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  • More Thoughts on the Dollar [View article]
    The rise in US saving through this recession will provide some of the investment needs, I am not sure if this will be enough.

    The paradox of thrift seems to be fighting Keynesian Stimulus on the consumption side.
    Oct 30, 2009. 12:07 PM | 1 Like Like |Link to Comment
  • The Dollar as a Reserve Currency [View article]
    The manipulation of dollar by exporting countries to send goods this way, means that they have a vested interest in maintaining the value of the dollar. They also sit on a lot of treasuries priced in dollars that would also lose value.

    The dollar's downfall will come as the US share of world GDP and world trade shrink to the point where US weakness does not kill the world economy, out creates a cold that they can recover from.
    Oct 30, 2009. 12:05 PM | 1 Like Like |Link to Comment
  • You Can Spend Your Way Out of a Recession [View article]
    Prof McTeer,
    I have been a big fan, both on this blog, on TV (seen you on Kudlow a few times). I do agree that government spending is just as stimulative as private spending, the key question is if private spending joins the party at some point early enough so that the debt burden that Govt. undertakes in priming the pump is sustainable beyond the recovery.

    China was able to prime the pump because of the excess reserves they have accumulated. Japan is priming inspite >100% Govt Debt/GDP, should they be doing it.

    Can the US debt get beyond a point where the debt burden exceeds the stimulative effect?
    Oct 30, 2009. 11:30 AM | 1 Like Like |Link to Comment
  • Investing in South Africa's Recovery [View article]
    The lack of consumer development is also part of the political risk for South Africa. The situation in Soweto (JoBurg slum) is illustrative of this issue. There are a lot of have nots that are not happy with their lack of economic progress, as Jacob Zuma's election illustrates.

    How this plays out is anybody's guess? I am hopeful for a slow development of a consumer economy built by broad income growth, but I am wary of political trouble and do talk to my relatives in the country for a headsup
    Oct 27, 2009. 04:36 PM | 1 Like Like |Link to Comment
  • Two Strong Africa ETFs [View article]
    I would also look at GAF (I own it) because of the length of history will give some comfort from a risk standpoint. The drawback is that it is primarily invested in South Africa & Isreal and doesn't give you broad representation like AFK will.
    Oct 27, 2009. 04:30 PM | 2 Likes Like |Link to Comment
  • Two Strong Africa ETFs [View article]
    I grew up in Nigeria, so always like to hear analysis on Africa. The real question for Africa is institutional development, rule of law. Nigeria has a lot of money coming in but very little accountability. It also has over 100 million consumers but the consumer markets are fragmented and not well organized.

    If an entrepreneurial class could develop and the corruption tax ('Dash') moderates then a real economic explosion could happen. The development of a middle class has been slow and not helped the growth of mass markets. The agriculture sector saw massive erosion as the oil economy developed.
    Oct 27, 2009. 04:25 PM | 1 Like Like |Link to Comment
  • In a wide-ranging interview with Index Universe, Nouriel Roubini says he doesn't believe in commodities ("rising commodity prices are not justified by the fundamentals"), oil ("I worry that oil is going to go up above $100 for reasons that have nothing to do with the fundamentals of supply and demand"), or gold ("without inflation, or without a depression, there’s nowhere for gold to go").  [View news story]
    Jeff,
    Roubini has never recieved the Nobel Prize.
    BC
    Oct 26, 2009. 02:31 PM | 1 Like Like |Link to Comment
  • Niall Ferguson: Dollar Is Doomed, U.S. Empire Over [View article]
    Brick,
    I am encouraged by the very modest uptick in capacity utilization over the past 2 months. But I do share your concern about the degradation of skills and human capital as the short term unemployment stretches to a long term unemployment problem.
    Something needs to be done to retrain or remploy these people before they become the permanent free riders and hold back the economy, I agree with Bill Gross's concern on this point.
    On Oct 21 11:12 AM bricki wrote:

    > I think that the view that the devaluation of the American dollar
    > means the fall of America is cart before the horse. The strength
    > of the dollar derives from the productivity of the US economy, not
    > the reverse.
    >
    > Yes it is quite the case that our fiscal house is not exactly in
    > order. However that is not a unique occurrence in American history.
    > It has indeed happened several times that the dollar has had to be
    > devalued, taken off the gold standard and so forth. During the 19th
    > century there were cases where we even ran completely out of gold
    > and had to borrow some.
    >
    > Other empires have also gone through crises of this nature and done
    > fine.
    >
    > The issue here is that we have poor capacity utilization. Unless
    > that is reversed we will lose significant productive capacity. That
    > will be hard to recover.
    Oct 21, 2009. 01:20 PM | 3 Likes Like |Link to Comment
  • Krugman: Recession is Over and Trade is Worse then the Great Depression [View instapost]
    Micheal,
    The crux of the decoupling argument as I understood it was that domestic demand in emerging countries especially in Asia was growing with rising incomes and would lead exporters to look inwards and supply these markets versus the excessive dependence on the slow boat to America that opened them to severe outcomes when the American consumer pulls back.

    The evidence has been mixed from this recession. While their exports did crash and burn, some of the chinese demand did pull Asian economies up, along with continued increases in domestic demand.
    On Oct 15 06:38 AM Michael Clark wrote:

    > Oxymoron: a combination for epigrammatic effect of contradictory
    > or incongruous words (as cruel kindness, laborious idleness).
    >
    > Clearly there is NO CONNECTION between global trade and economic
    > health. Perhaps this is the legendary 'decoupling' we have been told
    > for years now was occurring. (I think the decoupling is actually
    > between rationality and wishful thinking. Rationality is now the
    > empty house; and wishful thinking is on that slow boat to China.)
    Oct 15, 2009. 11:05 AM | 2 Likes Like |Link to Comment
  • Krugman: Recession is Over and Trade is Worse then the Great Depression [View instapost]
    John,
    Thank you for your reasoned comment. I was first introduced to Krugman by a conservative economist at U of Chicago, who was a big fan of his work on international trade, not so much of NY times columns. I also had a class where we used his textbook on international trade.

    He definitely has Keynesian impulses but much of his writing doesn't quite fit that bucket. He has studied the mechanism of international trade, the role of deficits, role of specialization, monetary flows. He is probably the authority on Globalization and its effects.

    He is definitely a cheerleader for liberal economics.

    I hear your point on financial engineering. But I would add that we could go back to the simple world from the turn of the last century, where you applied for a loan at the bank and got approved for it (or not). Adding credit swaps does allow risk averse investors to hedge against the loans they provide, this probably increased the funding of new startups, emerging technologies. The problem was when these instruments started being used as trading vehicles for the proprietary desks at investment banks. There needs to be limits put on this activity to reduce the level of speculative versus investment activity, to avoid the overinvestment & bust cycles.
    On Oct 14 03:12 PM John Lounsbury wrote:

    > Commenters - - -
    >
    > Krugman is a conflicted "liberal" economist. He is an avowed Keynsian.
    > He is also an independent thinker. That leads to some unexpected
    > opinions and conclusions. On the bottom line, he is data driven and
    > that keeps him grounded. He can wander off the track I tend to follow
    > with data, but he always seems to stay logical. That means he can
    > be reasoned with, which is a valuable characteristic of which some
    > economists with labels don't have a very long supply.
    >
    > One place he has settled, along with Simon Johnson, James K. Galbraith,
    > William Black, Joseph Stiglitz and others is a place I came to at
    > the beginning of 2009. That place is the one that is calling for
    > a reintroduction of the principles of capitalism to financial markets.
    > It is a place where the capital markets compete to intermediate the
    > financing of production and commerce and do not use up capital to
    > trade securities and create more "money" through credit instruments
    > that serve no real purpose beyond producing "creation" fees and a
    > larger artificial trading market.
    >
    > This means separating commercial and investment banking. This means
    > regulating interdependencies that create the opportunities for stacked
    > dominoes to develop. This means assuring (through regulation) that
    > capital markets are competing to provide financing for production
    > of things of utility and commerce involving such items. Derivatives
    > with values orders of magnitude greater than the underlying real
    > assets provide no value to the world outside of the financial engineers
    > who create and trade them. There must be some optimal relationship
    > between the total nominal value of derivatives and the value of the
    > underlying assets. I don't know where that level is, but I am quite
    > sure it is not 1000 times (or more), which is where we have gotten
    > to.
    >
    > This entire area is one of great research potential. Done properly,
    > it could well be Nobel Prize quality work. I wish I had the capability
    > to tackle it. The most I can probably contribute to this is to be
    > a cheerleader.
    >
    > Thanks for letting me clutter my own comment stream with a rant.
    Oct 15, 2009. 10:59 AM | 2 Likes Like |Link to Comment
  • Three Ways to Gain Exposure to South Korea's Boom [View article]
    Should the continued improvement in global trade fizzle, S Korea is going to be in a lot of trouble.
    Oct 14, 2009. 04:06 PM | 1 Like Like |Link to Comment
  • China Scrambles for African Resources [View article]
    Angola is in Southern Africa next to South Africa and is not a neighbor of Guinea which is in West Africa. Same continent but a long way apart.
    Oct 14, 2009. 03:48 PM | 2 Likes Like |Link to Comment
  • US Dollar: "I'm Not Dead Yet!" [View article]
    Russia is projected to loss nearly half its population by 2050. Not a recipe for economic vitality. For Europeans to supplant the US and US dollar they will need to stop their petty squabbling and drop centuries old animosities.
    My detailed post on Russia
    seekingalpha.com/insta...


    On Oct 07 07:53 PM ryanclarke wrote:

    > You wrote, "The yen will suffer for years as Japan heads into demographic
    > decline and large structural budget deficits." ... and thus the U.S.
    > will still remain the world's reserve currency. Not according to
    > the Euro nations, Mr. Merkel. And Russia, economically, is in a far
    > better position than most Americans think. The Russian economy is
    > a net exporter of oil and gas ... and the Euro nations need that
    > oil and gas. What's happening right now is the world waking up to
    > the fact that California's tech gizmos haven't improved much since
    > the late 1990's but the United States thirst for foreign natural
    > resources hasn't abated in the slightest in ten years. The ability
    > to "transport" via use of "hydrocarbon explotation" has until recently
    > been assumed to be practically free in terms of dollars. Now, unless
    > the U.S. can produce new technology to demonstrate such is the case,
    > you can rest assured the world is going to reprice the dollar.
    Oct 14, 2009. 03:38 PM | 1 Like Like |Link to Comment
  • US Dollar: "I'm Not Dead Yet!" [View article]
    Part of running a trade surplus is that you end up with surplus of whatever country you are running the surplus with. You can choose keep it with 0% interest or invest it (your choice as a country) through debt of some form and get interest.

    On Oct 07 11:43 PM surfgeezer wrote:

    > Well David, I disagree and would like you to explain
    > " Whatever country of our world has the status of reserve currency
    > must issue debt"
    > I in fact factor debt as a negative when making currency trades and
    > do not see the connection between reserve currency status and budget
    > deficits, other than it is easier (less interest cost) to fund the
    > debt.
    > I do agree-"It does not matter what currency crude oil trading, or
    > any other trading, is denominated in; it does matter in what currency
    > the proceeds from the sale of crude oil is invested in."
    > In fact a major part of being a reserve currency is the stability
    > and who would choose to invest in a negative investment, unless of
    > course you wanted to keep your currency artifically low. A trading
    > partner does not have to keep the profit anywhere, they may choose
    > to as a way to keep their prices relatively low but the cost of not
    > keeping it at home is a loss of capital for investment at home.
    Oct 14, 2009. 03:30 PM | 1 Like Like |Link to Comment
  • US Dollar: "I'm Not Dead Yet!" [View article]
    US dollar will become less important once the share of US in global GDP, Investments and trade decreases as the share of other countries increase.
    Oct 14, 2009. 03:26 PM | 1 Like Like |Link to Comment
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227 Comments
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