READ THIS: Why deflation might be around longer than we think – The Declining Usefulness of Debt – … Prof. Antal Fekete argues that the creation of excess new money in the current situation is deflationary, because we have entered an era of negative marginal returns on added debt. In this condition, the more debt created, the lower the GDP growth (or the greater the GDP shrinkage). … – John Lounsbury – seeking alpha

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must read: Jeremy Grantham: The last hurrah and seven lean years – Posted by Prieur du Plessis – Jeremy Grantham’s keenly awaited quarterly newsletter, entitled “The last hurrah and seven lean years”, has just been published. Grantham, who co-founded Boston-based GMO in 1977, covers a lot of thought-provoking ground in this letter, but focuses mostly on where to invest now. – has report – Investment Postcards from Cape Town 

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DvD Insights – The Politics of Hedging Risk – Donald R. van Deventer – … The reason for Professor Merton’s amusement is that this experience is widespread.  My SecPac colleagues and I were not the only ones to propose a risk reducing strategy and yet have only a 50/50 chance that you’d be thanked for it after the fact.  The chance one would do the right thing and be burned at the stake afterwards is particularly high in the case of tax revenue hedging ... – riskcenter.com

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SUE ALLON AND THE VALUE OF DUE DILIGENCE - BY PHIL HALL – good interview – … Securitization remains a highly effective way to bring liquidity to the market. In a year, I expect to see new issues backed by new originations and seasoned loans. I expect to see due diligence that is far superior than we saw in the past. If investors and government agencies are to be convinced, due diligence has to have real meaning.  … – MortgageOrb

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The Next Steps in Reforming the Housing GSEs – By Alex J. Pollock – he author recommends structural and regulatory requirements to ensure that competition is enhanced with regulation, with improvement of the American mortgage-finance system. – AEI Online