Weekend Reading: Bailout Blues

Good Sunday afternoon, and welcome to another edition of Weekend Reading. First, a look back at the week that just finished, then a look forward to the week ahead and then a summary of articles and papers worth reading.

It was another week of high volatility, risk and drama, including the biggest Ponzi scheme in U.S. history, but the major markets mostly ended higher. As I wrote here last week, given how the markets had begun ignoring bad news on a fairly consistent basis, an up week -- despite the bad news -- shouldn't have come as a huge surprise.

Looking forward to next week, an awful lot hinges on the on-again, off-again auto bailout. After politicians agreed to a rescue midweek, kiboshed it Thursday and then (maybe) reconstituted it over the weekend, the auto bailout is likely to again move markets. I, for one, wish we were past this point, but the macro risk of non-company events moving stocks will again be front and center next week.

Turning to economic indicators, the main event next week will be the last Fed meeting of the year. Bernanke & Co. are expected to cut rates to 0.5% (I can hardly believe I'm writing that), but most will be watching the accompanying text for clues about future monetary policy. In other items, there will be November industrial production numbers and we will see the the U.S. consumer price index and housing starts for November.

As for earnings, the remainder of the once-mighty investment banking sector will be reporting. Next week will see results from Goldman Sachs(GS Quote) and Morgan Stanley(MS Quote), both of which almost certainly will report blighted results.

Finally, here are some articles and papers worth reading:

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• Credit ratings companies won't get credit until GE(GE Quote) isn't rated AAA. (Bloomberg)
• Barron's runs interesting bearish interview with Macromavens and picks ASML(ASML Quote). (Barron's)
• Stimulus Package To First Pay for Routine Repairs. (The Washington Post)
• Good and bad infrastructure projects. (The Economist)
• New Jobs in Solar Power Still Booming. (The New York Times)
• Hedge fund managers admit major mistakes in 2008. (Bloomberg)
• Zoellick warns finance rescues may hurt poor. (Reuters)
• Geneva banks lost more than $4 billion to Madoff. (Reuters)
• Consumer spending to ebb more than investors see. (Reuters)
• Top-performing hedge funds of 2008 led by Paulson. (Bloomberg)
• Commodity Boom Is So Over. (The Washington Post)
• Economic Survey of the United States 2008. (OECD)
• To Build Confidence, Aim for Full Employment. (Shiller/The New York Times)
• Top 10 financial collapses of 2008. (Time)
• Merrill Lynch's 2009 Outlook. (The Big Picture)
• A survey of India: An elephant, not a tiger. (The Economist)
• Business on the cyclical rollercoaster. (The Economist)
• John Taylor on the Federal Reserve. (Econbrowser)
• Good discussion of banking crisis of 2007. (Tiff)
• Goldman super-spike oil analysts takes targets from $200 to $45. (Times)
• Risk management and card tricks. (Wilmott)
• Deception through telling the truth. (SSRN)

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting