over the last weeks:
Thank you for the mentions last week. I really appreciate it. Have a great weekend!