"there is chaos under the heavens, and the situation is excellent" ... chairman mao
This just in my e-mail in-tray:
E-mail #3 by zzzzzzzzzzzzzzzzzzz
"The parallels are rather in human behaviour, which in times like these sets market prices as much as the fundamentals."
note, the 'fundamentals' never 'set prices' in financial markets. it is only human psychology (herding) which does that. also, the fundamentals don't just pop out of the sky unbidden. they are also the result of human behavior and action.
E-mail #2
On 9/13/07, xxxxxxxxxxxxxxx wrote:
in this context, note this essay (linked below) by Frank Shostak on the Bernanke savings glut myth, where it is explained in plain English what savings really are, and how savings and money are not synonymous in a fiat money system - which confusion seems to be the root of Bernanke's error. an important point is also the fact that the US has managed to divert real savings from the rest of the world - which in turn has been engaged in massive monetary pumping. this diversion is no proof of a 'savings glut'. a 'money and credit glut' is not a savings glut.
in fact, there can not be a 'glut' of savings. this is akin to maintaining that there is a 'glut of wealth', as if that were somehow negative.
what is also clear is that in China and elsewhere in the mercantilistically inclined surplus nations, monetary pumping must have also undermined the local pools of real funding. it is also an inescapable conclusion that China is beset by malinvestments. the FT's warning with regard to China's stock market is well founded.
Shostak also puts the blame for the declining US savings rate and propensity for consumption without preceding production where it belongs - namely with the Fed. so here we have another confirmation that deflection of blame is the true motivation for the savings glut story:
Is there a glut of savings?
mises.org
further reading: debates on the 'savings glut' at the mises.org blog :
blog.mises.org
blog.mises.org
blog.mises.org
blog.mises.org
E-mail #1
On 9/13/07, YYYYYYYYYYYYYYYYY wrote:
FWIW, my boss told me last night I was wrong.
It isn't the US that is going to be the problem going forward, it is China.
There was apparently a land auction in Guangzhou this week where the price of land was sold at some absolutely absurd levels.
(I'll try and find out what it was). I did find this:
china.org.cn
A 110,000-sq-m plot was sold in the Guangzhou Development District (GDD) on Tuesday. Low-cost apartments will be built on the land to house local low-income families.
And there's more to come. The city's land sales in September are expected to set a record high for a single month - double that of the first eight months of the year - and will open up opportunities for local and foreign property developers.
Some of the land will be used to provide affordable housing for low-income families and migrant workers, while the rest will be used for commercial apartments.
The average price of residential homes was more than 12,000 yuan per sqm at the end of August across the Guangdong provincial capital's eight main districts.
In any case, I suspect that Tony Jackson in today's FT nails my boss' case:
ft.com
SNIP:
Back then, bulls would tell you the Tokyo market could only go up because Japanese savers had nowhere else to put their cash. Today we are told that because Chinese investors can only get 3.5 per cent on bank deposits, while inflation is running at 6.5 per cent, they have no alternative but to buy stocks. This fallacy is seductive, since it implies the market can logically have no ceiling. It is generally deployed as a last resort, when the fundamentals have fallen by the wayside. And whenever I meet it, the phrase "Japanese wall of money" springs to mind. In all this, I do not mean to draw direct comparisons between the two economies. They are plainly very different ¡V indeed, the Chinese economy resembles nothing the world has ever seen. The parallels are rather in human behaviour, which in times like these sets market prices as much as the fundamentals. |
