tag:blogger.com,1999:blog-7820485130017459619.post2203646874434622496..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: The Dire Position of the US EconomyUnknownnoreply@blogger.comBlogger17125tag:blogger.com,1999:blog-7820485130017459619.post-53215020006578439042009-09-09T06:57:54.387-07:002009-09-09T06:57:54.387-07:00On the subject of China, this will be fun.
http:/...On the subject of China, this will be fun.<br /><br />http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6082464/World-faces-hi-tech-crunch-as-China-eyes-ban-on-rare-metal-exports.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-1865576888506028922009-09-09T01:33:17.296-07:002009-09-09T01:33:17.296-07:00East Asia Moving to Tighter Capital Controls
Asia...<b>East Asia Moving to Tighter Capital Controls</b><br /><br />Asia is facing a flood of capital from Western investors who think Asia is a better place for investment. However, this will cause asset bubbles and instability in Asian financial markets.<br />The solution? Just as I have argued in my blog, the solution is capital controls (or in China's case, increased control over capital inflows):<br /><br /><i>What should Asian central bankers do ...? Much more likely is what is now being whispered about in the corridors of financial power — beginning to consider ways to tighten capital controls, i.e., limit the amount of capital that can come into a country, or force investors to commit to stay in the country for longer periods of time.</i><br /><br />http://economix.blogs.nytimes.com/2009/07/30/what-to-do-about-a-china-bubble/<br /><br /><b>See also my blog:<br /><br />http://socialdemocracy21stcentury.blogspot.com/</b>Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-74399701611155239802009-09-08T23:53:22.497-07:002009-09-08T23:53:22.497-07:00Cynicus,
You say that you plan to review the China...Cynicus,<br />You say that you plan to review the China situation sometime soon so I thought this paper (arXiv pre-print) might be of interest to you. It allegedly predicted the Chinese stock market crashes. The maths isn't too hard so maybe you would like to see if you can firm up your prediction of the $ crash ;o)<br /><br />http://arxiv.org/PS_cache/arxiv/pdf/0909/0909.1007v1.pdfginger tosserhttps://www.blogger.com/profile/14954116470256007245noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-9227033471579666512009-09-07T02:01:38.219-07:002009-09-07T02:01:38.219-07:00Thank you to the Anon commentator above for fillin...Thank you to the Anon commentator above for filling in the gaps on the story about the IMF that I didn't have time to expand. <br /><br />Would be nice if CE would have a closer look at the IMF and SDR's - the example above by anon could be seen as a sneaky way of the UK getting money from the IMF by "donating" to it, and then withdrawing all its reserve for a net gain, while other countries cover the difference - But only if the SDR fund works in practice a certain way.<br /><br />It is still a little unclear as to what the role of SDR's are. Are they another form of QE that is working on a more global scale? Are they a defacto reserve currency as some think they are developing into? <br /><br />Is the theory above possible and the donations being used to shuffle money around or are certain countries trying to increase their quota and thus their relative power and influence?<br /><br />I tend towards the latter as it also increases voting rights in the IMF as is evidenced by China wanting to be among the first in by putting in $50 billion <br /><br />http://www.chinadaily.com.cn/china/2009-09/04/content_8653967.htm<br /><br />I think that although there has been talk about SDR's when first mooted another look now we know how the powers are reacting could be useful.<br /><br />News - especially from the orient - has been fast this week, so I look forward to your China article.<br /><br />A couple of links that might help -<br /><br />http://www.marketwatch.com/story/hong-kong-recalls-gold-reserves-from-london-2009-09-03?link=kiosk<br /><br />http://www.bloomberg.com/apps/news?pid=20601087&sid=a0I.vQ0VvGUc<br /><br />http://thefundamentalview.blogspot.com/2009/09/china-and-buzz-of-pending-bank-default_03.html<br /><br />The last has an interesting viewpoint about the threatened defaults - that the companies that could been given permission would most likely deal with oil based rather than mortgage based derivatives - which puts another angle on things.<br /><br />The US stocks stayed up despite a slump. (Sometimes I get the feeling the whole US could fall asleep for a few days and it would still go up providing the machines were still switched on)<br /><br />The amount of insider selling went to another all time high in the past week. The previous link showed that for August the ratio was 30 time sellers to buyers which was the highest that had been recorded since they started in 2004. In the past week, it doubled to 61.8 times! <br /><br />http://www.zerohedge.com/article/insider-sellingbuying-ratio-doubles-618x<br /><br />Meanwhile the problems for the future US economy keep building up. Nothing is changed to stop predatory practices - some of the victims are the same, other vultures are eyeing up new targets.<br /><br />More on Ginnie Mae<br /><br />http://www.zerohedge.com/article/insider-look-ginnie-mae-mbs<br /><br />Wall street turning to securitizing life insurance policies. This is likely to increase premiums for all holders as Wall street would be buying and keeping going policies that would naturally be abandoned.<br /><br />http://www.nytimes.com/2009/09/06/business/06insurance.html?hpLefty Feepnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-52361858003259312842009-09-05T21:23:32.616-07:002009-09-05T21:23:32.616-07:00In response to Lefty:
You also have to look at th...In response to Lefty:<br /><br />You also have to look at the recent issues of 283 Billion SDR's by the IMF, which came out of thin air and were distributed to the various countries according to their quota.<br /><br />http://www.imf.org/external/pubs/ft/survey/so/2009/POL082809A.htm<br /><br />and<br /><br />http://www.imf.org/external/np/sec/memdir/members.htm<br /><br />So the the following countries received in Billion,<br /><br />UK 13.98 SDR = 13.46 GBP<br />DE 16.92 SDR = 18.59 EUR<br />FR 13.98 SDR = 15.36 EUR<br /><br />Exchange rates are here<br /><br />http://www.imf.org/external/np/fin/data/rms_five.aspx<br /><br />These countries simultaneously made the following contributions to the IMF.<br /><br />UK 6.8 GBP<br />DE 25.05 EUR<br />FR 18.45 EUR<br /><br />http://uk.reuters.com/article/idUKTRE57U1FZ20090831<br /><br />http://nachrichten.finanztreff.de/news_news,awert,topthemen,id,29696112,sektion,uebersicht.html<br /><br />So, it looks like the Brits have received a "bailout" of 7 Billion GBP, and the French and Germans donated more than they received. Business as usual, the Brits on the take.<br /><br />However, the issuing of cost free SDR's by the IMF is basically a Quantitative Easing process by a helicopter drop of cash over all countries. And effectively debases all currencies. This has not really been reported in the mainstream press. But this unprecedented re-erection of the IMF is certainly a process to watch.<br /><br />BTW India has also announced that it is buying into SDR's as well as China.<br /><br />http://www.imf.org/external/np/sec/pr/2009/pr09300.htmAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-32206935926450133842009-09-05T00:10:18.693-07:002009-09-05T00:10:18.693-07:00The middle of the road communists believe some ind...<i>The middle of the road communists believe some industries at least should be in the hands of state.</i><br /><br />So people who (for example) think that the post office or a few key industries related to defense should be state run are "middle of the road" communists in your view?<br /><br />Do you believe that all roads, bridges and high-ways should be privatised as well?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-92138614366209094912009-09-03T23:55:59.224-07:002009-09-03T23:55:59.224-07:00To Mr Carl,
The fact is that, free market has thr...To Mr Carl,<br /><br />The fact is that, free market has three essentials. These are:<br /><br />(a) Production.<br />(b) Distribution, and<br />(c) Exchange.<br /><br />Now, as concerns (a) and (b) they are in the hands of the private sector. However, when it comes to means of exchange, it is in the hands of state. This cannot be said to be free market. <br /><br />There are three types of communists. The first group, i.e. proper Marxists, believe the state should control all industries. <br /><br />The middle of the road communists believe some industries at least should be in the hands of state. <br /><br />The right wing communists, the most dangerous of all since they call themselves capitalists, believe in the Divine right of state to control means of exchange. If we are to have an semblance of free market, we must overthrow these right wing communists. And, this will be a tough battle, as you can see here:<br /><br />http://www.liberty-watch.com/volume03/issue08/coverstory.phpMwarang'ethehttps://www.blogger.com/profile/17751879277752081774noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-56141743851536987882009-09-03T11:32:37.217-07:002009-09-03T11:32:37.217-07:00China ditches the dollar
http://dailyreckoning.co...China ditches the dollar<br /><br />http://dailyreckoning.com/Mwarang'ethehttps://www.blogger.com/profile/17751879277752081774noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-77654298403027570202009-09-03T08:33:15.584-07:002009-09-03T08:33:15.584-07:00Thank you CE, I really enjoy this blog and it is a...Thank you CE, I really enjoy this blog and it is a breath of fresh air to have some contrarian thought regarding what our lords and masters have decided to do with the imbalanced world economy.<br /><br />I doubt that I will add much new to the debate but I do have one question which I have never seen answered or even asked much. What would actually happen if we just left the recession to run its own course? That is instead of following the policy of QE what in your opinion would be the advantages of just sitting tight, the government only stepping in to nationalise a collapsed bank (I suppose they would have to, am I wrong?) and allowing the whole mess to play itself out. I guess I am asking why we are not allowing the free market to handle it as the free market has created the mess?Carlnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-69535707188977503152009-09-01T12:47:21.309-07:002009-09-01T12:47:21.309-07:00At the danger of monopolising this thread (Ill sto...At the danger of monopolising this thread (Ill stop now I promise :) )<br /><br />Here are some developments.<br />AIG Freddie and Fannie down 15% so far (AIG closer to 20%) Since a hell of a lot of trading has been after hours recently and the trend going into the close is down it could be a lot lower tomorrow. Looks like the articles I collected yesterday that showed traders were very edgy were spot on - ofc it could just be a reaction to the news, but worth keeping an eye on the next few days.<br /><br />Even the old Vampire squid Goldman Sachs dropped sharply today - a sure sign of trouble.<br /><br />http://www.zerohedge.com/article/gs-new-market-windsock<br /><br />European countries announce that they voluntarily increase the IMF´s funding <br />Alistar Darling announced an increase in IMF funds on behalf of british tax payers just hours after the German and French Finance ministers agreed to do so.<br /><br />There have been rumours going around of an unexpected default of a large bank today - the IMF suddenly needing more funding could indicate a vulnerable country that could be harmed by it. <br /><br />http://www.berninger.de/details/datum/2009/08/31/something-big-is-happening.html<br /><br /><br /><br />Quantitative easing beginning to show in M4<br />The Bank of England has produced the first apparent statistical evidence that its programme of quantitative easing may now be successfully boosting the amount of money flowing around the economy. <br /><br />http://www.telegraph.co.uk/finance/economics/6123039/Quantitative-easing-beginning-to-show-in-M4.html<br /><br />Finally a very detailed analysis of the US CRE using data not normally seen<br /><br />http://www.zerohedge.com/article/guest-post-other-real-estate-issue-revisitedLefty Feepnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-13850101902244868772009-09-01T09:38:21.372-07:002009-09-01T09:38:21.372-07:00A couple of things I forgot to mention on my posts...A couple of things I forgot to mention on my posts above (there are so many things wrong over there, its hard to keep up)<br /><br />Sales figures negative – when the back to school sales should have sent it strongly positive<br /><br />http://bloomberg.econoday.com/byshoweventfull.asp?fid=437630&cust=bloomberg&year=2009#top<br /><br />"Insider selling is 30x insider buying, while corporate stock buybacks are non-existent. Companies are saying they don't want to touch their own stocks." While the general sentiment is strongly – extremely strongly bullish, the more savvy are selling like mad.<br /><br />http://www.zerohedge.com/article/trimtabs-ceo-charles-biderman-discusses-massive-insider-selling<br /><br />Banks threatening meltdown if Fed has to disclose information<br /><br />http://www.zerohedge.com/article/racketeering-101-bailed-out-banks-threaten-systemic-collapse-if-fed-discloses-information<br /><br />Pardon the link spam – It is usually easier and quicker to point to the important points than for me to stumble around trying to explain them – I do not have the gift for oratory and explanation of complex matters that you and some of my fellow commentators have.Lefty Feepnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-62362323724688867382009-09-01T08:31:10.521-07:002009-09-01T08:31:10.521-07:00CE, a good post,but I'd suggest avoiding drama...CE, a good post,but I'd suggest avoiding dramatic or mocking terms such as "meltdown" or "tickety boo". These may cause your objectivity to be cast in doubt.<br /><br />Can I also solicit your views on the possibility of setting up an alternative to the currently preferred (and flawed, IMO) GDP figure, taking in the full picture, and not equating genuine invention which will enhance the prospects of humanity, with the consumption of yet another TV serial or ice cream bar?<br /><br />I refer in particular to my definition of wealth (the hard resources and the abstract knowledge and skills to control our environment and destiny).<br /><br />I know the difficulty of subjectively evaluating all kinds of activity, but the misdirection caused by the current GDP method is unbearable.<br /><br />P.S: What is your view on Paul Krugman's argument that the US deficit is easily manageable?<br /><br />http://krugman.blogs.nytimes.com/2009/08/30/a-couple-of-notes-on-the-40s-and-50s/The_Rational_Martiannoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-55894249724750286462009-09-01T04:05:41.601-07:002009-09-01T04:05:41.601-07:00As far as other things that indicate Fed intervent...As far as other things that indicate Fed interventions, one of the methods which indicates that they are monetizing the debt is detailed here. <br /><br />http://www.chrismartenson.com/martensonreport/shell-game-how-federal-reserve-monetizing-debt<br /><br />Others such as changing the rules for indirect bidders (so that statistic is inaccurate as indicator of foreign demand) and swift buying back of items sold in an auction only a few days before (which could indicate collusion with bidders to keep auction figures good) I cannot find the links at present, <br />but along with graphs you and I posted, cast a doubt about how much demand is really there for US debt. (although treasury demand is high and could get higher if things de stabled)<br /><br />I would like to point out that while there has been attention paid to the QE in treasuries and stocks,<br />there is considerable amounts of cash being used in mortgage based securities as well – I would have to dig around some more to find statistics, but a rough guess is around 4 times the amount in other areas (also it has been noted that this sector has not been confirmed to stop at the same time as the other QE sectors in October)<br /><br />I am still trying to get my head around the implications, as have only started to read about it, but it is another indicator of the sheer mess the housing market has done to the economy.<br /><br />Here is a link that indicate foreign abandonment of MBS, showing how they are favouring treasuries.<br /><br />http://www.zerohedge.com/article/foreign-central-banks-accelerate-rotation-agencies-treasuries<br /><br />Also of interest from yesterday, on the following two links there are a couple of graphs by the user RobotTrader that show some interesting things, such as: “WASHINGTON (AP) -- Interest rates on six-month Treasury bills fell Monday to the lowest point on records that go back more than 50 years.” , Bonds exploding higher. And a large spike in the graph of the put/call ratio that shows that traders are very shaky and looking to cover themselves. News from China spooking the market?<br /><br />http://www.zerohedge.com/article/dollar-carry-flips-vix-now-tracking-dxy-stocks-pretending-care-about-bonds<br /><br />http://www.zerohedge.com/article/fx-reversal<br /><br />One last thing – the election of the DPJ could also stir the pot with the US as one of their election promises was to demand us treasuries in yen. If this and the rumours about China defaulting on debt have any substance, things are going to be interesting.<br /><br />More on Japan here<br /><br />http://www.zerohedge.com/article/dpj-set-win-japan-election-may-issue-seppuku-bonds<br /><br />http://market-ticker.org/archives/1388-An-Ill-Wind-Blows-From-Japan.htmlLefty Feepnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-37176615953981040312009-09-01T04:04:58.770-07:002009-09-01T04:04:58.770-07:00Another very good article about the reality that l...Another very good article about the reality that lies below most peoples perception due to being avoided by most mainstream media. I wonder when the true state of commercial and residential real estate will finally manage to filter through to the populous, and how they will react when they realise the lies being told to them?<br /><br />The Ginne Mae thing is scandalous – Karl Denninger in a memorable rant http://market-ticker.org/archives/1317-DAMNIT,-STOP-THE-LOOTING-NOW!.html compared it to subprime, and really it shows just how little has changed and how little has been learned.<br /><br />Meanwhile in the fantasy world of finance, the bubble is now in full view and ready to bust.<br /><br />While rallies happen for several reasons even in bad economic conditions, I suspected that the money floating around from all the QE would have an effect, so kept a look out for signs of things that would indicate something other than normal market behaviour (which is hard considering that most of the past 30 years have been very overblown on low interest rates, weak dollar etc)<br /><br />So when I saw these articles I knew we had a smoking gun.<br /><br />http://www.zerohedge.com/article/five-financial-stocks-dominating-market-volume<br /><br />http://money.cnn.com/2009/08/26/markets/thebuzz/index.htm?postversion=2009082612<br /><br />http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20090827&id=10343112<br /><br />That several bailed out and bankrupt institutions stocks such as AIG Fannie Mae and Freddie Mac had been raising in price out of proportion to value was known, and analysis (which I cannot find atm) had indicated a lot of the rises to POMO days – when the QE was injected into the market. <br /><br />However the fact that on days 4 stocks were providing the volume for up to 40% of the entire NYSE was an eye opener to just how much liquidity had been rammed into stocks that shouldn't even be listed as proven insolvent.<br /><br />It is safe to say that for at least a month, most of the US stock market has only kept its rise though 4 or 5 main stocks, all of which have been fed liquidity by the government and suckers, sorry speculators hanging on the coattails.<br /><br />I found a very interesting article yesterday that talked about this, with interesting parallels to the South Sea Bubble, although of course we cannot say that the government this time around is pumping the money in for the same reasons, the comparison is interesting and the article is good at explaining the reasons why POMO is indicated in these stocks.<br /><br />http://www.gamingthemarket.com/2009/08/where-the-new-ppt-hides.htmlLefty Feepnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-85240313849422454112009-09-01T01:25:51.696-07:002009-09-01T01:25:51.696-07:00A fundamental weakness in your analysis is why deb...A fundamental weakness in your analysis is why debt deflation is making, and will continue to make, the situation worse.<br />See Steve Keen's recent post:<br /><br />http://www.debtdeflation.com/blogs/Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-70241712176548983862009-08-31T16:38:36.330-07:002009-08-31T16:38:36.330-07:00Having posted this, I found this article in the Ti...Having posted this, I found this article in the Times:<br /><br />http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6816445.ece<br /><br />It is about a collapse in confidence in the Chinese stock market. I have been meaning to review China for a while, so may do so for the next post. There are lots of conflicting views out there, so I will do my best to make sense of them.Markhttps://www.blogger.com/profile/14983165364072918091noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-20560525307788545872009-08-31T16:29:18.664-07:002009-08-31T16:29:18.664-07:00Lemming (comment on the last post):
I will admit ...Lemming (comment on the last post):<br /><br />I will admit that, as far as inherited wealth goes I am in two minds. On the one hand, the libertarian side of me objects to removing freedom to disburse wealth as an individual sees fit, and on the other side I would like to see a more meritocratic system. These are contradictory views that I have not resolved.<br /><br />With regards to your second point, this is a question of how a welfare state should operate. I do not believe that it is right that people should live in perpetual fear for the future, but also believe that we can not afford the profligacy of the current system. It is also unjust that one group of people should remain idle at the expense of another group. <br /><br />This is why I proposed a reform that managed to offer a safety net, but also prevents people from using the welfare state for permanent support. <br /><br />http://cynicuseconomicus.blogspot.com/2008/08/reforming-benefits-system.html<br /><br />I do not believe that it is necessary to have an 'either/or' system. It is possible to balance the two aims. It is simply a return to the original idea of the welfare state, where it is a safety net, rather than a comfort blanket. <br /><br />Red and Anonymous (from the last post):<br /><br />Interesting comments. I am not sure whether it will be possible for the US to fade. I think that this might have been possible, had the US government and Fed acted responsibly. However, they are growing rather than shrinking the imbalances. The longer this goes on, the more likely a crisis. However, as I pointed out in the last article, I got it wrong before, so am now more cautious. <br /><br />On the other hand, as I point out in this article, the overseas creditors appear to be pulling out. If enough do so, what will hold up the US economy? They are left with just printing more money....<br /><br />Lefty Feep (also from the last post):<br /><br />Good to see you commenting again. An excellent link which I would like to pass on to other readers:<br /><br />http://market-ticker.org/archives/1374-Asset-Valuation-Games-Exist-In-England-Too.htmlMarkhttps://www.blogger.com/profile/14983165364072918091noreply@blogger.com