Spook

'The Crash of 2008 and What It Means' by George Soros

The Alchemy of Finance (1994)


> As I recall, Soros's Theory of Reflexivity pre-dates this book. I
> recall him outlining it in the late 90's.

'The Crash of 2008 and What It Means' by George Soros

People hate it when you are correct and proves them wrong, the whole market was betting the other way around, Soros sound out a warning that few people listen to, and when it happen, they don't really appreciate it.


> This is a guy I have never understood why people hate. he takes his
> position, makes it public and explains why. rogers, Buffett, Soros,
> einhorn,shiff, Faber. along with others. they have been successful
> over many years doing their own thing and bucking tradition.

'The Crash of 2008 and What It Means' by George Soros

It will be easier to understand Reflexivity in his book "The Alchemy of Finance".


> thanks for the review - I also read (or tried to read) “The Crash
> of 2008 and What it Means”
>
> you are correct. the books is painfully difficult to read;
>
> I would pass on Soros book - it is at the bottom of the list of investment
> books to read

Yet Another Huge Economic Number Coming out of China. Hard to Believe

Group of Chinese businessmen were is Taiwan in the last few months buying everything, take for example LCD panel, consumer sales in US were down, yet LCD panel maker in Taiwan are very optimist about the second half of 2009.

What people outside Asia normally see are the trend in cities like Shanghai and Beijing as well as the slump in pearl delta, but there are developing cities elsewhere in China were consumer spending is up a little.

I agree with Mark that people who never step foot in China does not know China well enough.

The Iron Ore War

All news were only reporting about the arrest of Rio Tinto employees, yet Reuters reported "The head of the iron ore department with the foreign trade and investment unit of state-owned Chinese steel company Shougang Group has also been detained, newspaper reports and a Chinese steel industry executive said on Thursday."

So it seems that Rios employee in Shanghai was able to gain privilege information for them to walk away from a $19 billion deal and deal with BHP instead, as well as not giving in on the iron ore discount days before.

If this spying case prove to be true, Stern may be able to go back to Australia unharm, but the head of the iron ore in Shougang probably will be execute, and the future business relation between Australia and China may not be as cozy as before.

Can China Do Without the U.S. Dollar?

Economic landscape have change lately, Taiwan just open up trade with China after 60 years of ban, guess what? Chinese buyer are already all over the island on buying spree, not for re-export, but for local consumption in China.


> Ha! Spoken like a true Chinaman. ;) Never paid for products?
> What PRC lies are those? FACT: Over 60% of EVERYTHING made in China
> is for other nations! You don't own any of it! So when U.S and
> European companies pull out of China and don't have anything made
> there anymore...let's see how great you think China will do then.
> The China MYTH is coming out in the open now....and your corrupt
> government knows this and is trying to do what they can before it's
> too late. Read a book: "Poorly Made in China."

Can China Do Without the U.S. Dollar?

Even if commodity price increases and cost of living and living standard in China go up, US wages will still be more expensive than China.

Also with much of the high volume manufacturing base already in China, Vietnam, India, Mexico, the only manufacturing in US will be the low volume, niche or for US consumption only.


> China's internal demand will eventually replaces the export based
> system. The trouble is that the huge internal demand will also push
> up the cost of commondity. It will also push up the China's labor
> cost. There will be less demand wroldwide for China's expensive goods.
> I welcome this development. US manufacturers will finally have a
> chance to compete. Americans' service based economy will be balanced
> with manufacturing industries. It means our grandchildren will have
> jobs. There is no need for US to play world cop, and world banker.
> All we have to do is to mind our own business. Our children and grandchildren
> will not risk their lifes to save the world. Let the rest of the
> world to fight it out.

Chinese Retaliation - Detained Rio Executive Should Make Us Nervous

Agree with what Canadian Re..... says, news only state of 4 Rio employee being arrested and no mentioned of non Rio personnel. If the Stern Hu is indeed stealing state secret, then there must be an accomplice who have access to state secret, whoever this person may be is probably being sentence for execution.

But lets look at this as "what if this is a real case of spying?",
* February 12, Australian stimulus plan fail in senate,
* February 13 China announce a $19.5 billion bid, the same day Australian senate pass the stimulus plan,
* March 25th, Australian government approved Chinalco bid,
* June 5th, the Chinalco-Rio Tinto deal collapse,
* June 30, the iron ore price negotiation between China and Australia pass without a resolution
* one week later China announce it will stop stockpiling of iron ore
* following day, China arrest 4 Rio Tinto employees

Too coincidental? somehow Australia must have known some critical information in order to walk away from all these deal.

Amazon Drops the Price of the Kindle 2 to $299

My thought on this. Last Friday, Prime View International (元太), provided a routine business update, second quarter is strong, but the key information is their projection of a strong EBook reader business in third quarter this year.

For those who may not be aware on what I was talking about, Prime View International is a Taiwan publicly listed company, who acquire E-Ink Technology last month, Prime View is also known to build Amazon Kindle and Sony EBook Reader. Taiwan public company are require to provide report to Taiwan SEC before every 5th of the month.

Prime View stock went up these few days as investor is anticipating a strong third quarter and possible strong EBook business.

Which to my translation is, Prime is gearing to build a lot of EInk for EBook use, they are the first of the supply chain to see how this business will be, next to see an increase in business is the system supplier as Taiwanese call them, in your term is the OEM vendor, finally follow by a pick up in business from companies like Amazon, Sony or Hanlin, unless Google join the fray.

Back to the subject, Amazon may be anticipating a surge in supply, in order to accommodate this supply without incurring high inventory, Amazon will need to drop the price of the 6 inch EBook.

Gazprom's Recent Deals Should Be a Red Flag to the Rest of Europe

Which is why China and Kazakhstan proceed to complete the pipeline connecting the two countries, China knows that Russia will let China and Japan compete one another over energy, by having direct link to Kazakhstan, the reliance on Russian oil is less. Now you have a Russian who owes China billion of debt irrespective if they deliver the oil for the next 20 years.


On Jul 02 10:38 PM Moon Kil Woong wrote:

> Thanks for the article Craig Pirrong. Europe has always been reliant
> on others for fuel. This is much better than them doing things like
> getting it from Iraq after imposing sanctions on them with the US.
>
>
> So let's just forget Europe in the equasion. Why is Russia which
> has more oil than it can use shopping to get more? Russia seems to
> have the desire to become it's own sort of mid-East OPEC without
> all the bickering (a monopoly not an oligopoly). they have Europe
> and Chinas appitite for the black stuff seems only to be growing.
> Over in the east they have been playing off China with Japan over
> a pipeline for years now. They too are learning Russia's contract
> commitments mean nothing.
>
> Russia's contracts more often than not merely mean they honor them
> when it's there best interest and revoke them when they can get a
> better deal or don't want them any more. What do you expect. Gazprom
> is state run. It's founder is in jail due to the exact type of crooked
> political dealing which anyone negotiating with Russia must deal
> with. This makes you wonder why you should make a deal with Russia
> at all. The answer is usualy, because 1) you have no choice or 2)
> they gave you an offer you can't refuse (although it is also probably
> too good to be true).

Japan Defends Dollar’s Status, China Tears It Down

The last thing you want to offend a Chinese when dealing with them is to let them loose face, recent Rio Tinto rejection vote against Chinese foray, then the strong stance in iron ore price reduction will speed up the Chinese move against western currencies.

However, it will be very interesting if there will be a study on which countries will be affected if US dollar will not longer be the supercurrency.


> I think you hit the mark on that one. The Chinese have been trying
> to buy natural resource assets for years. The latest salvo is the
> Repsol YPF overture in Argentina.
>
> But way back, there was the Unocal decision - completely unjustified.
> It was protectionism plain and simple. Then came the Rio move -another
> slap in China's face. And I should point out that the Germans have
> done a number of things which makes clear they don't want Chinese
> money either. So, it isn't just Anglo-Saxons doing this.
>
> The Chinese are pretty fed up with all of this. It is no wonder
> they are now viewing their western currency reserves as sunk costs
> and looking to a new monetary regime.
>
> Remember also that Russia and China will make things ugly at the
> U.N. for the U.S. on issues like North Korea or Iran unless they
> get traction on this issue.
>
> It would be wise to remember the failed deal between Chinalco and
> Rio Tinto. The Chinese were deeply insulted by the rejection of their
> proposal and it must impact their decisions on building foreign reserves
> in any currency, if the Anglo-Saxon economies are unwilling to allow
> them to buy strategic assets.
>
> As it stands they must feel that Western governments are playing
> them for fools, as they suspect the Fed, and several other central
> banks intend to inflate their debt problems away and yet they find
> themselves blocked from buying the natural resource assets they need
> for their own economic growth. They may be using the leverage they
> have with the US to prevent this continuing.

China Signals End of Commodity Stockpiling

Agree with CautiousInvestor, China have been hoarding commodities when recession hit, with 2 trillion in reserve, it can afford to buy all the raw materials available.

But isn't it coincidental that China will stop hoarding raw materials 4 days after talk with Rio Tinto on iron ore price cut failed to materialized?


> All of the dry bulk containers ships are bound for China, with demand
> arising from strategic stockpiling, stimulus spending and speculation.
>
>
> Surprisingly, in my view, this has been viewed as an indication of
> economic recovery when it is clear there is no final demand beyond
> China's borders.
>
> China' State Board, who is anything but dumb, will not continue to
> compete against itself and bid up prices in abundant commodities.
> And speculation owing to stimulus lending spilling unto the hands
> of arbitrageurs is certain to end.
>
> Together these developments will remove the pricing floor beneath
> the commodities China has been hoarding.

A Look at U.S.-China Trade

Agree with David, not a China problem, more with US long term problem.


> I am a little puzzled why America sees this as China's problem.

A Look at U.S.-China Trade

Nothing to export, perhaps those who are heavily involve in China market must have heard the "M Project".

Every growth opportunity right now in China are based on new design, development for China market, low cost, decent quality and with huge volume.

If US is going to expect to export its way out of the recession, it will need to adopt in the manner how Chinese market work. Taiwanese manufacturer are already in this M Project bandwagon.


> Thanks for adding the comments. I assume from what you said you are
> actually in China.
>
> What do those percentage numbers translate into as units? I know,
> owning shares of China Mobile, I always blink we I see the numbers;
> in the case of China Mobile, they have more subscribers than there
> are people in the U.S.
>
> Is there enough exports to support healthy internal growth in China?

A Look at U.S.-China Trade

I agree, its a long bumpy and winding road ahead.


> Please don't misunderstand, I'm one of those who believe that China will become an increasingly large force on the global stage, but the road is long, and rather bumpy.