Readers may recall that it wasn’t all that long ago that China’s banks were sitting on big losses and the analysts debated how bad the mess was. In 2003, for instance, the damage was pegged at $500 billion, a stunning figure given the size of the economy, and meant the banking system was insolvent. Even […]
Read more...If Alan Greenspan were serious about rehabilitating himself, he could hire himself out to central banks and instruct their officials in the art of Looking Serous and Appearing to Say Important Things While Actually Communicating Nothing. This is a crucial skill for anyone in an important bureaucratic position. The Chinese could use a few lessons. […]
Read more...The optimists that have long assumed that the dollar will continue to reign supreme due to lack of alternatives have just have their sanguine views challenged as China threw down the gauntlet on coming up with an alternative, non-country-specific, reserve currency. The US in fact had this option at the time of Bretton Woods and […]
Read more...Michael Pettis put up a long and useful post on the options open to China given a decline in US consumption and therefore its trade deficit, both of which he deems to be inevitable. Pettis argues that all things being equal, growth in China would probably be lower than most assume, 5%-6%. Note that while […]
Read more...Andy Xie, writing for Cajing, questions the durability of China’s recovery. He argues that much of hte upsurge in lending, which was one of the developments that cheered commentators, is fueling asset speculation, in this case in commodities, Reports this spring has suggested that as much as a third of the new lending was going […]
Read more...Frankly, it is hard to know what to make of the ongoing noise form China regarding the dollar. The most sensible explanation is that China is playing to a domestic audience. China, after all, purchased dollar assets as a integral part of its development strategy. Independent of the fate of the dollar, successful developing economies […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns. Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman has a good piece out today highlighting the differing economic policy agendas of the BRIC group (Brazil, Russia, India and China). In it he suggests CRIBS is a more appropriate moniker for the group as […]
Read more...I am beginning to feel as if I am being gaslighted. For those not familiar with the reference. Gas Light was a 1930s play in which a scheming husband keeps turning the gas lights in his house up and down, then keeps telling his wife that she is crazy when she comments on the changes. […]
Read more...China is not playing nicely in the sandbox. The nitty gritty of trade seldom gets the attention it warrants, but enough mercantilist measures can trigger retaliation, which most observers agree would merely precipitate a race to the bottom. And China, which in many ways has the most to lose from protectionism, has been tempting fate. […]
Read more...One of the alleged reasons for cheer on the economic front is that major foreign economies are bottoming. For instance, Japan reported the biggest increase in industrial production in 56 years roughly two weeks ago, A comment from a Bloomberg story on that release: This is not so much a green shoot as it is […]
Read more...The bits of evidence that provided the strongest support to green shoots backers have been the rise in stock prices and possible signs of slowing in job losses. However, the rally warrants considerable critical scrutiny. First. violent rallies are more characteristic of bear market head fakes than new bull markets. And this rally has featured […]
Read more...As we have said, electricity use is a very reliable contemporaneous economic indicator. China’s power output and consumption figures say the economy is contracting. From China Stakes (hat tip reader Michael): China’s power consumption in May continued to decline. Although the National Bureau of Statistics denied the conflict between economic growth and power consumption decline […]
Read more...The Fed has a mess on its hands. Yields on ten and thirty year Treasuries have shot up in the last few days as investors have become fixated on burgeoning Treasury supply in coming months and years. and, as belief in the “green shoots” story is rising, a shift to riskier assets. In addition, while […]
Read more...Even though it is risky to be skeptical when at a remove, we had trouble buying into the bullish talk on China. First, in the Great Depression, it was the creditor/exporter America that had a far more difficult adjustment than the wastrel debtors, who simply defaulted. Second, the stimulus package, which has been widely touted, […]
Read more...So much for the green shoots theory, at least as far as an early Chinese recovery is concerned. From AFP (hat tip reader Michael): Chinese exports fell 22.6 percent in April from a year earlier in the sixth straight monthly decline, state media said Tuesday,… Exports from the world’s third-largest economy totalled 91.94 billion dollars […]
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