Asbytec

G20 Urges 'Balanced Global Demand'; China Says 'No'

Hey, got several useless umbrellas I'll let go for cheap...no, you can just have them. I am sure you won't complain, as you're apparently above such behavior..well, except for bashing yanks.

There is a difference between stating fact and whining. Learn that difference, because the one you attribute to my post is a childish one. It's the way you see the world, though childish eyes. Trust me, it shows.

On Sep 28 01:00 PM coreopsis wrote:

> Whine...sigh...always like to see Yanks doing what they do best...whine
>

G20 Urges 'Balanced Global Demand'; China Says 'No'

On Sep 27 12:05 PM kinky wrote:

> To Asbytec:
> They produce in mass what the world order, we wanted >cheap,why they have to bother with quality. You better direct your >comment to the middle men and why not to Wall Mart? Buying >cheap only cost you more in the long run so it is time for you to >start looking at an not cheap umbrella which I hope you can find
>or you can afford . Why it is when producing counterfeit they are
>excellent?
>Our taking too many vacations while they were sweating >unstoppable to satisfy demand did pay for them. Trade will be >imbalanced as far as is paid with fiat money or credit cards.

Okay, some good points. I have heard it argued, and agree, we...the middle men...have imported cheap goods to 'hide' inflation. This is us doing it to ourselves with their help. Our trade relations is a dissertation in itself covering gluttony, debt, bubbles, you name it.

I live in Asia, not the US. I suspect the products the US (middle men) import are of descent quality, as I remember. I've bought fishing gear from Walmart and got many years of good service from it.

It's apparent umbrellas imported here are not. Here, at least, it's bad. I shudder to by stuff made on mainland China, but often have little choice. Most of the stuff sold here is manufactured there and dumped here. The markets and malls are jammed with such stuff. I'd love to buy a descent umbrella, to find one made in the US.

I have heard, but have not collaborated, there exist different export quality standards for developed nations and emerging nations. It appears to be true.

No doubt they are making great strides as a manufacturing nation, building a middle class, and playing hard ball on free trade. (Korea see's China's trade practices as a model for success.) In fact, we have allowed, no, we've welcomed such a relationship. We are reaping the whirlwind today: a collapsed financial system that is (consumer) debt heavy, severe current account deficits (one of the twin pillars of doom), and (the other pillar) funding our public debt.

This is the part of our current crisis I hope and pray 'corrects' in a big way. We become less debt reliant, both public and private, and we balance our trade more closely. And for China to say, "No," demands a response. This is the root of my tongue-in-cheek comment to make them buy their own umbrellas. Let them get wet when their umbrellas fold up during a microburst.

G20 Urges 'Balanced Global Demand'; China Says 'No'

I wish China would buy their own cheap stuff...I am tired of replacing umbrellas every week.

Dollar Worm May Be Turning

I have been a dollar bear for the last year, despite the severe chastening here in SA. The latest developments do make one (re) think. But, we gotta remember, though, deflation is still afoot. So, who knows, really. Just gotta remember we're in a rally, not yet a recovery.

Of course this says the dollar should recover based on any flight to safety. But, as a fundamental, being a safe haven currency doesn't say much for the green back. It should have it's own intrinsic value.

It's not comforting to know our (fiat) store of wealth (and I use that term loosely) maintains its value based on fear of everything else. But, with near zero interest rates, fears of (hyper) inflation, and huge trade deficits...what else does it have? <sigh>

I'd be curious to know how the new global financial regulations affect global liquidity. I hope it tends to strengthen the dollar based on a smaller supply. That would be sweet.

Stocks, Bonds, Commodities and Currencies: My Predictions for 2009

Sean, thank you for the clarification. Yes, many indicators, like unemployment, are lagging indicators.

Ron, I believe you're right on both counts. And furthermore, it will be a good long time before anyone buys MBSs...at least in their current form. There will probably be some regulation and rules on transparency forthcoming. Also, on CDS and other instruments. Especially, in the light of the Madoff scandal.

Personally, I hope this means the Fed will actually govern (tighten) the money supply produced on such instruments. If so, I suppose this will mean lower credit limits for many consumers and tighter credit all around. I guess that will be a good thing.

Stocks, Bonds, Commodities and Currencies: My Predictions for 2009

So, let's see. The Fed has reduced interest rates to zero and is flooding the banks with money. That hasn't even begun to slow our descent into recession. Jobless claims are way up.

And, there is deflation (at least targeted deflation.) Banks are hoarding cash despite Fed's attempts to force them to lend. But, they are not lending and folks aren't borrowing, especially in the all important housing market.

We're firmly in recession and losing jobs with falling home prices. Banks are strapped and don't trust each other. The Big 2 are forced into restructuring and may have a plan to do so in 90 days, but will not be near implementing such a plan. Does this sound like something we can just "snap out" of by mid 2009?

Even if the credit markets begin flowing by June, what about the looming period of (hyper) inflation? Man, we have a long way to do and a lot of work to do before things stabilize.

Greenback's Slumped on the Canvas

Hmmm...the 19th century belonged to England because of it's economic and military empire. The sun never sat until the 20th century. The US, same economic and military empire in the 20th century. Will china have some global military reach this century?

I imagine China's resources are largely untapped and it has massive human resources. It's production is unequaled today. But, one problem is China has not a sufficient middle class, yet. And is still, best I can tell, a command economy (with a free market interface.)

Interesting thought, though...

Greenback's Slumped on the Canvas

The "beggar they neighbor" has begun. Has the eventual collapse of all (most) fiat currencies begun as well? "All fiat currencies fail, and all currencies are fiat."

It's like having that root canal, it'll hurt but not after it's over. And when it's over, my bet is the dollar will be on the top of the heap. I think most central banks believe that, too. I suspect that's why none bought into the euro in mass while it was $1.26. Sure, there is some diversification...but not a wholesale flight from the dollar some have speculated.

Scary times. The greenback is certainly on the canvas with the euro moving in for the choke hold. But, the euro just does not have the demographics or might to supplant the dollar. The EU could never support huge trade imbalances with China.

The Declining Dollar: Can It Be Saved?

Well, whether the system is broken or not is arguable, but it is over stretched at this point in any case. I, too, feel it must correct. And by correct, I mean collapse.

And we might just need a new system. Sure. But, when this one reboots, it will be good as new and run it's course for another hundred years.

But, all is not said and done for the dollar. Man, I don't feel like repeating myself from other threads...

And I'd make one distinction with Bosun, it's not extremist capitalism, it's extremist financialism that brought us to where we are.

Dollar Could Be Headed to 13 Year Low Against the Yen

One more thought: Think the euro zone can survive valuation of it's currency in a global recession? Think again. It's rosy economic indicators will be hit. Downside risk to growth in the EU are real.

Dollar Could Be Headed to 13 Year Low Against the Yen

The recent dollar decline is due to many factors. First, the libor rate has decreased demand for the dollar. And risk aversion has given way to yields, so the euro has become more attractive as the ECB signals little room to move on interest rates.

This will change. The ECB will most likely have to cut rates, despite the better than expected economic data. The new year should trigger a return to risk aversion.

Dollar Could Be Headed to 13 Year Low Against the Yen

Ganesh, the Fed is printing power money. This is but a fraction of the global liquidity....in teh ball park of 10%, even with the recent injections.

The yen carry accounted for around 8% of global liquidity. This is now all but gone. Derivative money and the multiplier effect on this money...now winding down...just in the housing market alone is enough to bring the world to it's knees. And the housing market is but a fraction of total derivative money (75% of global liquidity) out there.

The dollar is disappearing into the very thin air it was made from faster then the Fed can compensate.

Dollar Could Be Headed to 13 Year Low Against the Yen

Toffe, the euro will not be the world's reserve currency. China will not dump dollars.

First, the euro demographics make for a poor reserve currency. Europeans are getting older and will not have the economic might to retain reserve currency status.

Second, the EU cannot support huge trade deficits with China. The euro would go through the roof. The EU could not take the valuation and still maintain export competitiveness.

Third, China pegs it yuan to the dollar. It does so to maintain low prices exported to the US. If it released dollars and bought up yuan, the yuan would soar and export prices to the states would sky rocket. China also has a policy of not converting dollars to buy yuan, but to print yuan to buy dollars. How do you think they got so much reserves int eh first place?

Can Central Bankers Prevent a Great Depression?

As for the Chinese stimulus, we should be doing the same thing. We could use some bridge repair and jobs.

As for falling home prices, I guess the solution to that is full employment and flowing credit markets. But, we wont see flowing credit markets until home prices settle. I don't see an end to this catch 22 anytime soon.

It's semantics, but the financial system, in my view, is not so much broken as it is abused. When times were good and American were feeling richer through rising home values, well, regulators just turned the other cheek. But, who can blame them, really. We can wish they had tempered the bubble, in retrospect.

And, as the author stated, it should be not only telling, but a warning, when a simple US housing market down turn brings the global economy to it's knees. It really is almost criminal.

China has been hit by a couple of whammies. First, as noted, reduced trade resulting from the crisis. But, also, from lost confidence in it's exports, tainted milk being only the most recent. Furthermore, despite the decoupling arguments, China does not have sufficient domestic demand to ride out a global recession. I believe they will falter along with the rest of us. They have just ended a period of tightening and, as mentioned in the article, appear to be poised to ease as needed. That's interesting.

While we're on the subject, apparently Obama is next in line to persuade China to let it's currency float. I hope he's successful, but am pessimistic. China is a command economy with a free trade interface. I do not believe they will play by free market rules, regardless. They accumulated around $2trn, I believe is the latest figure, in reserves and have become a major player in the lending game. I am sure that suites them just fine.

The US consumer is certainly in trouble, but some deleveraging is a good thing for us...in the end, anyway. If the big 3 go belly up, well, does anyone see a recovery by June? I suspect unemployment will increase through most of 2009.

As for Greenspan, right on. He knew this crisis was approaching, too. He bailed (pun intended) at the peak of his popularity. I hear a lot of folks blaming the Fed and, by extension, Ben and crew. Well, forgive Ben while he opened his proverbial bag of .... left to him. He's been very aggressive and creative since. He's had to be, until recently he's been the lone dog in this fight.

Anyway, it's a very informative article, thank you. I find I'm simply repeating myself and the author without adding much. So time to call it a night and check the dollar index.

Can Central Bankers Prevent a Great Depression?

Anyone seen Adam Smith's invisible hand?

I suspect it's been chopped off at the elbow and held captive in a damp wall street cellar. It's been replaced with a robotic hand that does as it's told.

Some brandy sniffing Harvard types are sitting around their exclusive lounge while immersing their cardigan sweaters with cigar smoke and hitting the "chop the little guy" button.

Oh, what a laugh that's gotta be...