Alexandre Kateb

The Quiet Grab: China's Recent Commodity Deals

I like your point about rare metals. I am going to research this Arafura company.

Thanks for the tips !

Economic Crisis: Good Luck Europe, You'll Need It

Great and accurate article, Marc.

Although being a European, and a French (but not an anti-american one, lol), I must say that I agree with you. The lack of political will weighs heavily on the Eurozone countries and the broader EU. It will take a serious crisis, to bring this political will back. I was one of those strongly in favour of the European Constitutional Treaty. But France voted against it in 2005. The EU is losing its ground in the global competition that is taking place. As is Japan. The Obama election should be a lesson for all of us Europeans. The US is back on the international scene after the shameful Bush era. In Europe, we lost our dreams. It is time to revive the European Idea.

The Great Inflation Moderation That Wasn't

Interesting view.

I would nonetheless argue that the FED follows "core inflation" which is more stable than headline inflation, and it seems to me dangerous to base a monetary policy on such a volatile cyclical measure of inflation as the one that includes mortgage payments.

The Great moderation thesis in my opinion is related to the successful management of both level AND volatility of inflation, with a focus on core inflation (i.e. inflation "through the cycle"). It owes a great deal to the credibility of the monetary policy that has improved a lot starting with the Volcker shock of 1979-1980.

The wider debate is whether monetary authorities should care about asset price inflation. I think the radical position of Greenspan et alli (Bernanke being very close from this position) that monetary policy should not try to influence asset prices probably explains the liquidity boom & busts that we have witnessed over the last 20 years.

Huge Decline in Mortgage Yields and Spreads Could Dispel Deflationary Gloom

Nice article.

I totally agree with User 55065 about the need to stabilize employment and wages before residential investment picks up again, which will lead thereafter to a recovery in home prices and a broader recovery in the economy.

I also think, as the author implicitly emphasized it, that the housing market is the KEY factor for the US economy, as it is the KEY driver for consumption. Once US consumption picks up, the whole world will recover as the US consumer will import goods from China which will buy oil from the arab countries and Russia, and machinery from Germany and Japan, etc...

Reality Hits Oil Market, Dollar Could Benefit

I agree with Georealist. From a rational economic point of view, the correlation between oil and the dollar goes from strong dollar to weak oil and NOT the opposite.

I don't know if we already reached "peak oil" but what is sure is that the world still relies heavily on oil and OPEC will control 50% of oil production in the near future up from 40% today. This is all the more true as major non-opec oil producers such as Russia (which produces the same amount as Saudi Arabia) have started to invest in oil production only in 2006-2007. This means new Russian oil output will not be on the market before a decade maybe.

Besides, the incremental demand for oil comes from China not from the US and China will consume more and more oil in the coming years. Don't get fooled by all the "renewable/clean energy" mantra. Every reasonable expert and analyst predicts that oil demand will grow considerably. Peak demand for oil will not be reached before 2 or 3 decades.

In the short term, oil demand will be reduced due to the recession and the market may overshoot on the downward side as well as it overshoot on the upward side in the summer. The price of a barel could fall to as low as 30 USD a barrel somewhere between now and H1 09 and there will surely be a lot of volatility but I expect the price of oil to bounce back to 100 USD a barel in H2 09. If I were an oil trader I would play the overshooting by selling (being short on) June 09 futures and buying (being long on) December 09 futures.

Is China's RMB 4 Trillion Fiscal Package Losing Steam?

A few comments on Michael Pettis article and the comment by Mr. Henderson

Michael, I agree with most of what you say except the argument on inflation. I think inflation is falling in China because :
1. The lagged impact of the monetary policy tightening of H2 2007 / H1 2008
2. The cooling of the job market as companies reduce their staffing needs
3. The housing slowdown which reduces rental inflation (to be checked)

Mr. Henderson, you are right in saying that only a rise in consumption can shift the chinese economy on a more robust self-sustained path, but this is a gradual process. You can't change consumption habits overnight. Savings are high because of a lack of a comprehensive social security net (healthcare, retirement benefits) and this will not be resolved between now and next year.

Don't expect any miracles from the banks. China is not the US or Europe. The banking system is dominated by a few major state banks which lend predominantly to SOEs and far less to small businesses or individuals.

What the government can do is to support the construction sector by boosting infrastructure spending and support the exporters by massively reducing taxes.