Ah, when it rains, it pours, We Americans get news that the US federal deficits are over the trillion mark even before Obama and Congress pull out the checkbook in an effort to buy some prosperity, when we also are told, via the New York Times, that China, our biggest creditor provider, is likely to […]
Read more...Reader Michael sent a host of updates on China, which might collectively be called, “Lousy China News Wrap.” And I don’t think he was cherry picking The eye-catching one was a coded story on capital flight from China, “China warns of risks from “abnormal” cross-border capital flow,” from Xinhua. The reason that capital is exiting […]
Read more...We have worried out loud that the policy remedies being pursued by the US amount to trying to restore the status quo ante to as great a degree as possible, particularly in trying to resturn US overconsumption to something approaching its former levels. Although it may be difficult to work two agendas, crisis response and […]
Read more...In past times of geopolitical stress, the dollar has generally rallies as investors move to safer havens. That behavior was not evident today as investors fretted about possible escalation of conflicts in the Middle East and South Asia. The euro went up a teeny bit, the yen faded slightly, the pound retreated. So where did […]
Read more...One of the ugly features of the Great Depression that in many (but not all) cases worsened the severity of the contraction was that countries adopted “me first” policies with little regard to their broader ramifications. The poster child of this pattern is Smoot Hawley. Although there is some dispute among economists as to whether […]
Read more...Admittedly, China announced a raft of worst than expected economic data yesterday, even when analysts anticipated further weakening in November. So the comment by the head of China’s central bank, that further rate cuts may be coming sooner rather than later, would seem to be entirely predictable. But one has to wonder at the timing. […]
Read more...Further signs that the Chinese economy is in the throes of a serious downturn. From Bloomberg: China’s exports shrank last month and industrial-production growth cooled, Fan Gang, an adviser to the People’s Bank of China, said today. “Things are not so good,” Fan said at a forum in Beijing. “November figures will come out soon, […]
Read more...I am puzzled by some recent market anomalies, which are breakdowns of established patterns: 1. Long dated Treasuries rising (a deflation signal) as stocks stage a dramatic rally 2. Dollar weakening while long dated Treasuries rise (the dollar and bonds usually go together) 3. Oil stocks rallying more than the S&P (28% versus 18%) when […]
Read more...We have been mystified at the utter silence on behalf of our friendly foreign funding sources at their willingness to be patsies to continue buying Treasuries when the outlook for the dollar is far from rosy. The US’s funding needs are going to escalate sharply due to the need to pay for rescue programs. And […]
Read more...The latest back-handed insult may be yet another variant of the Bush “we don’t do multilateralism” syndrome. Unfortunately, as various pundits writing at the Financial Times have pointed out, the US’s stranglehold on power is slipping. Even Obama in the campaign repeatedly said that a country cannot maintain military dominance if it is not a […]
Read more...The Japanese officialdom signaled an interest in a cheaper yen when the Nikkei breached 25 year lows. But the concern was not the level of the yen per se, but trying to use a weaker yen (it had run up to over 92 to the dollar) as to a desperate effort to shore up the […]
Read more...This Times Online story is frustratingly vague about the exact nature of these complicated and risky foreign exchange products sold to Japanese retail investors. While the size of the problem ($90 billion) may seem not all that bad in comparison, say, to subprime exposures, recall that these trades are likely to be unwound in a […]
Read more...As Senator Everett Dirksen famously said, “A billion here, a billion there, and pretty soon you are talking real money.” Today, the Fed provided Brazil, South Korea, Mexico, and Singapore with dollar swap lines of $30 billion each (hat tip readers Robertm, Dwight). From the Fed’s press release: Today, the Federal Reserve, the Banco Central […]
Read more...Over the last few weeks, and accelerating late last week and early this week, it looked as if a full bore run on emerging markets was in progress. Now with the yen taking its biggest dive in two decades and carry trade unwinds a temporary thing of the past, emerging market and currencies are staging […]
Read more...I’ve kept seeing mention of a possible 75 basis point cut by the Fed. As much as some traders seem to be lobbying for it, your humble blogger would regard Fed setting its policy rate at that level as entering the famed ZIRP (zero interest rate policy) land that has played a big part in […]
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