“Happy Christmas to all, and to all a goodnight!”

The year behind us delivered one of the better runs in publishing for finance and economic books. What follows are some of the more memorable names from my weekly Book Bits column over the past 12 months. Next week I’ll follow up with Part II. Meanwhile, here’s the first installment of a somewhat arbitrary listing of worthy titles from 2011:

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Disposable personal income (DPI) fell slightly last month while personal consumption spending for November rose by a mere 0.1%, the Bureau of Economic Analysis reports. It’s a disappointing report overall and one that adds up to the softest month for spending and income since August.

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As an investment strategy, equal weighting has two powerful attributes: it’s simple and it’s competitive. That’s a tough combination to beat. For some thoughts on why equal weighting does well, take a look at my article in the December issue of Financial Advisor: Model-Free Investing.

New filings for unemployment benefits dropped again last week, falling 4,000 to a seasonally adjusted 364,000. That’s a relatively modest decline, but it’s encouraging because it follows last week’s big drop that pulled new weekly claims down to a 3-1/2 year low. The fact that the previous tumble didn’t reverse offers one more data point for thinking that the recent slide in jobless claims is the real deal. If so, the outlook for the labor market is somewhat brighter, which of course is the critical variable these days in reading the macro tea leaves for the U.S.

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ECB unleashes a wall of money
Financial Times | Dec 21
If the answer to the eurozone crisis was a “wall of money”, it was provided on Wednesday by the European Central Bank. More than 500 banks borrowed a total of €489bn in three-year loans – equivalent to about 5 per cent of eurozone gross domestic product and the largest amount provided in a single ECB liquidity operation.
A Central Bank Doing What It Should
NY Times | Dec 22
After long resisting the kind of financial force Washington used at the height of the financial crisis in 2008, European central bankers on Wednesday pumped nearly $640 billion into the Continent’s banking system. The move raised hopes that the money could alleviate the region’s credit squeeze.

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In the great debate about whether there’s another recession heading our way, economist Andrew Smithers, head of Smithers & Co. and author of Wall Street Revalued, weighs in with a persuasive argument that the year ahead will be no stranger to risk and so it’s premature to dismiss the idea that a new downturn is lurking. A persuasive argument isn’t always the same as fate, but regardless of your macro outlook it’s helpful to consider an array of opinions if only to stress test your own convictions. The world is awash in forecasts, of course, but Smithers’ take strikes me as valuable for framing the linkages in markets, politics, and the economy. It’s a thankless task, of course, but someone’s got to do it and he does a commendable job in a new research note sent to clients today.

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A number of analysts tell us that the weak housing market has been the main impediment to stronger growth in the broader economy. One recent study advises simply that Housing Is The Business Cycle. Unfortunately, that relationship has only brought trouble in recent years, courtesy of a housing market that fell off a cliff and remained flat on its back. But thinking about residential real estate in something other than a deeply negative light is topical again this morning after reading today’s update on housing starts and newly issued building permits for November. Both series posted handsome gains on the month. Yes, we’ve been here before only to see the apparent rebound sputter out. But the latest rise is accompanied by something else we haven’t seen in a while: a rising trend over recent months. Could this be the long-awaited turning point for housing?

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How Long Do Housing Cycles Last? A Duration Analysis for 19 OECD Countries
Philippe Bracke (London School of Economics) | Oct. 2011
19 OECD countries. I provide two sets of results, one pertaining to the average length and the other to the length distribution. On average, upturns are longer than downturns, but the difference disappears once the last house price boom is excluded. In terms of length distribution, upturns (but not downturns) are more likely to end as their duration increases. This duration dependence is consistent with a boom-bust view of house price dynamics, where booms represent departures from fundamentals that are increasingly difficult to sustain.

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Will the threat come from within or without? Or are we set to be a two-time loser? Perhaps the more pressing question is whether it’ll come at all?

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