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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (7630)	2/10/2004 11:54:47 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

From the UK FOOL HIGH STREET SALES BOUNCE BACK AS HOUSE PRICES COOL By Anna Fifield, Economics Reporter search.ft.com House price rises continued to slow at the end of 2003, suggesting that the property bubble is steadily deflating, figures from the Office of the Deputy Prime Minister showed yesterday. … Ed Stansfield, a property specialist at Capital Economics, said further interest rate rises remained more likely than not. "Although the ODPM paints a picture of a cooling market, at 8.3 per cent house price inflation remains higher than the Bank of England is likely to feel comfortable with," he said. … NEW MODEL WILL POWER FORECASTS FOR ECONOMY By Ed Crooks search.ft.com Mervyn King, thegovernor of the Bank of England, will get the chance tomorrow to explain in full the reasons for last week's quarter-point rise in interest rateswhen he presents the monetary policy committee's new forecasts of inflation and economic growth. … Much of the questioning he will face is likely to focus on the change in the Bank's inflation target. These forecasts will be the first full set using the new consumer prices index measure. But the Bank made another change last year that attracted much less attention, but which could ultimately be more important - it started using a new model of the economy for its forecasts. … LETTERS TO THE EDITOR LET'S AIM TO BUILD HIGH-TECH HOMES IN THE COUNTRYSIDE By James Woudhuysen search.ft.com … t would indeed be a huge challenge, as Mr Wolf says, to double Britain's figure of 145,000 houses built privately each year. But that challenge can be met if radical solutions are adopted. … The world's new factory technology, together with deregulation, are the radical measures required. James Woudhuysen, Faculty of Art and Design, De Montfort University, Leicester LE1 9BH THE UK'S AGRICULTURAL LAND IS VASTLY EXPENSIVE AND COULD BE PUT TO MUCH BETTER ECONOMIC USE By Kevin Cahill search.ft.com Sir, Martin Wolf's perceptive column "England's great housing dilemma" … perpetuates the myth of crowding in the UK. … Agricultural land is not only uneconomic. It is vastly expensive. It is time that economic use was made of some of that expensive land. Kevin Cahill, Exeter, Devon EX4 4SN BROWN FACES CRITICISM AS THOUSANDS OF JOBS GO EAST By Jonathan Moules news.ft.com Gordon Brown will be accused tonight of failing to help maintain UK competitiveness as thousands of jobs move offshore. Mike Baunton, president of EEF, will criticise the chancellor, a guest speaker at the manufacturers' organisation's annual dinner, for adding to business costs. He will call for improved skills and innovation so companies can better compete with rivals in low-cost nations. … CAREFREE SPENDERS TAKE CARE OF WORLD ECONOMY By Christopher Swann search.ft.com In recent years US consumers have performed the same role in the global economy as the god Atlas did in Greek mythology - supporting the world on their shoulders. … Between the end of 1991 and 2003 US consumers increased their spending in every single quarter. Spending over those years rose by 55 per cent after inflation - dwarfing the 23 per cent increase in the eurozone and a 16 per cent rise in Japan. … … Americans' sense of wealth, though battered by the volatility in the stock market, has been bolstered by the strength of the housing market. Americans have also found it easier to free cash locked up in their homes through mortgage equity withdrawal. Economy.com, a consultancy, has estimated that mortgage equity withdrawal contributed around 1.8 percentage points to economic growth in 2003 and the economy grew by only 2.9 per cent. The cash raised by withdrawing equity from homes has been estimated at $775bn (€614bn, £420bn) last year. … G7 STATEMENT FAILS TO HALT DOLLAR'S SLIDE By Alan Beattie in Washington news.ft.com Currency markets on Monday shrugged off the Group of Seven's weekend attempts to fine-tune its message on exchange rates, as all sides tried to claim victory after the meeting. On the first day of trading since the seven leading industrial nations refined their call for currency flexibility and added a warning about excessive volatility, the euro hit a two-week high against the dollar. Traders concluded there was little in the statement to prevent the US currency sliding further. … EAT, DRINK AND GO SHOPPING, FOR TOMORROW YOU MAY DIE By David Pilling in Tokyo search.ft.com Japan's consumers are not yet driving a sustainable economic recovery but they have been spending more than economists had much right to expect. … Accounting for deflation, aggregate household spending rose 0.2 per cent in the nine months to September 2003, the latest reliable figures available. … Peter Tasker, who runs Arcus Investment, a hedge fund, says … "You can say consumer spending is not collapsing, that's probably true", he said "But one would have to say consumer spending remains weak." He points to housing starts, 30 per cent down on their bubble highs, and flat car sales as evidence of continuing weak sentiment. … JAPAN'S MONETARY ALCHEMY MAY NOT YIELD GOLD By Richard Duncan The writer is a financial analyst based in Asia and author of The Dollar Crisis: Causes, Consequence, Cures (John Wiley & Sons, 2003) search.ft.com … These developments highlight a fundamental question that has been debated over centuries: can governments create money and make the population richer without setting in motion a chain of events that ultimately ends in monetary chaos? We may be about to find out as Japan tests the hypothesis on an unprecedented and global scale. If this experiment in unorthodox monetary policy succeeds, then we have arrived at a new international monetary paradigm. Governments will have discovered how to finance limitless deficits through the creation of paper money, and we all can look forward to an age of great prosperity. If it fails - as have all past attempts to create wealth from thin air - then the world may not be able to avoid a severe and protracted economic slump as the extraordinary imbalances in the global economy (caused by the explosion of fiat money in recent years) begin to unwind. … GERMANS COOL LOVE AFFAIR WITH PROPERTY FUNDS By Juliana Ratner search.ft.com German investors' love affair with property is slowly coming to an end. Since 2001 German open-ended funds have attracted money from investors who were scared away from equities after shares, particularly small growth stocks listed on the defunct NeuerMarkt, fell. They quickly fell in love with property, but that affection is ending as equities begin to look more attractive. … LACK OF FAITH IN UPTURN KEEPS GLOOMY NATION FROM SHOPS By Bertrand Benoit in Berlin and Tony Major in Frankfurt search.ft.com … A survey published last week by the GfK market research institute showed consumer sentiment in Germany had fallen again after a slight rebound in the second half of last year. This was followed by the publication of dismal December retail sales figures last Friday. …. GERMAN CAR DEMAND FALLS SHARPLY By Tony Major search.ft.com Demand for cars in Germany, Europe's biggest market, fell sharply last month, undermining hopes of a sales boost this year. … BEIJING HOPES TO BRING CONSUMER VALUES TO RURAL POPULATION By James Kynge in Beijing search.ft.com China plans to create a consumer society in the countryside by boosting government spending this year to record levels in its rural economy of 800m people and increasing six-fold the budget for training peasants to do salaried jobs. … VENEZUELA DEVALUES CURRENCY BY 17% By Andy Webb-Vidal in Caracas and Païvi Munter in London news.ft.com Hugo Chávez (pictured) , Venezuela's president, devalued the official bolívar exchange rate on Monday in a move economists said would cut a projected budget shortfall this year but was likely to speed the rise in inflation. …

To: gregor_us who wrote (7630)	2/11/2004 10:53:03 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

I like Bloomberg, about the only mainstream financial media that wtites about this kind of thing: William Pesek Jr. is a columnist for Bloomberg News. The opinions expressed are his own. Is Alan Greenspan Behind China's Bubble Too?: William Pesek Jr. Feb. 11 (Bloomberg) -- Globalization is globalizing the Federal Reserve. It has 12 districts and acts based on U.S. events, but its influence has never been greater. It isn't far-fetched to think of Latin America as the 13th district, Southeast Asia the 14th, Russia the 15th, China the 16th, and so on. Perhaps it's not surprising, then, that some observers are blaming the Fed for problems in one of its de facto, satellite districts. China, Asia's second-largest economy, is experiencing a dangerous asset bubble, one that's making investors antsy. It seems a reach to blame Fed Chairman Alan Greenspan and his colleagues here in Washington. After all, Asia isn't a huge blip on the Fed's radar screen these days. The Fed also has taken its share of flack for the U.S. bubble of the late 1990s. But the U.S. central bank's global reach is being felt in Asia. ``The Fed commitment to keeping interest rates low for a considerable period of time fueled speculation in high-risk assets,'' says Andy Xie, Hong Kong-based chief economist at Morgan Stanley Asia Ltd. ``The byproducts of this speculation,'' Xie explains, ``are the wealth effect on consumption in the U.S. and the cheap capital-fueled investment boom in China -- the twin engines or bubbles, depending on your perspective, for the global economy today.'' The cycle, Xie says, will end with either the Fed reversing its policy or with a financial accident caused by the leverage building up in high-risk assets around the world. ``History would not be kind to the Fed,'' Xie says. ``Its accommodation and even encouragement of speculative excesses would be viewed as the primary cause of the massive bubble in the global economy today, the consequences of which are yet to show.'' The Fed's culpability is debatable. What's not is that speculative capital flows into Asia reached a record high last year, surpassing the previous peak in 1996. The big recipients of capital in 1996 were Hong Kong, South Korea and Southeast Asia. This time, it's China. Just like the capital flow destinations of the 1990s, China is experiencing an investment bubble. In 2003, East Asia's foreign-exchange reserves rose $234 billion more than the region's trade surpluses. That compares with an average of $26 billion in the 1990s and $8.3 billion in the 1980s. China and Japan were the main capital recipients in Asia last year. The increase began in 2001, when the Fed cut interest rates aggressively to boost U.S. growth. Like clockwork, China's foreign-exchange reserves rose by more than its trade surplus for the first time since 1996. The inflows picked up speed and reached record levels last year. What can be done about all this? China needs to tighten capital controls to slow the inflow, Xie argues. Such a step would be anathema to free-market aficionados and to the Group of Seven nations, which last weekend renewed its call for flexible exchange rates. But the longer Beijing allows such rapid inflows of speculative capital, the more difficult it will be to avoid a financial crisis. Xie's views are contrarian, indeed, but it's hard to dismiss them. The vast majority of world leaders, economists and investors think China's currency is undervalued and that Beijing should let it rise. That was certainly the thrust of the G-7's latest communique. But ``the appreciation of China's currency, which many advocate as the main means to cool the bubble, would only encourage more speculation, as we saw in Southeast Asia,'' Xie says. ``The resulting bigger bubble would make a hard landing inevitable.'' China may be presenting economists with a rare throw-away- the-textbooks situation. Established macroeconomic models hold that more exchange-rate flexibility will squeeze some air out of China's bubble and keep the economy from overheating. Freeing the yuan may do exactly the opposite. Beijing has taken steps to cool its economy. The central bank, for example, increased reserve requirements on commercial banks to curb money-supply growth. Higher interest rates in the U.S. could help temper China's boom. Global investors are looking for hints on the subject when Greenspan testifies in Congress this week. ``The massive swings in capital flows into Asia could only be explained by the speculative drives that rise or ebb with some stimulus,'' Xie says. ``The stimulus is usually Fed policy changes.'' It's doubtful Greenspan is preoccupied with all this. But those speculating on China's rise should keep two things in mind. One, the Fed's policy decisions here in Washington may have considerable influence on China's outlook. Two, what markets think they know about China's currency policy could be 100 percent wrong.