tag:blogger.com,1999:blog-7820485130017459619.post5525207966769985831..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: China, Gold and the $USUnknownnoreply@blogger.comBlogger27125tag:blogger.com,1999:blog-7820485130017459619.post-13389307569236660772011-09-12T13:09:28.554-07:002011-09-12T13:09:28.554-07:00i was shocked to see the topic titled "china ...i was shocked to see the topic titled "china gold and us" but after reading a bit i thought cynicuseconomicus is right in choosing the topic. haha..how to write a resumehttp://www.thewriters.infonoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-75350092692255955912009-03-05T15:32:00.000-08:002009-03-05T15:32:00.000-08:00The amplifier.Have you ever tried to bring a mic c...The amplifier.<BR/><BR/>Have you ever tried to bring a mic close to the speakers? The increasingly loud sound you hear is the result of feedback. The sound of the speaker goes into the mic, it amplifies through the stereo, goes to the speaker where it gets picked up by the mic, that sends it back to the stereo to be amplified and so on, in a infinite loop. <BR/><BR/>Your stereo works on the principal of feedback as well. The amplifier in it, has a mechanism that takes the output and feeds it back to the input. When you set the volume up or down, you effectively control the amount of the output that will feed back to the input. You set the gain of the amplifier. Gain that way, is a simple context. It means, how many times the voice on the mic gets multiplied. With a gain of 5, a whisper in the mic gets 5 times louder.<BR/><BR/>(disclaimer: To people that really understand what I'm talking about, chill out, I'm trying to make a point. As a whole, it works more or less like this).<BR/><BR/>Amplifier theory looks very inviting. You get more every time the mic-amp-speaker-mic loop gets involved. We can solve all the problems human kind faces. We can always go through the loop and gain what we need to continue. We need energy? Put our energy to the loop and we will get more energy. (and to the people of the last disclaimer, don't laugh... cry instead).<BR/><BR/>Inflating FRB, works more or less like that. You put the same investment, over and over in the market and you end up with growth. The only problem is your limit.<BR/><BR/>Theoretically, the feedback system can go to infinity. Yet, any electronics student can tell you that you cannot do it. If you glue your mic to your stereo speaker, you will simply overheat the amp (lol, global warming), and end up with an amp either burned or blown out. <BR/><BR/><BR/>ZedAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-42099953538614111052009-03-05T12:21:00.000-08:002009-03-05T12:21:00.000-08:00MarkThe BoE has now given figures for the amount o...Mark<BR/><BR/>The BoE has now given figures for the amount of money it will print. Is this the answer you wanted? <BR/><BR/>If the figures are now known, doesn't that mean that the pound will simply devalue proportionately to compensate for the extra loose cash known to be sloshing around? Or is the idea that the money is going to be 'loaned' to people, thereby making it 'sound' money, as opposed to money simply given away?<BR/><BR/>I have to admit that I'm still hazy on these 'assets' the BoE will be buying. Are they rubbish that no one would normally buy?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-78079756426462872012009-03-05T09:54:00.000-08:002009-03-05T09:54:00.000-08:00Anonymous - the food price rise is most likely the...Anonymous - the food price rise is most likely the recent oil spike working its way through the system.Crujientehttps://www.blogger.com/profile/06268006469183945717noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-41112625692629606832009-03-05T07:29:00.000-08:002009-03-05T07:29:00.000-08:00General, With regard to the above comments by 'Red...General, <BR/><BR/>With regard to the above comments by 'Red' about Cynicus 'insighting people' and 'making a circus' by asking readersto write to their MPs re QE. This is not how I see it. <BR/><BR/>It does not matter that 'no-one is likely to get the response' (that Cynicus, or you, or the readers themselves) 'are looking for'. The point is that by the very process of asking for such a justifiction people make the dramatic transition from passive observers to engaged citizens. <BR/><BR/>Hitting the brick wall of an MPs' token response is precisely the shock some people to impress upon them the necessity of their own involvement in getting through the hard times ahead. As such, anything that seeks to empower individuals in such a way is, in my view, legitimate.<BR/><BR/>---------------------------------<BR/>Cynicus,<BR/><BR/>It is to further debates such as this (over essentially tactical issues) that a user forum is needed.If the 'critical mass' you spoke of has not been reached then I suggest it will be very soon. <BR/><BR/>In the last week I have seen your site linked numerous times by commentors on sites as varied as the guardian, the telegraph and znet, and heard it raised in debates about the economic future of the city I live.<BR/><BR/>I think it's crucial that when this wave of interest hits (as it may have already - you have the stats I presume) there is something that:<BR/> <BR/>- gives people some ideas as to what to do with the wealth of pertinent information you present them; <BR/>- creates an easier way for the information to be accessed than just rereading through older posts;<BR/>- allows people to debate to further their understanding of the issues;<BR/><BR/>Not only a forum, but other tools, (such as wikispaces, link sharing, pamphlets, videos, etc) may also seen as necessary and, since your only one man (albeit one who manages to get a lot done in the time he has), this is where a community would be useful.<BR/><BR/>If Steve Tierney does not follow through on his original offer to facilitate this, please let me know and I will.<BR/><BR/>TAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-71281659618971204742009-03-05T07:09:00.000-08:002009-03-05T07:09:00.000-08:00Another article from Ambrose Evans-Pritchard in th...Another article from Ambrose Evans-Pritchard in the Telegraph:<BR/><BR/>http://www.telegraph.co.uk/finance/financetopics/recession/4939796/Europes-banks-face-a-2-trillion-dollar-shortage.html<BR/><BR/>The thrust of the article is that European banks have huge amounts of debt which are denominated in $US. Therefore there is demand for $US, which will stop it collapsing.<BR/><BR/>At the end of it there is a quote:<BR/><BR/><I>Simon Derrick, currency chief at the Bank of New York Mellon, said the implications are obvious. “The global bullion of the last eight years was funded on dollar balance sheets, so the capital destruction we’re seeing leaves banks starved for dollars. Dollar is clearly going to appreciate a lot further,” he said.</I><BR/><BR/>I would be interested in peoples' thoughts on this. It seems to me that this might be another thing that delays an inevitable collapse in the $US.<BR/><BR/>Regards,<BR/>JonathanAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-8110310053650525342009-03-05T05:39:00.000-08:002009-03-05T05:39:00.000-08:00On the radio over the weekend I heard someone say ...On the radio over the weekend I heard someone say that communism and capitalism were dead, primarily because they were 19thC. terms that had outlived their environments.<BR/><BR/>While true, some of the worst aspects of communism as practiced by Soviet-era goverments are still practiced today.<BR/><BR/>I believe China thinks in the very long term, so long term that it's beyond the understanding of most of us - certainly politicians who keep one eye on the next election.<BR/><BR/>The opportunity may exist for them to use the crisis in capitalism-led economies to completely reorder the world to their long-term liking.<BR/><BR/>Appealing to the short term greed of someone who knows that they may in fact own it all in the long term seems a dubious basket into which to place your eggs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-39784382372413973992009-03-05T05:21:00.000-08:002009-03-05T05:21:00.000-08:00@cynicus see thishttp://www.guardian.co.uk/busines...@cynicus see this<BR/><BR/>http://www.guardian.co.uk/business/2009/mar/05/interest-rates-quantitative-easing<BR/><BR/>smileyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-91530343986064617342009-03-05T04:50:00.000-08:002009-03-05T04:50:00.000-08:00I don't buy the $US collapse. I can see significan...I don't buy the $US collapse. I can see significant weakening of $US if economy starts to recover, but not collapse. There is four things government does that have effect on $US:<BR/><BR/><B>1. Stimulus</B> package tries to put money into infrastructure investments (human and material) and necessities. Investors understand that. These will build up the future. <BR/><BR/><B>2. Money supply</B> is artificially bloated by Fed, but velocity of money is so slow that it does not matter. Fed can scoop extra money from system within weeks if inflation builds up and economy gets out from <A HREF="http://en.wikipedia.org/wiki/Liquidity_trap" REL="nofollow">Liquidity trap</A> <BR/><BR/><B>3. Bailout</B> is the weak point of Obama administration. Instead of nationalizing them, they are given money as needed. Just like Japanese government did once. If Obama does not change course, this will create havoc and prolong recession. <BR/><BR/><B>4. Military spending</B> is constant $1 trillion/year money sink. It continues to be overlooked when there is these new spending initiatives, but defense budget continues to be the biggest drain of money (in several year perspective). Current stimulus package could be easily financed by permanently cutting military spending 10-20%. Same for bailouts. Does US really have money to spend $10 trillion in next 10 years.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-64783219405738769252009-03-05T04:28:00.000-08:002009-03-05T04:28:00.000-08:00@Red CE is asking us to question our elected repre...@Red <BR/>CE is asking us to question our elected representatives to ask for the transparency that should already be there for such a radical and potentially damaging policy.<BR/><BR/>I see nothing that incites political or other action, just asking for clarification of the policy and full disclosure so that the amount of money injected in the system is able to be accurately gauged.<BR/><BR/>You may feel that it will not get the answers in the replies, that may be true as the MPs will have to refer to official policy (when it actually comes) rather than giving uninformed opinions.<BR/><BR/>However it should indicate to politicians that there is some concern about the obscuration of the policies and that trying to make it more open to public view will ease confusion and discontent, which is something the economy doesn't need at the moment.<BR/><BR/>If CE was telling readers to write saying the policy of QE is wrong and it should be abolished, I would see your point about thinking better at running the country, but in the ways he has termed it, it is really a request for more information so can better judge the effectiveness of the policy.<BR/><BR/>I can understand your irritation at amateurs discussion things that may be beyond their comprehension if they go on to make unreasonable demands of an authority body, but I feel that this is not the case here.<BR/><BR/>If you think the sample letter could be worded in a better way, why not write your own version to show the way you feel it should be worded. constructive criticism is always welcomed.<BR/><BR/>lefty feepAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-44598467023272569552009-03-05T04:12:00.000-08:002009-03-05T04:12:00.000-08:00You may be interested to look into the increasing ...You may be interested to look into the increasing amount of barter deals being struck between Asian economies - they are trying to bypass any foreign currency at all in their dealings with each other - particularly the US dollar.Anonymoushttps://www.blogger.com/profile/11979607671826391515noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-91850523520201056842009-03-05T03:35:00.000-08:002009-03-05T03:35:00.000-08:00I wrote to my MP back on your first suggestion. I...I wrote to my MP back on your first suggestion. I'm in a lucky position, because I know my local MP well and also because he's a truly excellent MP.<BR/><BR/>I had an answer within a day, but the answer was: "I'll ask". Mainly because my MP isn't a specialist economist and would not have been able to offer any better insight than the rest of us.<BR/><BR/>However, I saw him last Friday and he told me he'd asked the question of the Powers That Be and demanded more than a stock answer.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-21609317897206118382009-03-04T16:27:00.000-08:002009-03-04T16:27:00.000-08:00Your three month prediction was stated on Jan 19th...Your three month prediction was stated on Jan 19th. In my previous comments I've balked at that, just because I believe as many others do that there are too many with too much to lose and not enough with nothing to lose to let the system fail. <BR/>However, I recognise the complexity of the macro picture and have always held that there are multifarious social and political factors coming into play which could tip the balance...<BR/><BR/>One of my eyes will be on the G20 summit... For many reasons.<BR/><BR/>One more thing... As I've said before, beyond the obvious dramatic value added to the narrative of your blog - I'm not sure what you are hoping to achieve by asking readers to write to their local MP's...?! No-one is likely to get the response you are looking for for reasons I have mentioned previously - the state is doing what the state thinks is best for the country - do you think you could run the country better? You better start learning the art of politics in a democracy if you do, and become expert in a number of other subjects besides. Do you think Obama, who Laurence Lessig has commended many times pre-public office for his ethical constitution can put the world to rights by just stepping up to the plate? Do you not think he has had to try & understand the macro-picture in its many forms and take advice where he has to? The lazy and unenlightened will no doubt eternalise the blame for this situation and seek retribution in all the wrong places and from all the wrong people, and when the riots start it will be rioting against a phantom that resides metaphorically in ourselves as the selfish, untutored individual, and physically as the fat cat banker who is now knocking back pina coladas in Tahiti... Either way its a phantom. <BR/><BR/>There is no point in insighting people in this way - it is making a circus of your otherwise brilliant blog.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-40011219002638973822009-03-04T14:53:00.000-08:002009-03-04T14:53:00.000-08:00Food price increases to date are pretty much a dir...Food price increases to date are pretty much a direct result of the devaluation of the £ against the Euro, since any produce raised or grown in the UK can easily be sold to the continent.Philhttps://www.blogger.com/profile/15334261621479728021noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-51044276189494704642009-03-04T14:38:00.000-08:002009-03-04T14:38:00.000-08:00I just found the following blog entry on the BBC: ...I just found the following blog entry on the BBC: http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2009/02/obtaining_the_right_to_print_m.html<BR/><BR/><I>That said, there are big practical differences between this policy and Zimbabwe-style money financing. The most important is that the Bank is choosing to buy gilts as a means to an end. It is not being forced to buy them because the government has nowhere else to go.<BR/><BR/>Also - and crucially - the Bank has every intention of unmonetizing the debt when the storm is past. In other words, it's going to sell it all back.<BR/><BR/>So in that sense, QE will not directly affect the stock of government debt one way or another. (Certainly there won't be any direct change to the amount of debt on the Treasury's books.)</I><BR/><BR/>She is indicating that their motives are not to finance the government. Not sure where she is getting her information from though.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-44619963157903281652009-03-04T14:14:00.000-08:002009-03-04T14:14:00.000-08:00Financial RegulationFrom the 1930s to the 1980s, m...<B>Financial Regulation</B><BR/><BR/>From the 1930s to the 1980s, most countries had vigorous and effective financial regulation (which is sometimes emotively called financial “repression” by those opposed to it).<BR/><BR/>The policies of financial regulation included the following (but did not have to include all of them to be effective):<BR/><BR/>1. Interest rate ceilings<BR/>2. Liquidity ratio requirements<BR/>3. Higher bank reserve requirements<BR/>4. Capital Controls<BR/>5. Restrictions on market entry into the financial sector<BR/>6. Credit ceilings or restrictions on the directions of credit allocation<BR/>7. Separation of commercial from investment (“speculative”) banks<BR/>8. Government ownership or domination of the banks<BR/><BR/>Ito, H. 2009. “Financial Repression,” in K. A. Reinert, R. S. Rajan et al. (eds), <I>Princeton Encyclopedia of the World Economy</I>, Princeton University Press, Oxford and Princeton, N.J. pp. 431–433.<BR/><BR/>There were no massive and destructive asset bubbles in these years. In all Western countries, there was spectacular economic growth in the real economy.<BR/><BR/>In fact, the modern financial collapse of 2008 was very much like the Scandinavian banking collapse of the early 1990s, after financial deregulation:<BR/><BR/><I>“The control of the external flow of capital was a major pillar for post-war stabilization policies [in Scandinavia] because it isolated Finland, Norway and Sweden from international financial developments, thus allowing for far-reaching domestic interventionist and selective monetary and fiscal policies. The capital account controls served as the wall behind which the central banks determined the rate of interest and the distribution and size of capital flows within the domestic economies according to political priorities …<BR/>[But after deregulation in the 1980s] bank lending could now be expanded without any binding regulatory restrictions. Banks entered into a fierce competition for market shares. A lending boom started, channelling credit to the asset markets, mainly to the real estate and stock markets and causing rising asset prices. Asset prices grew more rapidly than consumer prices. Rising asset prices formed the basis for rising collateral values, further fuelling credit expansion in a cumulative process”</I><BR/><BR/>Jonung, L. “Lessons from financial liberalisation in Scandinavia,” <BR/>Comparative Economic Studies, Dec 2008 <BR/>http://www.entrepreneur.com/tradejournals/article/191856697.html<BR/><BR/>This all ended in the Scandinavian financial collapse of the 1990s. It was a similar story in Japan, and now in the US in 2007-2008. We all know that Alan Greenspan was a devotee of Ayn Rand. He was appointed to the Federal Reserve by Reagan (also a free market ideologue), an institution that had partial responsibility for regulating the financial sector.<BR/><BR/>Greenspan gave up all pretence of serious regulation of the financial sector in the US.<BR/><BR/>This article shows that the 2 major US asset bubbles of the past 20 years could have been stopped:<BR/><BR/><I>To deal with the high-tech bubble, [Greenspan] could have increased margin requirements (the amount of cash people need to put down to buy stock). To deflate the housing bubble, he could have curbed predatory lending to low-income households and prohibited other insidious practices (the no-documentation - or "liar" - loans, the interest-only loans, and so on). This would have gone a long way toward protecting us. If he didn't have the tools, he could have gone to Congress and asked for them</I><BR/><BR/>Joseph E. Stiglitz, “Capitalist Fools” Vanity Fair, January 2009<BR/>http://www.truthout.org/121008R<BR/><BR/><BR/><B>Pre-1980s Financial Regulation and Basel I and II</B><BR/><BR/>Financial liberalization in the 1980s was associated with a shift in prudential regulation from direct regulation of banks (by, for example, regular site visits and investigations of the banks’ investments) to an indirect approach based on the monitoring of bank capital to ensure that it remained adequate in relation to the risk being taken.<BR/><BR/>Thus Basel I and later Basel II were born.<BR/><BR/>But the Basel Accords are just watered down and absurd substitutes for the serious, vigorous and effective regulation that existed before the 1980s. <BR/><BR/>Basel I and II are almost like toothless “rule books”:<BR/><BR/><I>One type of prudential standard ripe for revision concerns banks’ capital adequacy. The Basel II standard of capital adequacy, which came into force at the start of 2007 after some nine years of negotiation, marked a shift from the external regulation of Basel I to self-regulation—making it an invitation to careless behaviour and ‘moral hazard’ at a time when big banks are more confident than ever that they will be bailed out by the state. Basel II requires banks to use agencies’ ratings and their own internal risk-assessment models—both of which have been shown to be pro-cyclical and to have failed spectacularly in the run-up to the present crisis—while raising capital standards during periods of illiquidity, precisely when banks are less able to meet them</I><BR/><BR/>Robert Wade, Financial Regime Change?<BR/>http://www.newleftreview.org/A2739Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-18605713380911781392009-03-04T13:10:00.000-08:002009-03-04T13:10:00.000-08:00Food prices surge 9% despite inflation fallhttp://...Food prices surge 9% despite inflation fall<BR/>http://business.timesonline.co.uk/tol/business/economics/article5844672.ece<BR/><BR/>Could this be an early effect of money printing? I know it isn't officially started, but since the Banking Bill passed the BoE could have been doing it and we would be none the wiser without the weekly report.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-35402484232047884452009-03-04T11:13:00.000-08:002009-03-04T11:13:00.000-08:00I can see WW3 brewing.I can see WW3 brewing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-55808822898740621872009-03-04T07:18:00.000-08:002009-03-04T07:18:00.000-08:00What will China do with it's reserves?Buy real wea...What will China do with it's reserves?<BR/><BR/>Buy real wealth. <BR/>http://www.atimes.com/atimes/China_Business/KC05Cb01.html<BR/><BR/>ZedAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-25261279816521221922009-03-04T06:21:00.000-08:002009-03-04T06:21:00.000-08:00History suggests that every major economic upheava...History suggests that every major economic upheaval or change (or attempt)in the economic hierarchy results in war. USA still has the most aircraft carriers but with lots of nuclear weapons about.....?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-42642864230488702482009-03-04T05:12:00.000-08:002009-03-04T05:12:00.000-08:00Cynicus, thankyou for another great post.Far to sp...Cynicus, thankyou for another great post.<BR/>Far to speculative for me to comment on. Therefore please alow me to vent on a completly unrelated matter, for today is a significant day for my family.<BR/><BR/>I consider myself Mr slightly above average. With a Net income of aprox £2k per month inclunding insane amounts of overtime, 2 kids and a wife that stays home to bring up the kids.<BR/><BR/>Today we offically entered fuel poverty with an increase of the direct debits for gas and electricity to £101 & £114 per month. more than 10% of my income.<BR/><BR/>Dark days indead !<BR/>Time for a wood burner and veg patch me thinks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-20238779979030378632009-03-04T03:21:00.000-08:002009-03-04T03:21:00.000-08:00I've written to my MP, although I think I'll get a...I've written to my MP, although I think I'll get a very similar vague response to <I>wait and see</I> - particularly because he's a Labour MP and they've gotten very much used to comfy inaction in past years.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-19971927316409938562009-03-04T03:14:00.000-08:002009-03-04T03:14:00.000-08:00Great commentary Cynicus though I appreciate it's ...Great commentary Cynicus though I appreciate it's very speculative.<BR/><BR/>Peston's out in China and it looks like they are massively feeling the pain of this crisis:<BR/><BR/>http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/03/china_all_about_jobs.html<BR/><BR/>As you say... the world is balancing on a knife edgeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-13512808200013947292009-03-04T02:41:00.000-08:002009-03-04T02:41:00.000-08:00Forgot the link!! http://www.uscc.gov/hearings/200...Forgot the link!! <BR/><BR/>http://www.uscc.gov/hearings/2009hearings/written_testimonies/09_02_17_wrts/09_02_17_pettis_statement.phpAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-8364674437961400812009-03-04T02:38:00.000-08:002009-03-04T02:38:00.000-08:00Here is testimony by Michael Pettis, Professor of ...Here is testimony by Michael Pettis, Professor of Finance, Peking University, before the U.S.-China Economic and Security Review Commission on Feb 17 2009 entitled China's Role in the Origins of and Response to the Global Recession<BR/><BR/>I think it feeds well into your discussion on China.<BR/>All the bestAnonymousnoreply@blogger.com