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RedFxTrade
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views from a couple of locals ......
Marc Faber: Why I am bullish on gold
http://www.commodity...-39728-3-1.html
jim Rogers: US Is Nearing Even Worse Financial Crisis
Great Rogers interview, cheers. I heard he was short JP Morgan a while back...it kind of confirms it when he said its the one that has not went down as much as the rest. The Tech call is hard to argue with also when you look at the rise of Twitter, Facebook, Linkin and Groupon against the valuations place on them...He has also stepped into buy the USD for a rally...its good to hear from my point of view....however, as soon as the fall comes, possibly before it, it will be time to bail the ship...talk of major investment banks selling the CHF on the wires this morning, which would explain the spike up in the USD in the last hour.
Anyone here looked at the water investment as related to China and India...? There could be some stocks in that area, that could be potentially explode.?
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Chris M is good. I must read more of his stuff as I have always enjoyed what I have read.
I think this is possibly my favourite blogger. His posts are long, but superbly written, and a very indepth analysis is made. Lots of effort is put into his posts. Pater Tenebruam of the ActingManblog, at the link.
Fighting A Rhetorical Rearguard Action
As a result of the ever more evident failure of his money printing exercise to produce anything beside overvalued stock prices and soaring commodity prices, Ben Bernanke is now forced to fight a rhetorical rearguard action. The speech he gave yesterday was basically a slightly extended and embroidered version of the past 20 or so FOMC statements. A summary of the salient points has been provided by Marketwatch.
As a slightly more expansive report on the speech notes in its preamble:
“Federal Reserve Board Chairman Ben Bernanke said Tuesday that he is not in the camp of economists worried about a double-dip recession as he defended the central bank from accusations it’s fueled a boom in commodity prices.”
In short, Bernanke is either as dense as a fence post, or he's pulling a JC Juncker on us. As we have previously noted, the Fed's quantitative easing program has done far more than just 'increase excess bank reserves at the Fed' as many defenders of the exercise would have it. The most commonly heard argument is that since these bank reserves remain for now sequestered on the Fed's balance sheet and it doesn't seem likely that private sector credit growth will spur the 'money multiplier' into action, the Fed's activities have been neutral with regard to money supply inflation. This is belied by the fact that the true money supply TMS-2 is currently up almost 43% since the beginning of 2008.
The broad US 'true money supply' TMS-2, as per Michael Pollaro (for a definition and detailed explanation see here). This measure stood at $5.3 trillion as at January 1 2008. Today it stands at $7.574 trillion, an increase of 42.9%. Since January of 2000, the true money supply has increased by 151%. It has been the biggest monetary inflation of the entire post WW2 era in such a short time period.
Evidently then, the Fed has done precisely what Ben Bernanke said it would do when he was first interviewed on the topic of 'QE' on '60 minutes'. It has printed plenty of money. If you wonder how this feat was accomplished in the face of private sector credit deleveraging, consider that the Fed buys securities not only from banks, but also from non-banks, which increases both deposit money (i.e., perfect money substitutes) and bank reserves concurrently. In addition, the banks are not as idle as is generally supposed. They are reinvesting the proceeds from 'QE' by buying more government securities. Thus, although the debt monetization by the Fed bypasses the treasury (it is not allowed to buy treasury debt directly from the government), it finances the government's spending excesses indirectly, via the detour of the commercial banking system and other market participants that receive checks from the Fed in the course of QE (for details on the mechanics of QE, we refer you to an earlier article). We mention all this mainly to make one point perfectly clear: there has been inflation, and lots of it. When Ben Bernanke references 'inflation', he talks about the rise in consumer prices, but that is not what inflation is. Inflation is the increase in the supply of money. Rising consumer prices are just one possible effect of inflation, and not the most important one.
The defenders of inflation as a viable method of combating recessions should therefore explain how it was possible that the decade that has brought us the worst economic performance since the Great Depression coincided with the biggest monetary inflation since WW2. If inflation worked as a panacea that 'fixes' the economy as they assert, then why has the exact opposite happened? Evidently their theory has a major flaw – and the same obviously goes for the defenders of deficit spending (more on those further below).
Hence the rhetorical 'rearguard battle' Ben Bernanke is forced to fight these days. He has inflated the money supply massively and has nothing to show for it. Hence his assertion that the current slide back into recession is of course only 'temporary'. As Marketwatch reports further:
“Although he acknowledged the economy has been surprisingly weak so far this year and there have been recent signs of a loss of momentum in the labor market, Bernanke was sanguine about the outlook, saying that both jobs and growth would pick up in the final six months of the year.
“I expect hiring to pick up from last month’s pace as growth strengthens in the second half of the year,” Bernanke said in a speech to international bankers meeting in Atlanta.”
Home prices have just slipped to a new low, employment is weakening again, the ISM diffusion indexes are plunging – but don't worry. Bernanke just knows that all his money printing must have worked somehow. Indeed, it has. It has distorted the economy's productive structure further and thus weakened the economy structurally, while creating an all too brief illusion of 'recovery'. How Bernanke knows that 'growth will pick up in the second half' he didn't say. Given his forecasting track record, we can take this assertion almost as a guarantee that a recession is all but imminent.
The report continues:
“Overall, the economic recovery appears to be continuing at a moderate pace”, Bernanke said, but it will continue to be uneven across sectors and “frustratingly slow” from the point of view of unemployed workers.”
Translation: there is no recovery.
“The highlight of the speech was an exchange during the question-and-answer session between Bernanke and J.P. Morgan Chase JPM -0.59% Chief Executive Jamie Dimon.
The JP Morgan chief presented Bernanke with an exhaustive list of the sea-changes in financial markets, from the vanished products to the forced regulatory changes and strongly suggested they were to blame for the sluggish U.S. outlook. Bernanke said no comprehensive study of the economic impact of the new rules on credit has been conducted.
“It’s been the most comprehensive financial reform since the 1930s, we don’t have quantitative tools to do that,” Bernanke said. “There is going to be some trade-off here,” he said, adding the rules could be tweaked later.”
(our emphasis)
As we have noted previously, the Frank-Dodd regulatory monstrosity is an attempt to close the barn door long after the horse has escaped. It will have far more unintended than intended consequences, as is always the case with such interventions. So they have imposed endless new regulations on top of the existing regulatory jungle without 'conducting a study on their economic consequences'? Instead the new rules will be 'tweaked' later (every time an intervention predictably fails, new interventions are heaped on top of it to 'repair' the failings of the previous ones, and so forth, ad infinitum).
“For his part, Bernanke blamed the sluggish outlook for the April-to-June quarter on the effects of the Japanese earthquake. This is likely to dissipate in coming months, he said. At the same time, there is some prospect of lower gasoline prices.
With these two factors in train, “growth seems likely to pick up somewhat in the second half of the year,” he said.”
This is too funny. The mainstream experts all assured us sotto voce back in March that the 'broken window' in Japan would have no adverse economic effects – see 'Japan disaster will have limited impact on global economy' as a pertinent example. Now all of a sudden it is to blame for the US slowdown? And of course the somewhat 'higher' gasoline prices that preceded the prospect of 'lower gasoline prices' in coming months had absolutely nothing to do with the Fed's policies. That goes without saying.
“The fact that Bernanke did not sound overly alarmed about a slowdown was taken as a sign that the Fed would be in no hurry to launch another asset buying program, or quantitative easing plan, once its current $600 billion program ends in June.
Stocks wilted after Bernanke’s speech, perhaps on disappointment the Fed was not planning to ride to the rescue with another asset-buying plan.
Bernanke signalled he was also in no hurry to exit, saying that the zero-interest rates and bond purchase plan are still needed.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” Bernanke said.”
The markets know of course that without a further acceleration in monetary pumping, the bubble activities that have held the prices of titles for capital aloft will come under pressure. We can start speculating now on how many SPX points will need to be lost before 'QE3' comes down the pike.
“The Fed chairman spent a large portion of the speech trying to calm market fears about inflation.
The latest data show that inflation “should moderate” assuming that commodity prices stabilize and inflation expectations remain stable, he said.
Bernanke also made a strong defense of the Fed’s bond buying programs, saying it was not the root cause of this year’s surge in commodity prices.
He said that fundamentals of global supply and demand played the “central role” in the recent swings in commodity prices.
Bernanke ended his remarks by stressing the central bank would remain alert for signs that inflation may flare up.
“Most FOMC members see the recent increase in inflation as transitory and expect inflation to remain subdued in the medium term,” he said.
“Should that forecast prove wrong, however, and particularly if signs were to emerge that inflation was becoming more broadly based or that longer-term inflation expectations were becoming less well anchored, the FOMC would respond as necessary,” he said”
(our emphasis)
The pace of monetary inflation should indeed 'moderate' once QE2 ends, but that is of course not what Bernanke is talking about. As regards commodity prices, it is clear the Fed is not the only central bank responsible for their sharp rise, as other CB's have been inflating copiously as well (especially the PBoC). However, when the money supply is pumped up, some prices, somewhere in the economy will always rise. That Bernanke is trying to take credit for pumping up stock prices while refusing to acknowledge the Fed's role in increasing commodity prices only shows how disingenuous he is. The central bank has absolutely no control over where the money it creates goes. It didn't go into houses, that much is clear. But it sure did go into financial assets and commodities.
The part we have highlighted above is testament to the bureaucracy's hubris. Listening to these guys one always gets the impression that without our vaunted 'policy makers' we would have been in a permanent financial and economic crisis since at least anno domini 1374, when the Venetian banking system crashed after an economic boom turned to bust (this particular bust was the result of the banks creating a boom by practicing fractional reserve banking, in the main to finance the extravagant expenditures of the government – sound familiar?).
Whether or not rising prices are a 'transitory' phenomenon depends not only on the increase in the supply of money, but also on the demand for money. The fact that inflationary effects on final goods prices have so far remained subdued owes much to the public's much greater demand for money (i.e. cash balances) in the wake of the bust. Should people alter their assessment of the likely future purchasing power of the money unit, the bureaucrats could be in for a surprise, given how much additional money they have already created since 2008. Meanwhile, as the recent example of the BoE shows (which keeps its administered short term interest rate at 0.50% in spite of 'CPI inflation' increasing to nine times as much, at the current level of 4.50%), the promise that the monetary bureaucracy will 'respond as necessary' is a hollow one. Similar to the BoE, we expect the Fed to eventually come up with all sorts of excuses as to why the 'necessary response' must be delayed.
Koo To Krugman: I'm The Better Keynesian
Richard Koo, the man who recommends massive government spending as the 'cure' for recessions, in spite of the fact that he resides in Japan, where the failure of this policy could be observed first hand for over 20 years running, has taken it upon himself to snipe at a fellow Keynesian, Paul Krugman. Allegedly, Krugman's recommendations are not favoring deficit spending enough.
This is of course incredibly funny, given that Krugman has yet to encounter a government deficit he thinks is big enough. His main failing, according to Koo, seems to be that he wanted a lot of money printing from the Fed as well, or that he expected it would 'work'.
As Businessinsider reports:
“Paul Krugman's belief that further monetary stimulus, specifically QE2, would be capable of supporting the U.S. economy misled the Obama administration and has put the U.S. in a difficult economic policy position, according to Nomura's Richard Koo.
Koo says that while U.S. officials and Paul Krugman read his book on balance sheet recessions, they refused to admit more fiscal stimulus, that is government spending, was the only means by which U.S. could grow. Instead, they convinced themselves that more monetary stimulus would be enough to jumpstart U.S. growth.”
(our emphasis)
Consider us rolling on the floor with laughter. The economy, according to Koo (and according to Krugman, for that matter) is apparently a stalled engine in need of 'jumpstarting'. Of course we all know how well Mr. Koo's recommendations on deficit spending have worked in Japan – where for some reason, said 'engine' still refuses to be 'jumpstarted', in spite of Japan's government amassing the by far biggest fiscal debt among industrialized nations.
The so-called 'balance sheet recession', which Koo and his fans insist is some kind of great new revelation is of course nothing but the Keynesian 'liquidity trap' concept warmed over. To accuse Krugman of relying solely on more money printing instead of more deficit spending of course laughable. Krugman himself keeps insisting that the government is not spending enough.
“The result of QE2 has not lived up to administration, or Krugman's expectations, according to Koo. Instead, we're left with only two policy choices: protectionism and dollar devaluation, or more fiscal stimulus.
It's important here, to note, WHY QE2 doesn't work, according to Koo… essentially all that happened is that by buying up Treasuries, investors were forced to look for returns elsewhere, in places like stocks and commodities. The latter, the commodity gains, ended up slowing down the economy. What's more, QE2 has had no positive impact on bank lending whatsoever.
Koo notes that, because of the current political situation, fiscal stimulus now seems unlikely. Consensus has formed around austerity, and that would need to change for more government spending to be put in place. Standing in the way is Republican opinion, Democrat acquiescence, and ratings agencies who seem prepared to downgrade the U.S.
The alternative, protectionism and dollar devaluation, could be disastrous if history is any example, according to Koo.”
It should be noted that Koo's critique of 'QE2' is entirely correct – it has had precisely the effects he mentions and bank lending to the private sector has certainly remained subdued. He is also correct that 'protectionism and dollar devaluation would be disastrous'.
However, he presents us with a set of false choices, under the erroneous assumption that the government must intervene in the economy to 'save it'. He says ' we're left with only two policy choices: protectionism and dollar devaluation, or more fiscal stimulus', but that is simply untrue. As Ludwig von Mises noted a long time ago already, the best thing the government can do when faced with an economic bust is absolutely nothing. The only way to bring the economy back to a sound footing is to allow market forces to correct the imbalances in as unhampered a fashion as possible. The problem of the economy is not a 'liquidity trap', even if it comes by another name, its problem is that the previous credit expansion has left it with a discoordinated productive structure and a grave imbalance between production and consumption.
No amount of government intervention can alter this fact in a positive manner – it can only lead to even more distortions. In what way any of the tree 'policy choices' we are now allegedly left with would improve this situation is a complete mystery. It should be obvious that neither protectionism nor dollar devaluation can possibly improve the economy's status. However, it should be just as obvious that deficit spending is likewise destined to fail. Every single cent the government spends must be taken from the private sector, since the government produces no wealth and possesses no hidden stash of resources it can draw on. So to the exact same extent as the government increases its spending, the private sector will be forced to reduce its spending and investment. Resources will then simply be commandeered by bureaucratic fiat instead of the voluntary decisions of market participants. How is that going to improve the economy? As a matter of fact, the past decade has not only seen the biggest bout of monetary inflation of the entire post WW2 era, it has also seen the biggest increase in deficit spending since WW2. Obviously, neither the former nor the latter have had any positive effect so far. We will never understand why people like Koo and Krugman do not for once stop to think about this and consider that their theories might simply be wrong.
Of course, we still find it eminently entertaining when these Keynesians begin sniping at each other and start arguing over who has the 'better plan'. Why not just abolish capitalism and be done with it? If these people were right, the Soviet Union's GOSPLAN agency would be the institution most worthy of emulation. A pure command economy provides after all the best conditions for statist intervention. According to people like Koo and Krugman nothing could be better, since that would enable all their plans to be implemented in full.
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German Schaeuble's letter on Greece to IMF, ECB, euro peers
Looks like default to me. Everyone is going to default sooner or later, one way or another. Promises that can't be kept, won't be.
It does indeed . However, with all eyes on Greece, it probably has escaped the Triokas attention and the markets for that matter that Spanish yields are moving higher once again today after the bounce of the resistance. Also today Portugal bond spreads have reached a record widening.
Bernanke last night ruled out more QE,yet we know thats not true. Interest rate expectations continue to fall Australia and now New Zealand, 12 month interest rate futures have slid to 18 bps over 12 months. Of course we know Bernanke will go onto some other scheme. however, now that he has said he will not the market will no doubt force his hand in the form of lower asset prices before tempting him back with more QE in some form. It is akin to the central banks threatening intervention in the currency markets like the SNB and BoJ did. The currency in the end forces their hand, leading to actual intervention rather than lip speak. USD, JPY up strongly today as a result.
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If you don't get the answers here MBMG based in Bangkok will know ....Paul Gambles used to work for the UK tax office /
U.S. funding for future promises lags by trillions
Cheers man...I ll check that out.
These are going to be interesting but awful times ahead for many who are happily going a long oblivious to the fiscal and credit train wreck that is upon us. We are seeing the results in Greece and increasingly in Spain when what has been promised is retrenched, or they are told they cannot have it. This flag was quite telling I saw yesterday of how sentiment is turning. I think that civil unrest just like sovereign debt crisis begin at the periphery and move to the center, think Tunisia was the catalyst. It was quite incredible how what started from a fruit seller in a small town in Tunisia burning himself to death in front of a government building in protest against corruption cascaded into Egypt, and then Libya, Yemen, Syria etc. Eventually in the US they will take to the streets, and throughout Europe. I quite like listening to Celente, he said when the money stops flowing to the man on the street, blood starts flowing in the streets. Looking into the Egypt case, it seems that they became a net oil importer last year, and the money that Mubharak was using to subsidise and appease the people ran out. With the inflationary policy of central banks driving up food prices in marginal income countries, it appears this was the catalyst in Egypt, as they are also a large wheat user. So a double whammy of changing to net oil importer, and higher wheat prices was the final straw.
Likewise, as in the US, the UK has massive unfunded liabilities. I wonder what will actually happen in the end? I try not to be too dogmatic on the side of the inflation/.deflation debate...however, from what I have read on hyperinflation, or at least high inflation it is a political process. The great Austrian Economist Murray Rothbard, one of the greatest economic historians to have lived IMO said it was a process that and did not happen overnight, but in decades. I wonder when the chickens come home to roost regarding the unfunded stuff, and people are told they cannot have what was promised will that be the political catalyst and back drop for a real inflationary environment, where all reason is thrown to the wind by government? This is anecdotal, but I joined twiiter a while back and I am constantly seeing growing support and anger and a growth in extremes from the center politics, to more anarchist on the right, to extreme nationalist socialist movements on the left...the age demographics appear to be young, as 18-40.
Hemingway...
"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."
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Guys I know this is a bit of topic but some advice would be appreciated...Right, I m in the UK right now. Now my plan is to spend more than 9 months outside the UK a year, probably more, with a large part in Thailand, and some other travel, as an example Naam, going to Beijing with a spreadsheet to count vacancy rates in condos to report back to this forum
..all joking aside...I have a a broker account that is not based in the UK, but the US and Singapore. However, the account is linked to a Nationwide UK Bank account, and transfers are done this way. So from a tax perspective, if I m outside the UK more than nine months I will not pay tax. So I m reasoning that I can transfer money from my broker account as needed to my Uk bank account, and then transfer the money from that account through an international chaps to a Thai bank account...so I do not need to pay any tax? I cannot see how I would have to., I m not working in Thailand, not living in the UK? This is all feasible? Thanks -
Perhaps if there was less corruption people would learn to drive safely
Perhaps if there was less corruption the roads would be built better; safer layouts, less pot-holes, better visibility of signage...
SC
Yes, perhaps.
And perhaps there would be no naughty nightlife, no choice but to surrender your drivers license and take a ticket when committing a violation, no street vendors selling delicious food, and no chance to buy your way out of trouble if you really got into a jam, etc., etc.
I wonder how many expats would honestly make that sacrifice to rid the land of corruption, if it came down to a choice? I would have to give it a long, hard think.
Have read through most of this thread. I m in between the UK and Bangkok often, and have lived in Bangkok for long spells, however, being in the West now shows me that being Thailand is much more desirable, and when I have been in Thailand its always felt more relaxed and less intrusive. I think a lot of the posters should come back to the West to get some perspective. I m kind of on Richards argument here...The UK , and from what I can gather from US friends, and in the EU is becoming an evermore bureaucratic night mare.
The place feels sterile, boring, there are new rules and regulations coming out every day designed to govern and interfere in every little nook and cranny of our lives. What business is it of some politician who I probably never endorsed in any election tells me that I must pay 70% tax on a bottle of wine, that I must not take too much salt, what type of light bulb I need to put in my house. There is this attempt here to micromanage every aspect of an individuals life.
I have listened to the stories of some small business owners who are in agreement. A cafe in a town wants to put a few small tables and chairs out the front of the shop, and the nice man from the council comes a long and says you need to pay a yearly fee for that...or he will be sent to court and to pay a £3000 fine.
A local hairdresser to ease the boredom for waiting customers wants to put a TV on the wall. She has to buy a TV license, which she expected, but now someone calls in to tell her to buy a music license.
And all the stories are coming out from all the corruption in the councils and politicians expenses. Councils have been spending millions of tax payers money on credit card and now refuse to give over details of what it was spent on. For me this is corruption under the guise of socialism. The money might not go to a policeman, but it goes to some bureaucrat to waste and spend on his house, travel, food. Have you seen the food bill for some of these guys for a year?
The bank bailouts also. A complete and utter corruption of the system, with government and corporations and the banks all in bed together. We might paint it in nice language in the West, and under the guise of social good, and necessary for the good of society and the economy.Total rubbish. Politicians have spent so much that the West is now bankrupt. And now want to to tax citizens who are already highly taxed even more. For me, a government that takes 50% of your income tax, add 20% VAT, has a monopoly over alcohol pricing, and charges you 70% tax on petrol through force and coercion is corruption., The government call it TAX. For me that is real corruption, that politicians spend other peoples money, and squandered their savings without the means of production to pay it back...
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If it were me, then I would seriously think about moving. y
Keeping in mind that the police and these thugs are hand in hand, so being a one-man defender of justice is not going to work. I have no idea if the OP is renting or has paid for his property.
In the past we also had problems with neighbors and in the end the only options were to either put up with it or move on.
People only cause problems and I made my feelings clear to my family that whereever I live, I want to have as much space as possible between me and my neighbors.
Please read the opening text. This is the final straw and I'm getting out of Thailand. Thing is 5 years ago I didn't have neighbors.
These guys built 3 years ago . My contract expired last week and I told my landlord yesterday I won't be renewing after all.
Well, we all have to make decisions that are best for us. Thats unfortunate. I mean, perhaps you have been unlucky with this particular neighbour. If everyone who had a bad neighbour in any c ountry decided to leave the country every time, migration would be on the up every where. I mean they make bloody programs in the UK called things like "neighbours from hell. Have you considered moving to another area? Have you any idea where, still in the region or back to the West? I discovered that that spending a year in India was good practise for South East Asia. Walk in the park South East Asia.
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Make friends with them. Get them off their faces on whiskey every night. Say go ahead, use your chainsaw.
Now you're being silly........
Yeah right. My Pen Rai La la la ...
Just let Ten, three meter long sections of half meter timber be milled for well s it took over a week last time with half the lumber.. two weeks straight 30 meters from you un airconditioned home that you lived in 2 years before they built their home . Yes, ridiculous
So no one knows the law I guess . Which is No you cannot do that it turns out as my landlord is now involved and pissed having had me tell her I'm moving. She's losing a very very good tenant. I sahll post pics of the amount of lumber just as rude as it gets from a jack ass neighbor.
What do you pay twice the going rental rate?
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when you look at the figures for China especially regarding percentage share of certain commodity world usage, and the percent of those used in construction, a few percent slow down in Chinese GDP, ie, $1 trillion USD or so, will impact the commodities market
a logical assumption. but i wouldn't dare to short any relevant commodities because too many unknown factors and known factors, the latter beyond my grasp, exist. moreover, i don't call $1tr slow down (>17% of total GDP) "a few percent". taking into consideration what the learned eggheads call "GDP" that slowdown would be in reality a huge big crash with negative global results affecting all assets/investments.
i also do not believe in the "big construction bubble" and "ghost cities" spread by the usual gloom&doom suspects. for the last 2½ decades the annual chinese demand was more or less stable at 20 million housing units per annum. i admit there might be a price bubble in metropolitan areas where they keep on building units which only a tiny percentage of the chinese population can afford. but one has to look at 0.5% growth of a population of 1.3 trillion (U.S. figure) respectively 1.3 billion (continental European figure).
When I say a slow down, I mean if GDP falls to say 2-4% from 9%, that would be a huge slowdown....
The thing is Naam since 1970 until today, urbanisation as a percent of the population has grown exponentially. In 1970 urban population as a percent of total was around 15%, as of 2010, urban population as a % of total population is around 47%,...so thats nearly half of the population. The growth in urban China correlates very well with construction growth in urban areas as one would expect, so if you take the 10 largest cities in China (where the majority have flocked to over the last decade or so) and look at price increases in these cities, we talking about 30-50% in a few years. By any metric that is huge.
If you check sources such as CB Richard Ellis, Jones Sang, Haver Analytics, certain distressed asset managers (who have been in China), the work of Chanos (who has not been in China, but as he said, he didn't work an Enron when he shorted it) and Standard Chartered who have been the best at monitoring Chinese real estate, they all corroborate and indicate a huge over supply.
Haver Analytics research for example shows that there nearly 3.8 billion sq metres of floor space constructed and under construction...That equates to 3 metres squared of floor space for every man, women, child, senior citizen in China. It is also notable that materials that you would expect demand to be high for during a construction boom, China accounts in many cases for nearly 50% share in world usage. 50% is a huge demand. To have such a cornering of certain raw materials in itself is a warning sign. Using up 50% of the worlds steel trade does not equal a few construction projects. To use that quantity of steel you you really need to be constructing a lot of the buildings. Vacancy rates in office space in tier one cities is 20-30%, however, Standard chartered research and on going figures shows that even in the 3rd and 4 th tier cities there is bulging supply.
I m not shorting any commodities...however, shorting the AUD against the CHF,JPY, USD, and possibly some Oz banks is a way to play it(as Oz also has their own real estate bubble and rely heavily on over seas funding), due to the fact that 30% of OZ exports are to China. i think the carry trade currencies will be hurt from this. Also some of the listed stocks on the nasdaq, Amex are Chinese shares. A few months ago I shorted Deer group, a company that sold house hold items in China, which worked out well.
Also shorting Japanese steel companies, and certain miners in Australia is another way to play it. There are also certain China related ETF's such as the TAO, which is a Chinese real estate ETF, where one could buy put options on these.
All in all,its a myth that urban areas in China are only small when they actually make up about 47% of total population. The correlation in urban growth, construction growth in those urban areas, Credit growth relative to GDP, and real estate prices in those urban areas is tight...it is no surprise that the urban areas are where the bubbles are, due to the growth in urban China over the last few decades and especially the last two decades.
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When I say China, I m interested in the fallout and the ramifications it will have globally...
i'm aware of that Red. but will you add your thoughts to the existing zillion publications on these potential if/then ramifications? can't you find something more productive and interesting to do... such as throwing small gravel stones at passing old ladies or cutting some herbs for your kitchen?
:lol:Interesting you should say that, I have actually been growing a lot of herbs lately. You get interested in their well being...rocket, spinach, mint (although I use some gold shavings to make them gold mint leaves to serve for guests
), sage, coriander, basil, etc etc....the throwing stones part not yet...however, the when you look at the figures for China especially regarding percentage share of certain commodity world usage, and the percent of those used in construction, a few percent slow down in Chinese GDP, ie, $1 trillion USD or so, will impact the commodities market. Yes, alot of people have been talking about it...but that does not mean there is not a construction bubble...bubbles go on longer than many think, especially fixed asset and real estate bubbles as price discovery and relative illiquidity compared to other markets can hide the bubble for a while,but unless you think China is going to do what has never been done before and grow with stopping then calling for a slowdown in China and what goes with it is a no brainer. -
Well, I hold physical silver, and gold...
that's not what i call "short".
Its a de facto short. I mean its hard to say it has not been a short the USD...with 80-90% negative correlation. The ideal scenario for me is if the USD rallies with gold. Interestingly the AUDUSD short is down today, while silver is up, which does not happen so often. Interestingly Portugal yields on the 10 year broke to a new high today, and Spanish yields moving up also...Not much breathing space for the Euro...
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Bitcoin: With Enemies Like Schumer, Who Needs Friends?
Saw this on my twitter feed this morning...might be of interest to some of you. I admit I have not looked into Bitcoins, so cannot comment. However, what I would say, it is not up to any of you to decide if it will become a medium of exchange or whether it can or will not become a medium of exchange. The market will decide. We can theorise all day about it, but It all depends on demand, and acceptance. If that happens at any level,If a group start accepting it as a medium of exchange then it is money in some form, period. How widely used it becomes and to what value it has all depends on the aggregate demand from individuals.
Anyway, the guy Schumer in the linked article is the anti-thesis of what I think a human living in the practical world should be...interesting article.
Thanks for that link,
Schumer is an old fart. Does he even know what email is? Everytime I see him talk on one of those political shows, I grit my teeth.
I agree and unfortunately there are becoming far too many old farts, in the US, UK, EU...and the (politcial) room is becoming pretty stinking with them.
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Essentially, I m short the USD via gold/silver, but long USD against a couple of the sick sisters
using what instruments?
When I say China, I m interested in the fallout and the ramifications it will have globally...
Well, I hold physical silver, and gold...and I m long USD in a currency trading account, however, I do create synthetic paper positions in silver and gold against other currencies sometimes in the forex account...I know trading paper gold and silver, my bad, don't tell anyone,haha.... :)but they are short term and efficient, and the win or loss is definitely real.
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However, what I would say, it is not up to any of you to decide if it will become a medium of exchange or whether it can or will not become a medium of exchange.
we insist on it!
Haha, what an irony that would be...the bitcoinists lobbying big business and government to make BC legal tender...
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As I have stated on here on here a few weeks ago I have places some tentative long on the USD,,,mostly against the AUD, an average price of 1.0900 area...I have also went cautiously long the USDCHF...Still think Gold could spike up to the $1630-1650 area before consolidating into the summer.
Anyway, found this from zero hedge although it was on Bloomberg originally. Worlds biggest currency hedge fund now long USD...John Taylor Says He Is Now Long The USD As Of A Week Ago.
I m not so sure about QE being finished, infact I m sure its not, unlike Taylor...although Taylor has made some excellent calls on currencies over the years...I guess you have to to have $8 billion in a fund...However, the window of opportunity for the USD is between now and the next QE. There is a speech by Bernanke tonight which I will watch with interest.I have a feeling he will play it down for a while until things fall a bit more and the economy slumps more, so he will have a better backdrop to introduce it.
I saw a bit of the interview on Bloomberg - He seemed very vague and not really sure - The reason he is short the Euro is because he does not understand it ! Not a very good reason?
Re QE I think unemployment in the US will have to get a lot worse for more - I think that the figures will improve slowly so more QE not for now - However I think Bernanke will continue to keep a very loose policy and make that very clear until the us economy picks up /
I just saw this - China FX official says USD will continue to weaken against other major currencies. http://forex.fxdd.co..._medium=twitter
It could well do CH, don't post these things...your making me nervous about my trades now,lol.kidding obviously...I think what he was saying about the Euro is that it is unclear regarding the bailout...as there have been so many conflicting statements every hour of the day from so many sources...plus he said the bailout has not been explained, lengthening maturities on bond yields, is that going to happen or not...that uncertainty could weigh. I m not yet short the Euro, if it moves up its last high I may think about it. Too many retailers are short, and I don't want to be on the same side...as they are usually on the wrong side...however, they are reducing their shorts, and their are some divergences appearing with the large speculator increasing USD longs.The ECB have been more dovish with interest rates rises of late. I have thought for a while that interest rate expectations have been mispriced for a while now, and it is usually expectations of yield that drive currencies.
Lurking on some trading forums nearly everyone, retail traders are pricing in more AUD, RBA interest rates rises, and the market also. Yet last night, they stayed on hold, and the RBA came out with a dovish statement. The same in the UK, a few months ago, the markets thought it was a certainty that the Boe would raise in May/June,but now the BoE don't look like doing that. Over night interest rate swaps and futures have seen a large drop of in rate rise expectations, so it would appear the market is beginning to reprice those expectations.
Essentially, I m short the USD via gold/silver, but long USD against a couple of the sick sisters from a techincal and fundamental point of view. I have been looking at China alot in the last two weeks. Will do a post on it in financial crisis thread to get some feed back in the next couple of days.
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Bitcoin: With Enemies Like Schumer, Who Needs Friends?
Saw this on my twitter feed this morning...might be of interest to some of you. I admit I have not looked into Bitcoins, so cannot comment. However, what I would say, it is not up to any of you to decide if it will become a medium of exchange or whether it can or will not become a medium of exchange. The market will decide. We can theorise all day about it, but It all depends on demand, and acceptance. If that happens at any level,If a group start accepting it as a medium of exchange then it is money in some form, period. How widely used it becomes and to what value it has all depends on the aggregate demand from individuals.
Anyway, the guy Schumer in the linked article is the anti-thesis of what I think a human living in the practical world should be...interesting article.
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As I have stated on here on here a few weeks ago I have places some tentative long on the USD,,,mostly against the AUD, an average price of 1.0900 area...I have also went cautiously long the USDCHF...Still think Gold could spike up to the $1630-1650 area before consolidating into the summer.
Anyway, found this from zero hedge although it was on Bloomberg originally. Worlds biggest currency hedge fund now long USD...John Taylor Says He Is Now Long The USD As Of A Week Ago.
I m not so sure about QE being finished, infact I m sure its not, unlike Taylor...although Taylor has made some excellent calls on currencies over the years...I guess you have to to have $8 billion in a fund...However, the window of opportunity for the USD is between now and the next QE. There is a speech by Bernanke tonight which I will watch with interest.I have a feeling he will play it down for a while until things fall a bit more and the economy slumps more, so he will have a better backdrop to introduce it.
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World debt comparison
The global debt clock
Our interactive overview of government debt across the planet
Thanks for this CH. I love those type of graphics. What is interesting is the public debt per person per country...For all the head lines in the US, the US as per debt per person is lower than Italy, Norway, France, Japan, ireland...and as a % of GDP is even lower than German, UK, Greece, France etc etc. In conclusion all paper currencies are not worth a dam_n.
Interestingly a few months a go I heard a Jim Rogers interview in Britain, and the interviewer said Britain is making cuts, and doing all the right things...but Rogers said he has heard it all before from politicians saying that stuff...from when he was at Oxford in the 1960's. He has been around for a while and must have seen a lot over the years. Basically the UK will not be able to make the cuts, as there will be a back lash or by the time the next election comes they will thrown out, and the new party will destroy the work done...
I have also heard the analogy that when public debt becomes so big that it becomes like a massive ship, that cannot be turned quickly to avoid the icebergs. From a UK perspective this is the case. Firstly the populace do not understand the difference between the deficit and the total debt. The total debt is growing, and will be much larger in 2014 than today. The "cuts" are not actually cuts. They are just going into debt slightly more slowly. The deficit in the Uk is about £160 billion a year, so if the Uk spends £140 billion this year, it is still increasing the debt. Real cuts are politically impossible with a debt load this size and all the promises that go with having a debt load of this size. The UK have already spent £40 billion over their target since the Tories came in...and Half Councils Have No deficit cut plan.
When you dig a little into any of these currencies they are all screwed. I would rather own the USD to be honest than GBP.
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As Nigel Farrell quite rightly said...
who or what is Nigel Farell?
he has the spelling wrong. Its Nigel Farage. IMO one of the best speakers around today. He is hated in the EU for telling it how it is and he does does not hold back.
This is is greeting to Von Rompuy...hilarious....
http://www.youtube.com/watch?v=lqovTGjYjM4
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Spanish 10 Yr at inflection point, and yields at trend line resistance. A range in Spanish yields has been in place since last November between about 5.1%-5.6%...The attached chart shows we are at the trend line resistance. A move below support at 5% would give Spain some breathing room, although a move upwards and a break out of the range will spell trouble especially with articles like this in the FT. Yield are up on the day. Add to that all the assets on the banks book that have not been marked to market in the hope that the Spanish property market will recover. When a market forms into a tight range, it means there is a relative balance between buyers and sellers...however, the long a market stays in a relative state of equilibrium, it is akin to a hibernating bear that has awoke after a long sleep...when he wakes he is hungry. When this range is broken expect higher volatility. With the mass protests in Spain and the instability at government level, and the contracting economy it is hard to see yields breaking down below 5% in any sustained way...the fundamental back drop and bias is for a break to the up side in yields.
Bankrupt Claim heightens Spanish Debt Fears
The central Spanish region of Castilla-La Mancha is "totally bankrupt", according to the incoming administration of the rightwing Popular party (PP), an accusation that will deepen concerns about Spain's budget deficit.
The claim has prompted angry denials from the Socialist government.
Spain's 17 autonomous regions and its more than 8,000 municipalities, with €150bn ($220bn) of accumulated debt between them, have become the latest worry for investors in Spain and its sovereign bonds.
Although the amount is less than a quarter of total public sector debt, regional debt has doubled since 2008. The 17 regions collectively exceeded official budget deficit limits in 2010, and appear likely to do so again this year despite repeated demands for compliance from the central government.
Catalonia, an economy the size of Portugal, says its deficit will be double the target.
Vicente Tirado, a senior PP politician in Castilla-La Mancha, said the region was "totally bankrupt"; owed suppliers such as pharmaceutical companies that provide drugs for hospitals a total of €2bn in unpaid bills; and would have trouble finding the money to pay the region's 76,000 civil servants next month.
Marcial Marín, the PP's economy co-ordinator in the region, accused the departing Socialist government of "the height of irresponsibility" and alleged that unpaid bills were being destroyed to hide the evidence.
"From the data that the PP has, Castilla-La Mancha is the Greece of Spanish regions," he said, referring to the bail-out of the Greek economy by the European Union and the International Monetary Fund.
Mr Marín said the PP, which won the region from the Socialists in elections two weeks ago, would shut between half and three-quarters of Castilla-La Mancha's 95 government owned companies because they duplicated the work of other organisations and were staffed mostly by Socialist party members.
The departing Socialist administration described the PP's accusations as false and said PP leaders were scaremongering in order to prepare the way for cuts to public services.
At the national level, Socialist leaders have accused the PP of undermining Spain's credibility in financial markets for domestic political ends and have noted that several PP-run fiefdoms have also exceeded their deficit limits.
Official data show, however, that Socialist-run Castilla-La Mancha was the worst-performing region last year, recording a deficit of 6.5 per cent of gross domestic product, compared with the limit for that year of 2.4 per cent.
Spain was able to meet its overall public sector deficit target of 9.3 per cent of GDP in 2010 only because austerity at the centre compensated for regional overspending.
Two opinion polls published on Sunday, meanwhile, predicted that the PP, led by Mariano Rajoy, would win national elections with a 13.8 percentage point advantage over the Socialists, under their leader in waiting Alfredo Pérez Rubalcaba.
Mr Rubalcaba is the hitherto unchallenged party candidate to replace José Luis Rodríguez Zapatero, the prime minister. A national election must be held within a year but the PP wants an early poll.
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Lets Hope Nasri does not leave also. He is trending on twitter, so a lot of rumors circulating and stories...would not surprise me to be honest...Nasri not sure about new contract
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Bitcoin is nothing else than an elaborate pyramid scheme, the ones that started it did get loads, by the time it gets mainstream it's useless/valueless.
It's a nice green currency as well, burn electricity by the truckload to get more...
Anyways, idiocy.
Bitcoin Fiat Money is nothing else than an elaborate pyramid scheme, the ones Banks/Central Banks that started it did get loads, by the time it gets mainstream to society/the man on the street it's useless/valueless.
It's a nice green currency as well, burn electricity by the truckload to get more...
Jdietz I could not have summed up the current system any more succinctly myself
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Gartman Sells 50% of Gold Holding After Decline, Says Further Drop Likely
'"There are rumors and there are rumors of rumors about IMF sales, or sales on the part of legacy central banks in Europe, or sales from the European Central Bank, the proceeds of which can be used to prop or bail out Greece and the others," Gartman wrote. "Although these are merely rumors, where this is rumored smoke there can be actual fire."
That rumor has been circulating for a few years now...and the consensus seems to be universal that the IMF selling gold will be bearish for Gold. I think it will be bullish, rising investment demand, and central bank buying into the IMF selling? Bearish? I think Gartman might be doing a Bill Gross. Gross sold all his T-Bonds,which appeared to be a bearish sign when the worlds biggest bond fund sells the most liquid bonds, yet from the day he announced it T-Bonds have rallied ever since. Also once the IMF have sold their Gold, well they will not have anymore to dump on the market. I m going with this being bullish rather than bearish...Thoughts?
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Hugh Hendry's cycle of QE...pretty much running to script so far...and with Hendry pointing out we are at the EM growth slows stage with then the US and Germany, the last few days and indeed weeks have shown evidence that is happening.
..all joking aside...I have a a broker account that is not based in the UK, but the US and Singapore. However, the account is linked to a Nationwide UK Bank account, and transfers are done this way. So from a tax perspective, if I m outside the UK more than nine months I will not pay tax. So I m reasoning that I can transfer money from my broker account as needed to my Uk bank account, and then transfer the money from that account through an international chaps to a Thai bank account...so I do not need to pay any tax? I cannot see how I would have to., I m not working in Thailand, not living in the UK? This is all feasible? Thanks
Where Is Gold Going In This Market
in Jobs, Economy, Banking, Business, Investments
Posted
Definitely provides a decent fundamental back drop for Silver. I think world demand for silver based on industrial use is 48%, so it certainly provides a good balance between industrial use and investment demand. The Gold/Silver ratio is still on the rise, once it begins to fall below the moving averages, and some form of "cupcakes 3" is announced or is began to be priced in, as Rogers pointed out, ie, QE 3 in another name for those that didnt watch the video. Then Silver could take off again. Add to that the fact that after a contractionary phase we are in now will turn to "expansion" phase which should support silver. When I say expansion it will be another short lived false expansion, but it will lead to a demand, false demand or not it will be good for assets such as silver IMHO.