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Drinking poison to quench thirst: Andy Xie
The zero-interest rate environment and rapid monetary growth are scaring conservative savers into becoming budding speculators. By threatening to destroy the value of cash and by subsidizing speculation with low interest rates and bailouts, good guys really finish last. It may be better surfing the speculative waves than staying put. One may die in a speculative crash, but holding onto cash when governments are hell-bent on printing money to solve every problem seems like certain death.
Check out this saver in particular.
Rogers Says Shanghai, Hong Kong Property in Bubble (Update1)
“Certainly, Shanghai real estate or Hong Kong real estate should decline,” said Rogers, 67. “My goodness, if anything’s in a bubble in the world, that and U.S. government bonds are certainly very overpriced.”
Apparently Chanos is getting to him.
Jim Rogers: Everything is coming together for China this century
Digital Journal also reported last week that Rogers believes a food shortage will occur within the next few years, which will force commodities to spike in prices.
Brace for the sarcasm. Here it comes.
Everything certainly is coming together for China this century. No doubt about it. There's nothing quite like a real estate bubble and/or potential food shortages to unleash all sorts of future prosperity, especially for an economy so dependent on stable employment, cheap food, and the absence of James Cameron movies.
China Pulls Avatar From Their Cinemas Fearing Civil Unrest
According to Hong Kong's Apple Daily newspaper, the Chinese government is concerned with the possibility of parables between the Na'vi (the indigenous population of the planet Pandora who must fight to maintain their way of life in the face of a human military operation) and Chinese residents who have to put up with aggressive repopulation by property developers. Apparently, the fear is that the film may "lead audiences to think about forced removal, and may possibly incite violence."
Hey China, here's an upbeat replacement movie idea.
ICE: Mortgage Delinquency Rate Increased Year-over-year in October
-
From ICE: ICE First Look at Mortgage Performance: Serious delinquencies hit
17-month high while foreclosure activity remains historically muted
• At 3.45% ...
2 hours ago
44 comments:
I sense a Churchillian moment:
"Perhaps it is better to be irresponsible and right, than to be responsible and wrong."
Conclusion of Xie's article:
"the sickness will strike in 2012."
Wow, 2012? Seems a long way away... Anything can happen between now and then ...
- jus me
G.H.,
From your link...
"The Council of Europe, representing through its Committee of Foreign Ministers and Consultative Assembly most of the free nations of Europe. The council's participation in Western defense is limited to the framing of resolutions, which are binding on no one."
Why am I suddenly reminded of the euro? I might be wrong of course. Perhaps the Germany's taxpayers will indeed cough up some of their savings to help out Greece.
jus me,
It would have been helpful if he would have supplied the exact date and time.
He does show some humility though. He discounts the idea that his own prediction would be so popular and so widely believed that it would actually alter the outcome.
I'd be tempted to sell in 2011 if the crash was coming in 2012. Of course, knowing that you might sell in 2010 to get out before me. ;)
Stag,
According to the Mayan Calendar, the great cycle ends on 12/21/2012 at 11:11 A.M. Universal Time:
http://www.adishakti.org/mayan_end_times_prophecy_12-21-2012.htm
For some reason, the Mayans sold REALLY early. It makes you wonder, no?
Perhaps the Mayan's just didn't anticipate that they would be able to sell to people like Chuck Prince at CITI or the Cramer and CNBC faithful. That herd will be dancing right until the music stops.
And after the music stops they'll start re-arranging deck chairs.
No rush, no worries.
mab,
"And after the music stops they'll start re-arranging deck chairs."
Rumor has it that the deck chairs will be nailed to the side of the hull because...
Nothing says iceberg protection like cheap Made in China plasticware!
Stag,
Nothing says iceberg protection like cheap Made in China plasticware!
Good point! Nobody does melamine quite like China.
The CONflicting data coming out of China really is amusing. It reminds me SOOOOO much of the U.S. housing market just before the bottom fell out.
For every article like this one claiming a bubble:
http://www.ft.com/cms/s/0/2a47c0fc-04b4-11df-8603-00144feabdc0.html?nclick_check=1
There's a shill ready to claim that there is no bubble and that prices are going higher:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aStXstBbM7h0&pos=6
Oh well, bubbles wouldn't be half as much fun without self serving deniers like Blob Troll and David "Bagdad Bob" Lereah.
News Sends Shockwaves
Through Global Equity Markets
by James Hyerczyk, Brewer Futures Group, LLC | January 20, 2010
"U.S. Stock markets backed off from Tuesday’s strong closes overnight as China took moves to limit lending in an attempt to slow down the economy. The news sent shockwaves through global equity markets as the Shanghai index dropped 3%. Traders are concerned that less spending from China will derail the global economic recovery."
http://tinyurl.com/yc9mfap
China Asked Some Banks to Limit Lending, Regulator Liu Says
By Bloomberg News
Jan. 20 (Bloomberg) -- Chinese regulators asked some of the nation’s banks to limit lending after they failed to meet requirements including those for capital, said Liu Mingkang, chairman of the China Banking Regulatory Commission.
http://tinyurl.com/yhdb9ya
Mark
If you have time could you give me your take on this?
Watchtower & Mark
There's a bit more here
http://immobilienblasen.blogspot.com/2010/01/chinese-banks-already-lend-out-20.html
I am sorry but how does a China loaning less money in country contribute to a global slowdown? How much copper can they buy anyway?
Now if the pulled back on their lending to say, the USA, now we have a huge problem.
I am sorry but how does a China loaning less money in country contribute to a global slowdown?
GYSC,
The answer is found in Ponzi eCONomics 101, Chapter 1, Greater Fools!
Here's the gist of it. In order for ponzi credit systems to keep expanding (or keep from collapsing), somebody has to believe they can become wealthier by impoverishing themselves with debt. The system always needs a greater fool!
In that light, shills serve a VERY important purpose in our eCONomy. Even Buffett is in on the sham. He's been pumping on CNBC for years now.
For a while I couldn't figure out why Buffett would validate a cess cess pool like CNBC. Easpecially after spending his life warning people about "helpers" "hyper helpers" and the like. But it all makes sense now, Buffett has a LOT at stake.
Hey everyone,
I apologize for not commenting much today. I'm a bit pressed for time. A friend is coming over.
I look forward to reading all of your links. I'll be posting comments later. :)
mab,
I hear you but China is not fueling US growth (though they are buying everything Australia can dig up!) and their internal bubble would only hurt their people which last time I checked were not exaclty priority #1 for the Chinese government.
"I'm a bit pressed for time. A friend is coming over." = "Halo IV Planning Meeting"
but China is not fueling US growth (though they are buying everything Australia can dig up!)
GYSC,
The dollar is the world's reserve currency. Lots of dollars have been hoarded as reserves, but eventually the dollars must find their way back to the states and must be spent on American goods.
Treasuries and mortgages were the primary dollar reservoirs over the past decade. It wasn't a global savings glut as Bernanke claims, it was a dollar creation glut/bonanza. Perhaps if foreigners had bought more U.S. CPI goods rather than interest rate lowering products like Treasuries and mortgages, Bernanke would have recognized the inflation and acted to stop the runaway credit growth.
As far as I am concerned, Bernanke is an idiot. He has no common sense and still doesn't understand what inflation is and what causes it. I also don't think he fully understands how the banking system works. No joke.
Also, keep in mind that most commodity sales (OPEC, Australian, Russian, Brazilian, etc.) are settled in dollars. But again, even if the commodity selling country doesn't spend the dollars directly on U.S. goods, ultimately the $$$$ must come home (even if they cycle around the globe for years in the interim.
The problem that everyone seems happy to ignore is that a lot of the credit floating around the globe acting like an actual dollar is not backed by real output.
An argument can be made that the system is more unstable today than ever before.
"The problem that everyone seems happy to ignore is that a lot of the credit floating around the globe acting like an actual dollar is not backed by real output."
Excellent observation as usual. This leads into my "notional existence" of money sermon but i will spare you!
Speaking of USD...
In previous posts, such as found in this thread, I've been suggesting that we may be poised to ride a USD wave to higher highs.
Here's what Anonymous said in that thread:
"My guess is that something big will hit outside the US in 2010(Europe? Emerging markets?) and money will quickly flow back to safer ground. So the US dollar would go back up..."
A foreknowledge of events perhaps as the story of China tightening lending yesterday was, at least by Mr. Markets interpretation today, big.
Click here for graphical gratification
That could be a breakaway or runaway gap but is not likely an exhaustion gap
Am I a technical analyst? No. Do I believe technical analysis should be a staple in the diet of a prudent investor? HECK NO!
But I'm tracking Mr. Markets trend and he could be telling me something.
And as an aside, Mish seems to agree.
"In the meantime, the pending collapse of Japanese government bonds will not be good for the carry trade, but should benefit the US dollar. In fact, there are many things good for the US$ here.
...
Morepver, I would like to point out that the Massachusetts special election is likely to be US dollar positive.
...
Add it all up and most of the possible surprises are likely to be US$ supportive. Thus, dollar bears should consider hibernating for a while. The stars are aligned for at least a modest dollar rally, and perhaps a lot more than that."
I saw that interview with Bass live and was deeply impressed with what he had to say regarding Japan and the US. I'm not a Mish groupie either but read him almost daily. As far as his read on USD it doesn't really matter, the chart linked to above is what does matter. UUP is closing in on 195 day line as we speak. I'll post when/if I buy.
watchtower,
"If you have time could you give me your take on this?"
China cannot allow inflation expectations to become unhinged. Rising property prices might make the early purchasers happy but certainly not those following them. Unhappy Chinese are politically dangerous Chinese. Further, since food prices make up such a large part of the Chinese budget, and inflation often hits necessities first (food and energy), they have no choice but to tighten at some point.
Tightening is very risky for the "sure thing" risk trade.
It's one reason I'm not a believer in commodity driven stock markets. Didn't work in the 1970s. Didn't work in the 2000s. Won't work in the 2010s. Commodities as a growth engine won't lead to prosperity. Ask any locust swarm.
Put another way, central banks want to encourage risk taking right now but they'd vastly prefer something other than oil speculation. It isn't on the approved list of acceptable bubbles.
Just opinions of course.
mab,
"The system always needs a greater fool!"
Unfortunately, our choices seem to be...
1. Unborn American children.
2. Lowly paid Chinese workers.
3. Unborn Chinese children.
4. None of the above.
China is resting its hopes on #1. Export or die!
Jim Rogers appears to be betting on #2 and #3. Good luck on that!
I think you know where I stand.
GYSC,
"This leads into my "notional existence" of money sermon but i will spare you!"
Give us this day our daily "bread" ... or we're heading back into deflation!*
* Bread may include but is not limited to physical cash, extended unemployment, and extended COBRA. Post-crisis bread must meet or exceed pre-crisis bread or inflation unlikely. Bread must not be borrowed from the recipient in order to pay the recipient or prosperity not likely. Beware overcooked bread not marked to market.
Thanks Mark.
G.H.,
I think the very best reason the dollar bounced higher (and may continue) is that SO many were convinced it couldn't.
Sitting in the frying pan may seem painful, but jumping into the fire is hardly an exit strategy. The dollar being bad does not mean that the euro is good or that oil and/or Chinese real estate is good at any price.
It's all about relative value and what's already been priced in. I'm picturing all the newest forex traders who based their trading strategies on popular headlines. If reading headlines and using heavy leverage was all it took to make serious money, then we'd ALL be rich.
TIP (inflation protected Treasury bond fund) is spiking higher on the fear trade today.
If that fear trade continues too much though, TIP is going to reverse course big time.
Few think deflation is possible right now. Deflation has a way of sneaking up on us though. Deflation is not good for TIP.
Oil's down again (my $80 ceiling prediction is holding). The stock market is too. Contrary to very popular opinion, cash is not trash. It's a perfectly rational place to be sitting today.
Another China article:
http://finance.yahoo.com/news/China-declares-crisis-past-apf-2622806758.html?x=0&sec=topStories&pos=8&asset=&ccode=
The article mentions wages and inflation, specifically food inflation.
Remember, the recession ends when the depression begins. I'm taking the under on 2012.
mab,
"I'm taking the under on 2012."
If only there was a way to safely overleverage that bet using what's left of other people's money. The leverage could allow you to win big. As you trickled down your winnings other people could win too. You'd be providing a great service in our service economy. You'll want a catchy name to inspire confidence though.
Goldmab Sacks
Indirectly serving the unemployed since 2010.
Just a thought.
Mark,
glad you are ok and your "friend" did not tire you out!
UK inflation up, ours is even, China's is out of control, I guess its all relative.
Dollar gaining a Holla, and gold and silver hit in the collar
Banks are a target by white house,
markets go on a temper tantrum
All a big mess, and Berkshire Hathaway does the first stock split ever, why was that?
Crazy week, but get your Friday night requests in, its gonna be a long one!
GYSC,
"China's is out of control..."
And therefore China itself is out of control. Scary times for a government that believes first and foremost in being in complete control. Won't end well, not that it ever ends.
GYSC,
"All a big mess, and Berkshire Hathaway does the first stock split ever, why was that?"
It has something to do with the conversion of Burlington Northern shares into BH-b shares for tax purposes. That's all I know, and it's not much.
Stag,
"Sitting in the frying pan may seem painful, but jumping into the fire is hardly an exit strategy. The dollar being bad does not mean that the euro is good or that oil and/or Chinese real estate is good at any price.
"
Knowledge is useful, but I'll take understanding any day of the week. If I don't understand something I'm going to stay away, I just don't want my dumbness to catch me out ;)
You seem to understand this dollar thing far better than myself, I'll have to rely on market trends to determine entry and exit points.
I hope your call on TIP is right if for no other reason than the "feel good" benefit of knowing I got out at a good time.
G.H.,
I hope your call on TIP is right if for no other reason than the "feel good" benefit of knowing I got out at a good time.
For what it is worth, I keep chanting, "Anything but stagflation."
It's especially hard to do right now. It seems I put stagflation in my name, lol.
If oil would just crash again it would make me feel much better about sitting in cash. Hopefully China will help me out. I have to believe $80 oil is killing them.
Even if oil stops rising, then inflationary pressures should vanish. High unemployment and falling rents should see to that.
Charlie Rose which not enough people watch because he is on PBS did an excellent interview with Prince Alwaleed. I have known of the Prince for sometime because of his massive ownership stake in Citigroup. But most recently they purchased The Four Seasons Hotel brand along with Bill Gates. The interview is wide ranging from the Middle East, his investments, global change, China. Take a look. If you get bogged down with the Mid-East political talk Charlie draws him into, just skip ahead as there are some real insights here.
www.thegreatloanblog.com
Mr Jumbo Mortgage
I don't know Stag,
"If oil would just crash again it would make me feel much better about sitting in cash. Hopefully China will help me out. I have to believe $80 oil is killing them."
Remember, China is simply storing a heck of a lot of those vehicles they've sold since ~mid-year 2009, so that might mean that the people who actually bought cars to drive are capable of pumping government-subsidized-artifically-low-priced gas into them.
But what do I know...
Just came across this juicy tidbit:
Geithner Spoke to Buffett, Blankfein on AIG Aid Day
Let's take a look at the list of people he "consulted" on the day of the AIG "rescue":
* Jamie Dimon (JPM)
* Lloyd Blankfein (GS)
* Vikram Pandit (C)
* Ben Bernanke (DOPE)
* Henry Paulson (GOD)
This is exactly the class of person that needs to be exterminated from the process of determining fiscal policy and procedure where taxpayer $$ are concerned. These are nothing short of the Five Heads of the Family that make up the cartel/cabal/clique of Wall Street Banksters.
I noticed that Ron Paul was NOT one of the people consulted.
G.H.,
"...so that might mean that the people who actually bought cars to drive are capable of pumping government-subsidized-artifically-low-priced gas into them."
From what I understand, the Chinese are paying pretty much what we are for gasoline. Price controls didn't work long-term.
http://online.wsj.com/article/BT-CO-20100120-703850.html?mod=WSJ_earnings_MIDDLETopHeadlines
"Under China's new resources pricing system introduced in January, refiners are guaranteed a 5% profit margin as long as the price of international crude is below US$80 a barrel."
The Editor,
I watched Charlie Rose quite often in college. I wish I could say it was for entirely noble reasons, but much of it was just because I was a night person and late night TV viewing choices were very limited back then.
I remember a prince talking up Citigroup many years ago (while I owned the stock). I'll be watching the interview with interest (pun intended) at some point today.
The Berkshire move is probably nothing but unless I am mistaken they have been buying companies since, well, since forever and never did a spilt like this so unless there was some tax code change not sure that was the sole reason.
http://www.bloomberg.com/apps/news?pid=20601170&sid=aE93Hqifg6ZA
"Splitting the B shares is designed to accommodate the smallest holders who elect for a tax-free swap, it said."
Buffett's unfavorable attitude towards the little guy was finally trumped by someone on the other side of the negotiating table. I say good for the other side.
Expect more "inferior investors" at Berkshire's annual shareholder meetings going forward.
http://moneynews.com/Headline/US-All-Business/2010/01/22/id/347731
Don't be fooled. Buffett isn't doing this because he wants to give more people a chance at owning Berkshire stock. The stock split is being done as part of Berkshire's $26.3 billion acquisition of Burlington Northern Santa Fe Corp. The new lower-priced shares enable Berkshire to offer shareholders in the nation's second-largest railroad Berkshire stock instead of cash.
Buffett acknowledges he doesn't like having to issue stock. Neither does his right-hand man, vice chairman Charlie Munger.
"Charlie and I like using stock about as much as preparing for a colonoscopy. It's not our favorite activity," Buffett said Wednesday at a special shareholders meeting to approve the stock split. He did not return a message requesting additional comment.
Mark,
great points and I am sure that is the deal but it just seems out of character for them.
Oh yeah,
GO SAINTS!!!!!!!!!!!
Dec. home sales sink; prices plunged in 2009
"Still, prices plunged by more than 12 percent last year — the sharpest fall since the Great Depression."
http://tinyurl.com/ycl6g27
Alrighty then, now who was it that said:
"If you already have a lot invested in the stock market, perhaps real estate is the way to go."
Oh yeah, it was Jim Wang.
Mark covered this in his last post but when this news hit today it was the first thing I thought of i.e. Mark's last post.
GYSC,
Our whole economy is "out of character". ;)
As I type this CNBC tells me of a whole new season of American Greed though, so at least we have that to look forward to.
watchtower,
Prices plunged? That's great (depression) news!
As home prices approach zero, renter prosperity approaches infinity. Too bad the government policies were aimed at reducing the number of renters. Oops.
So I'm over at one of the political forums where I participate (rant, rave, fight, and so on) and I run across this:
"...TARP is the most profitable program the treasury department has ever ran.
...government made enormous sums of money off the banks via TARP."
So I decided to take a look at the most recent transactions report for Capital Purchase Program (CPP) and I see that we (taxpayer) are still owed $82B on an original investment of $204B. So far, a 40% loss.
It's interesting to note that out of 677 banks given bailout money only about 20 to 25 have paid back and, shockingly (sarcasm), they consist primarily of the cartel banks.
Notable are Suntrust, KeyCorp, and Regions who have not paid back one penny of north of $10B combined and the world ain't gettin' any easier for these banks.
Watchtower,
I dont take advice from anyone named "WANG" lol.
Don't worry the existing sales drop was due to seasonal factors but when home sales go up in the summer (like they do every summer since time began) that is not a seasonal thing but proof of a strong rebound. Charlatans all.
Mark, did you hear anything about the live action fime for "Halo" yet? I read the same guy directing the new "Hobbit" film wants to do it. Any time frames?
G.H.,
...and the world ain't gettin' any easier for these banks.
Nice summary.
GYSC,
Any time frames?
I'm awaiting the next advancement in financial innovation to protect us from crashing prosperity. It's taken from the movie industry.
Stop Motion + Freeze Frame
It will be sold with the following slogan.
Take a picture. It will last longer.
There will be lots of eye rolling to help add to the effect. ;)
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