A China-U.S. Reckoning - Forbes.com

Nouriel Roubini, Rachel Ziemba and Adam Towle, 03.18.10, 12:01 AM EDT
The two powers grope for a new normal.

The fault lines in the U.S.-China relationship have been increasingly exposed in recent weeks, with rhetorical barbs exchanged on: trade; the treatment of foreign companies in China; strategic issues such as U.S. support of Taiwan and Tibet's Dalai Lama; responses to Iran's nuclear ambitions; and especially exchange rates. Domestic consensus in the U.S. on the need for action with regard to the renminbi (RMB) is growing. Chinese leaders, including Premier Wen Jiabao, have recently hit back at the U.S. for what they characterize as interference in China's security and economic affairs, and U.S. economic mismanagement.

Today we examine the quest for the new normal between the world's largest creditor and its largest debtor. (More)

This is definitely a market "off kilter".

Inflection points do that.

Rob Dawg wrote:

Inflection points do that.

This is also like an infection...

mock turtle (profile) wrote (in reply to...) on Thu, 3/18/2010 - 3:29 pm

and you are wrong the MA plan works

Check out link I passed along to the video of our current treasurer, Tim Cahill. He's been the guy figuring out how to pay for it, and just last night he said that the current congressional plan, which is modeled on the MA plan, will be a disaster and will bankrupt the US in 4 years. This not a Tea Party person, and not a Republican. He's a long time Democrat who's become an independent candidate for governor. The MA plan is a failure- period!

Cinco-X wrote:

Nouriel Roubini, Rachel Ziemba and Adam Towle,

Hey remember how a year ago Roubini said stocks had another 30% to fall?

Apparently the monetarists have no ability to predict the consequences of the policies they advocate.

Contrast CR's post with this rosy stuff:

"
The median price of houses sold in Santa Clara County

rose 21 percent last month

from February 2009, while sales rose 4 percent, a real estate information firm reported Thursday.
"

Silicon Valley, Peninsula house prices, sales rise in February - San Jose Mercury News

CR said:

Almost 27% of the buyers used FHA insured loans, and another 27% paid cash (mostly investors). This is a long way from normal ...

If you're paying close to the list price, it makes sense to use a low down payment FHA loan, as a "put" against the chance that the housing market takes another leg down. If you're paying cash, it's a safe bet you're paying well below list, and the next leg down is much less of a concern. It all sounds reasonable to me, except for the 46% that have chosen neither strategy....

"Sales and price data remain choppy," DataQuick President John Walsh said in a statement released with the data. "The market remains fundamentally off-kilter.There's still relatively little lending going on in the upper price ranges, and little adjustable-rate financing, which has been vital to the Bay Area."

this sentence at bottom of article is telling and even mirrors robdawg...

Rob Dawg wrote:

This is definitely a market "off kilter".

We can add it to the list of markets that are off-kilter.

Don't know if this is a good contrarian indicator or not, after all these guys were all selling at the lows.

Please sell, I am a buyer.

I'm crusading against hopium up here by giving away free pot samples....still doesnt work....

hopium is shiny, stinky and doesn't make you cough....

27% paid cash

In the Bay Area. I guess Wall Street bankers are running out of places to stuff their bonus money, aka, our tax money.

Cinco-X wrote:

We're being "called out"..

This guy says "The Case-Shiller Housing index has been up for the past six months, suggesting prices are stabilizing,"
but CR says
"The index [CoreLogic] has declined for five consecutive months."

gruntled wrote:

This guy says "The Case-Shiller Housing index has been up for the past six months, suggesting prices are stabilizing,"

People rationalized the bull market in 2007 when fundamentals didn't support it. They're rationalizing it now for the same reason.

Just like many rationalized--in March 2009--that the Fed was powerless to inflate another bubble.

And here we are.

ghostfaceinvestah wrote:

Don't know if this is a good contrarian indicator or not, after all these guys were all selling at the lows.

Why aren't they listening to Soros. Don't they know gold is the biggest bubble there is?

Cinco-X wrote:

We're being "called out"....

Also this guys says "Payrolls are up relative to where they were a year ago. In fact, the increase (or less decrease) in payrolls looks like a sharp V. 4.) This will not be a jobless recovery."

but even Obama is predicting at best a flat unemployment figure this year, certainly not a "sharp V."

gruntled wrote:

Cinco-X wrote:
We're being "called out"..
This guy says "The Case-Shiller Housing index has been up for the past six months, suggesting prices are stabilizing,"
but CR says
"The index [CoreLogic] has declined for five consecutive months."

Inflection points are like that. Whether we double dip or recover strongly is the question. Whichever expect the stock markets to wildly overreact. IMO if we get the double dip it sets the stage for a V recovery better than anything an extend and pretend scenario can promise.

noob goldberg wrote:

Just like many rationalized--in March 2009--that the Fed was powerless to inflate another bubble.

energyecon wrote:

Yes, I was referring to myself there.

Speaking of epic fail. Hows my SRS doing today noob?

gruntled wrote:

Payrolls are up relative to where they were a year ago.

WTF????

poic wrote:

Speaking of epic fail. Hows my SRS doing today noob?

You're up 4 cents, poic!

Still under $6 though

My beaten-down SKF picked up a few cents today, so now I'm only a hundred or so in the hole. Stupid market.

Cinco-X wrote:

The Bears Are Dead Wrong - Financial Adviser - WSJ

Well you'd expect those kind of articles to become more prevalent as a top approaches.

BTW, just because somebody is a pessimist doesn't necessarily mean they're a bear. From a trading perspective I've spent a lot of time trying to train myself not to necessarily be a bear just because everything appears to be going to hell.

That's why I like to frequently make jubilant bubble posts. It helps to take on the mindset of the market during strong trends, even if the trends don't make any sense. What counts is that the market thinks it does.

ghostfaceinvestah wrote:

hah, true dat. I do NOT count myself among that crew. Can the Fed fight the deflationary trend of a bursting credit bubble forever? Jury is still out

Heh, I've considered this entire 24-month run to be a 'learning experience'. Something I'll relate to my kids someday, and they'll roll their eyes and tell me to shut my yap and finish my prunes.

noob goldberg wrote:

I'm not in a rush

Me either... I still think we have another down leg, just dont know what will trigger it... all of the global defaults should have some impact... I just hope it doesnt go down like a row of dominoes....

gruntled wrote:

This guy says "The Case-Shiller Housing index has been up for the past six months, suggesting prices are stabilizing,"
but CR says

He also says, "When a foreclosure happens, people have more money to spend (they are no longer spending on mortgage." Which is of course a lie, as now that the freeloaders have been kicked out, they now have to start paying rent.

dryfly wrote:
Is that a good thing or a bad thing? If 'normal' is the heady bubbiliciousness of the last decade then maybe abnormal is better. Not ripping anyone just suggesting an alternative take.
At a party where everyone gets just as drunk as the next, there is a whole new normal and a whole new standard for socially-acceptable behaviors...

lol

this SRS seems to be getting ligher and lighter and lighter.

I think my winnings today will cover a Starbucks trip wheeeeeee

Somaxon Pharmaceuticals IncNASDAQ:SOMX
$9.21 +5.27 (133.76%)
Day's Range
3.77 - 10.01

ok. here's the thing. in the future, when an event like this is about to take place, i want someone on this board to inform me; ahead of time. like the day before would be nice.

gruntled wrote:

ghostfaceinvestah wrote:
gruntled wrote:
Payrolls are up relative to where they were a year ago.

WTF????

I hope you realized that I was quoting that Altucher dude.

Well I think in many instances he's right - compared to this time last year many firms do have heavier payrolls. Most of the ones I work with & for do. But this time last year we were all looking for the cyanide tablets...

test

noob goldberg wrote:

Heh, I've considered this entire 24-month run to be a 'learning experience'. Something I'll relate to my kids someday, and they'll roll their eyes and tell me to shut my yap and finish my prunes.

You just have to understand the MBS market. It is a big market that a lot of people just don't understand. Make sure your kids understand it.

I will never forget as long as I live the private label market freezing up in August 2007, and the equity markets climbing through October. I remember thinking, WTF, do people realize how vital the securitization market is to this economy?

I wasn't smart like John Paulson and put on massive short positions, but I did sell and go flat, which saved me some money.

Then last year when Zimbabwe Ben said he was gonna pull a Hunt Brothers on the agency MBS market, I remember thinking "I have no idea what this is going to do to the equity market, but it is going to crush the dollar relative to real goods", so I bought oil and a few other commodities (and went long CAD and AUD as commodity plays). Today is actually the one-year anniversary of that day, actually.

Now, though, I am waiting, waiting while the market bubble inflates. I will be very surprised if I am wrong in guessing the market is going to drop once the MBS buys are over.

ghostfaceinvestah wrote:

Now, though, I am waiting, waiting while the market bubble inflates. I will be very surprised if I am wrong in guessing the market is going to drop once the MBS buys are over.

So does that mean the beaten dollar makes a resurgence?

noob goldberg wrote:
lawyerliz wrote:
test
You passed!

Cinco-X wrote:

We're being "called out"....

Not a single intelligent remark in that shillish puff piece.

I LEAVE JUST FOR A LITTLE WHILE AND PEOPLE START INSISTING THAT THERE IS A NORMAl to hang your hat on. srry for the all caps. the eensy computer is cute but horrible to actually use.

noob goldberg wrote:

Still under $6 though

Should I put in a limit buy order at $4, or is it going to zero?

poic wrote:

lol

this SRS seems to be getting ligher and lighter and lighter.

It seems like just yesterday that we had the "SRS is a steal at 100" discussions.

dryfly wrote:

Repeat that all across NAFTA Zone & we get a more accurate picture of 'stagflation new century style'.

I realized I hadn't visited the newsfrom1930.blogspot.com in quite some time. I read this entry from March 17, 1931:

US Feb. exports $226M vs. $349M in 1930 and lowest since 1914; imports $175M vs. $282M and lowest since 1916. While Feb. is a seasonally slower month, observers had expected a better showing due to drastic decline in the previous few months.

...and immediately wondered if they had an exceptionally heavy snowfall in February.

noob goldberg wrote:

I still think that poic will end up being proven right. I see him hoisting his SRS high above his head, digging his spurs into his trusty steed, and rushing headlong into the Federal Reserve to vanquish his eternal foe.

Sancho, my armor!

I am at rehab. Along with some other people who appear to be a thousand and 3 average.

The guY riding by my side --emp??--was 80k underwater on his myg. I ADVISED HIM TO WALK. vERY SOOthing to the hip pain, telling someone to walk. It would be a ruthless default, since he has roommates and can afford mtg.

"seeing a stock market that, to him, is a screaming buy. "

I think he meant it's a screaming bye.

Sancho, my armor!

I recall salesmen exhorting people to buy at certain delicate times in the history of the Market. I always wanted to hear them say what they were doing with their own money, but I suppose that would have been too rude and personal.

Jonathan wrote:

Has China eclipsed us in millionaires yet?

Real, or nominal?

Poor SPY broke it's winning streak today. Up in after hours, but too little too late!!!

lawyerliz wrote:

They wanted to know if I wuz innerested in bingo. . . .

I'd decline. Take a seat at the front, next to the caller, and make bets as to which of the players is going to win. Or have a heart attack. Or, for double your money, both.

Al Jazeera English - Business - China export rebound continues
Al Jazeera English - Business - US ups pressure on China over yuan

That Jesse cracks me up sometimes ...

http://2.bp.blogspot.com/_H2DePAZe2gA/S6I4EBy1TkI/AAAAAAAAMLw/gPH8wz3-P_4/s1600-h/bernundbutt.JPG

Oops, before I go, David Rosenburg has made another appearance, this time to yell at the loonie:

David Rosenberg thinks the Canadian dollar is overvalued by 6 cents - The Globe and Mail

Dollar overvalued, Rosenberg says

The Canadian dollar (CAD/USD-I0.99-0.005-0.49%) is overvalued by at least six cents, Gluskin Sheff + Associates chief economist David Rosenberg says in posing the question of whether the loonie is “ripe for correction.”

“The net speculative long position (from the Commitment of Traders report - futures and options on the Chicago Mercantile Exchange) has surged by a factor of five in just the past month, to 62,123 contracts (C$100,000 a pop) which is the second largest on record,” Mr. Rosenberg said today. “The last time the net speculative longs on the loonie were this high was back in November 2007; the loonie went on to suffer a 9.5 per cent cent correction in the next month.”

One of Canada's leading economists, Mr. Rosenberg said that the “fair value line” is rising by a couple of cents a year, which illustrates how Canada's fundamentals are improving relative to those of the United States. “But at 99 cents, we believe the loonie is overvalued by at least six cents and therein lies the conundrum for the bulls on a near-term basis,” he wrote.

Some other economists believe the dollar will hover around par with the U.S. currency once it gets to that point.

The dollar traded around the 99-cent U.S. mark this morning, but then dipped as the price of oil dropped and the U.S. currency firmed.

Over the past three months, BMO Nesbitt Burns noted, the Canadian dollar has been "king of the currency world," outperforming all other major money. Over the past year, BMO said, the strongest performer is actually the Seychelles rupee, while the Canadian dollar ranks fifth.

noob goldberg wrote:

US Feb. exports $226M vs. $349M in 1930 and lowest since 1914; imports $175M vs. $282M and lowest since 1916. While Feb. is a seasonally slower month, observers had expected a better showing due to drastic decline in the previous few months.

Realize we were the China of the day - the world's greatest exporter. The importers at that time didn't feel the pain nearly as badly as we did... fast forward to now... we are no longer a net exporter, we import. Trying to peg us to the US in 1930s terms is a fools errand - pegging us to 1930s Germany & France & the UK is a lot better comparison. And as we all know now their pain came later - and was driven by 'social dysfunction' more than economics. Just sayin'...

I just ran into an old business associate from China. It sounds like things are still going gangbusters there. It's amazing to be reminded of what can be accomplished in an economy that has a semi-functional banking system and fairly healthy small businesses.

More:

• The "Arreola-Treat" wedding.
• The "Gowen-Geter" wedding.
• The "Holland-Tunnell" wedding.
• The "Daffee-Ducmann" wedding.
• The "Hay-Saylors" wedding.
• The "Palmer-Ball-Ichen" wedding.
• The "Rump-Orefice" wedding.
• The "Rump-Hammer" wedding.
• The "Hunting-Hoar" wedding.
• The "Busch-Hacker" wedding, and finally
• The "Long-Wiwi" wedding.

sm_landlord wrote:

It's amazing to be reminded of what can be accomplished in an economy that has a semi-functional banking system and fairly healthy small businesses.

SMALL BUSINESSES? It's all driven by SOE's & MNC's via party connections!!!! I have friends on a plane headed there now - there is very little small business that isn't fully sanctioned & under the thumb of either party or some large MNC [that then kisses party ass] to keep its franchise there. The stuff that isn't tied directly to it is driven from the trickle down from it.

Wow.

Yalt wrote:

lim SRS =0
t->∞
independent of path.
Unless you just want it for a quick flip, there has to be a better way.

I'm looking for trades that can run for at least six months. In our Calvinball markets, that's hard to find. I've actually made money on a couple of double-inverse ETFs, but SRS has something seriously wrong, or I still don't understand it, or both. No position.

lawyerliz wrote:

mnc??

Multi national corporation?

In Oakland, CA, investors have been successful up to this point as they appear to be smart enough to buy properties that look bad (typically not FHA eligible) but can be made livable with reasonable effort (minimal $ + sweat equity). In January investor-owned sales made up 6% of all sales and all but one showed a substantial gross profit (cost of repairs/upgrading isn't known).

dryfly wrote:

It's all driven by SOE's & MNC's via party connections!!!! I have friends on a plane headed there now - there is very little small business that isn't fully sanctioned & under the thumb of either party or some large MNC [that then kisses party ass] to keep its franchise there. The stuff that isn't tied directly to it is driven from the trickle down from it.

My associate runs a small business. Of course, he is very well connected and speaks English quite well, so.... you can fill in the rest.

ResistanceIsFeudal wrote:

MultiNational Corporation... aka the Spawn of Satan

Yup - or GDFMNC... that you'll have to guess for yourself.

Cinco-X wrote:

15 Most Unfortunately Funny Wedding Announcements

Beaver-Wetter ... heh heh ... heh heh heh ....

Looking like CR will have new Greek news to post.

http://www.creditwritedowns.com/2010/03/germany-backtracking-on-imf-involvement-in-greece.html

It must be amateur hour in Europe.

Mr Slippery wrote:
Traylor-Hooker was better.
I'm sure a Traylor-Park wedding would be interesting, if forgettable.

Jonathan wrote:

It must be amateur hour in Europe.

Not THAT amateur. FTA:

"Greek Prime Minister Papandreou had threatened to go to the IMF over EU objections if he did not receive assistance. This threat has been nullified. The next move now falls to Greece."

Rob Dawg wrote:

and the embarrassment from reading her posts while on all the good drugs.

And trying to type them on a tiny laptop. Have I mentioned that I hate laptop keyboards? I can't wait to get home.

Speaking of weddings - I was at one recently and the mother of the groom came over and asked me if I knew who the people were at an adjacent table - about 8 people altogether, 4 adults and 4 kids and teens, all well dressed in suits and ties... We were having a full dinner at the reception following the wedding - no one in the groom's or bride's families could identify them, neither could any of the other guests.... Apparently these people crashed the reception for a free meal and some drinks....

Where do I sign up for that size of balls?

ShadowInventory wrote:

Apparently these people crashed the reception for a free meal and some drinks.... Where do I sign up for that size of balls?

They probably watched the "Wedding Crashers" movie and thought, we can do that.

Get well soon, Liz.

dryfly wrote:

[In fairness my wife worked summers in one of America's best Danish bakeries - she really can pull out the stops when she wants to].

Raspberry Butterbraids? Nom nom. nom.