Thursday, April 19, 2012

Quotes of the Day!

April 19, 2012
Car Makers Still Look to China

China has "already got overcapacity that's about equivalent to the size of the entire German market," said Mr. Thomson.

Meanwhile, over at planet Jim Rogers...

April 19, 2012
Jim Rogers On When To Buy Gold, Chinese Bubbles And Fake Good News

China will certainly be the largest producer and consumer of automobiles in the next several years. I don’t know how much they will produce or consume.

I've never seen a more uncertain certainty argument.

But if anybody thinks there’s a bubble in China, they haven’t been doing their homework. The bubble popped. Prices have come down and are continuing to come down.

There was this bubble you see. And it popped. But don't go calling it a bubble now because prices have come down and they are apparently continuing to come down, lol.

I shorted Treasury bonds again a little while ago, and my timing has never been very good in that market. I’m down a little bit, not much.

July 7, 2011
Jim Rogers Says He's Shorting 30-Year Treasury

Jim Rogers, the noted commodity bull, is shorting the 30-year U.S. government bonds and may consider shorting the 5 and 10-year bonds as well, he told CNBC on Monday.

30-Year Treasury Yield (7/7/2011): 4.37%
30-Year Treasury Yield (4/19/2012): 3.12%

For those keeping track at home, that's a 1.25% loss each year for 30 years. He managed to squeeze all of that "sure thing" pain into just 9 months though, much like an expectant mother.

Baby needs new shoes!

St. Louis Fed: 30-Year Treasury

Click to enlarge.


Stagflationary Mark said...

As I ponder the chart, I am left with this curious reflection.

It took the depths of the Great Recession to get the 30-year Treasury yield this low.

Now all it takes is a wink and a nod, lol. Sigh.

Troy said...

I don't pretend to understand China at all. is the raw housing market data. The YOY doesn't seem that alarming, but who knows what bona-fides this data has.

As the 1970s & 80s showed here, real estate is the best place to front-run inflation, and is one of the only investment avenues for Chinese.

If you take the average Y60,000 flat -- $360,000 in current FX but once the yuan goes to 4 that will only be $240,000 again.

Nominal and real Chinese wages will continue to rise this century. How much, dunno, but my thesis tells me that land will gladly take every dollar the Chinese have to throw at it.

China's population pyramid for 2050. Many more old people, fewer young people.

China has room to inflate up to our level, and we have room to deflate down to their level. Mebbe we'll meet in the middle some day, though by then we'll have given them all of our money and jobs and we'll have more a Soylent Green-quality economy.

China is going to peak around 1.4B people apparently. Not all of them can have an American standard of living, but it wouldn't surprise me to see more of them doing so than us, should present trends continue.

Mr Slippery said...

On one level, I can understand why Jim wants to short T-bonds. The US is running a failed economic system. The handful of politicos and appointed bankers at the Fed have no real wealth. Just a couple of marble buildings and a computer that runs Quicken. The only difference is that the law lets them put whatever number they want in their checking account.

What Jim should realize, though, is that as long as the US is the center of the world money system, every country and wealthy person in the world will support it. He should be shorting the edges of the empire first. Look at how the EU is breaking down. Not from the center, but from the periphery. So, I would look at shorting Japan or China before the US. Yes, I consider China part of the US empire.

Mr Slippery said...

Depression is a choice.

Worth a read.

Troy said...

^ that was good, but only as far as it goes.

As I haunt Delong's comment section with, we have a very poorly-structured economy, as evidenced by our $8000/capita health care costs, 50-60% population of renters (and the trillion(s) in ground rents they yield to landowners).

But it is true that they-with-the-gold are making the rules. Conservative forces have done a reasonably decent job constructing institutional defenses of their position since the "Powell Memo".

Our $900B/yr defense bill is another brick in that conservative wall, too -- keeping food on a lot of tables and people off the streets. If it were divided by $50,000, that would be 18 million workfare paychecks, about what the total national health & education employment is.

Whenever I hear people complaining about low yields on their investments, I can only smirk 'return on capital or return OF capital, pick ONE'.

People still don't seem to understand the CMDEBT bubble of 1999-2007 that put us collectively where we are now.

Stagflationary Mark said...

Mr Slippery,

From your link...

The median influencer in these economies is not a billionaire, but an older citizen of some affluence who has mostly endowed her own future consumption. She would like to be richer, of course. But she is content with her present wealth, and is panicked by the prospect of becoming poorer. For such a person, the depression status quo is unfortunate but tolerable. The risks associated with expansionary policy, on the other hand, are absolutely terrifying.

I believe there is much truth in that.

Stagflationary Mark said...


Whenever I hear people complaining about low yields on their investments, I can only smirk 'return on capital or return OF capital, pick ONE'.

Put me firmly in the return OF capital camp, lol. Sigh.