I’m not even sure it wouldn’t be a good idea. One of the reasons that China has done so well, this time around AND last time around, is because of the limited convertibility of the yuan. Most of the foreign investment in China has been via ‘direct investment’ – a company comes in and builds a plant. Other countries might want to take a long hard look at doing something similar to limit hot money INFLOWS. Which of course would certainly decrease the destablizing effects of hot money OUTFLOWS next time around.

Unfortunately, your average Joe (or Michel here) doesn’t know what’s coming. The main trade union (IG Metall) is still threatening to strike for a nationwide 8% claim, while the car plants are already shuttering. The trade union leaders seem to imagine the finance crisis is just a trick to fool them. Ach weh!

But there is another thing which makes me sick. Too many British and American commentators are evidently hoping its going to hit everybody else EVEN WORSE! How bloody stupid can you GET!!! We are all in this boat together, and, as Dubbya said, this sucker might go down – with all of us.

OK what do we need? Two things:

1) A global agreement that NO currency will be allowed to fall victim to a speculative attack, whether it’s the Pakistani Rupee or the Chinese Renminbi. Yes, the Renminbi too – the Chinese know their enormous reserves could be gone in the twinkle of an eye if what we suspect about the Chinese economy is true. And they will only expand domestic demand if they are secure on the currency side.

2) A global investment plan for eliminating poverty (in China too) and conversion to CO2-free energy production. Finance it by issuing bonds that are so AAAA that everyone will buy them. Precondition – stable currency conditions (see (1) above).

‘The Treasury TIPS auction today was a disaster. The market is sending Treasury and Congress a very strong warning that you both better cut this crap out or the Treasury market may dislocate, ending the party for America entirely.

If you want to know where that nasty selloff came from in the market late this afternoon, you just found the reason.’

http://market-ticker.denninger.net/

look at the chart. who is the odd man out?

http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/leadingtraders.html

This is somewhat entertaining:

Goldman, Hungary and Regulators
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/goldman_hungary_and_regulators.html

… So the US authorities should have known – and presumably did know – that by allowing Morgan Stanley and Goldman to become banks they were in effect forcing a serious contraction in the hedge-fund industry, which in turn would lead to sales of all manner of assets held by hedge funds and precipitate turmoil throughout the financial economy.

Jesse W.
http://www.subprimeblogger.com