Bank regulators issue interest rate advisory (FFIEC) This may sound boring, but it’s rather important. The FFIEC — a collection of bank regulators including FDIC, OCC, the Fed, OTS and NCUA — hasn’t issued such a warning since 1996. It wants banks to make sure they can handle rising interest rates….which seems to me a HUGE disincentive to lend. 5% mortgages originated today will lose mucho value as rates go back up. This is a huge reason banks “aren’t lending,” because up is the only direction for rates to go!

Employers unexpectedly cut jobs in December (Mutikani, Reuters) The jobs report is an important catalyst for the dollar and gold. If the employment situation improves, it will be easier for the Fed to tighten (good for dollar, bad for gold). If unemployment stays high, the Fed will keep rates low indefinitely and likely keep printing money to buy assets (bad for dollar, good for gold).

U.S. now renter’s market (Timiraos, WSJ) Hooray for deflation! As I’m fond of reminding folks, rents midtown west neighborhood of Manhattan crashed over 20% last year. That’s oodles of spending power freed up to pay for other things. Yes, it’s probablematic for landlords and the banks to which they owe money. But it’s good for the economy overall. Letting house prices fall will have a similar stimulative impact.

Why does it feel worse than reported? (EconomPic Data) Comparing Gross Domestic Product with Gross Domestic Purchases demonstrates how we lived beyond our means for so long and why getting back to equilibrium feels so painful.

Bubble warning (Economist) Not a new thought (argued it myself in sep ’08), but Economist is great at summarizing issues.

Swiss speeding motorist fined $290,000 (Rhodes, Reuters) Finland also does a means test for speeding tickets. This makes so much sense. Can a millionaire with dangerous driving habits be reformed if he’s only looking at a fine of a couple hundred bucks?

The Messiah complex (Brooks, NYT) Brilliant comment on the plot of Avatar. Brooks’ last two paragraphs are particularly good.

R.I.P., WTO (Blustein, Foreign Policy) Will the WTO die in 2010? I have to admit, I’m questioning my own belief in free trade. My default position is to favor it at every turn due to the wealth effects of comparative advantage. That said, I wonder if cross-border trade is growing faster than our ability to manage it…

Great find on Antiques Road Show (PBS)

Happy birtday Stephen Hawking (Wired)