How much of the inflation paranoia was fueled by the Federal Reserve and how much by the dumbass ECB hawks? This entire "buy commodities to hedge against inflation" headfake was hammered into investors' heads by the ECB, not the Fed: Bernanke Q2/2008 - "clear risks to growth" - "economy slowing down across the board" - "headline inflation will cool in the intermediate term" - "seeing no longer term pressures on wages and core inflation" ECB July/2008 - "remaining highly vigilant about inflation" - "highly concerned about rampant headline inflation trickling down into core inflation" - "not concerned about EUR strength" - "do not see negative EU zone GDP in Q4/2008" - "see growth pickup in Q1/2009" - "no room for rate cuts" - "will not rule out further rate hikes" The ECB, in my opinion, is one of the main culprits behind the severity of the commodity bubble by driving millions of dumbass investors into short USD/long commodities positions at the same time that led to a viscious and painful unwind this fall when everybody tried to exit through the same door. Just the facts, from my "cheerleader" perch.
it was shown on another thread - japan is no longer a big saver - scarinbop (sp) and mvic made impressive posts. finally - this is a trading thread. Figuring out what is going to happen to currency and interest rates once China stops buying our debt is the macro trade of the future. So far timing has been really tough. When will US inflation kick in - is it really in China continued interest to stop it. Do they have so much labor they could work for virtually nothing. Is that the true limit - when there is no valued added charge for their labor and only very small return for their investment in factories and technology --- I am seeing reports - that lead me to think that is starting to happen now.
China has chosen to follow the US. They have linked their future with ours. They are simply concerned, and they have every right to be. The fear of China is ridiculous, as we go, they go harder, up or down. They displayed a tremendous amount of respect to the west just last summer. Many Chinese are moving to the west coast. It is not easy for an ancient and proud country to get along with a young sometimes rude Super Power. There is no justification for fear of Chinese. They could very well become our greatest friends in this world. They are in pain and are looking for US economic leadership.
Hugh Hendry was writing very recently that there is a "video going around macro hedge fund managers email inboxes of idle and deserted construction plants filmed all over China" and how he put on a small China short position. Anybody seen that video? Link?
Are we talking about CHINA??? The one who threatens force to reunite with Taiwan, Tianmen Square, dominates Mongolia, has a communist government that is disconnected and detested by much of its people. had to shut down huge amounts of factories for a couple of months just to clear out the vast pollution in time for the Olympics, considers "free trade" as "let's see how many companies in 200 countries we can put out of business with our government-supported market domination of products and stealing of foreign ideas and pirated services to keep ahead of the streaming masses coming into the cities desparately seeking work"... THAT China??? I have been there, have you????
Monaco is a MONSTER created by the USA. They were about to build a massive terrace over the Mediterranean see and take it over. Luckily the project is on hold now.
China? India? USA? Europe? Ha! All will fall or be converted by the sword of Islam eventually. It's the most aggressive and persistent power out there. Europe is already not far. ~2 generations
China will never stop lending to the US. If they stop lending to the US, the dollar is very likely to plummet, and all the savings of China will be reduced. Indeed, the most important part of the chinese savings are invested in the US (Treasury bonds) and thereby consist of dollars. There is an interdependance between the US and China, and no one have an interest in breaking it. However, with the recession and the financial crisis in the US, the American househod will stop borrowing money and will begin to repay their debts. In addition, Chinese household will begin to consume more. The savings rate in China is 45%, but it is likely to decrease. China has an interest in such an evolution, because they are currently too much dependant on their exportations to the US, and may suffer from the current global crisis.