Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (58401)	11/27/2009 10:28:59 AM
From: elmatador	Respond to of 217619

Not only avoided calling default! Used the term Black Swan!! The term “Black Swan” is used far too often in today’s discussions about the financial markets and it pertains to unforeseen events that cause havoc on the economy or the markets themselves. seekingalpha.com Unforeseen!!! This was a train wreck waiting to happen as I posted here in 2006!!!

To: TobagoJack who wrote (58401)	11/27/2009 11:24:22 AM
From: bull_dozer	Read Replies (3) \| Respond to of 217619

China, gold, and the civilization shift Stephen Jen from the hedge fund Blue Gold Capital has a warning for those who think that gold has risen far too high, is necessarily in a speculative bubble, and must soon come clattering back down. Mr Jen is an expert on sovereign wealth funds from his days at Morgan Stanley. The gold story — essentially — is that the rising economic powers of Asia, the Middle East, and the commodity bloc are rejecting Western fiat currencies. China, India, and Russia have all been buying gold on a large scale over recent months. Why should that stop when the AAA club of sovereign debtors is pushing towards the danger threshold of 100pc of GDP? These new players account for almost all the accumulation of foreign currency reserves worldwide over the last five years, so what they do matters enormously. After crunching the numbers, Mr Jen found that the share of gold in their reserves is just 2.2pc compared to 38pc for the Old World (perhaps we should just call them the deadbeats from now on). They would have to buy $115bn of gold at current prices to raise their bullion to just 5pc of total reserves, and $700bn to reach just half western levels. The killer-term here is at current prices since any such move in the tiny global market for gold would send prices into the stratosphere. blogs.telegraph.co.uk

To: TobagoJack who wrote (58401)	11/27/2009 12:18:09 PM
From: elmatador	Read Replies (1) \| Respond to of 217619

China Seen Facing Protectionist Backlash Next Year By REUTERS Published: November 26, 2009 BEIJING — China faces a protectionist backlash next year because its manufacturers are saddled with overcapacity and are disposing of its excess output on world markets, the European Union Chamber of Commerce in China said Thursday. Jörg Wuttke, the head of the business group, said it would take about 12 months to prepare a case alleging dumping, the practice of selling goods for less than it costs to produce them. “This lead time would indicate to me that in the second half of 2010, there will be far more dumping cases against China, unfortunately,” Mr. Wuttke said. He was speaking at the introduction of a study into industrial overcapacity in China, a longstanding situation that the chamber believes has grown more serious as a result of the global financial meltdown and Beijing’s aggressive response to it. “The crisis has throttled demand for exports from China at a time when even more investment, in the form of the Chinese government’s massive stimulus package, is being pumped into building new plants and adding unnecessary capacity,” the report said. “As a result, the problem is actually getting worse in many industries,” it said. In a survey of the chamber’s members, 56 percent of respondents identified local government policies aimed at luring investment as the main macroeconomic reason for overcapacity; loose lending was the second most frequently cited cause. Mr. Wuttke welcomed efforts by the central government to curb new capacity but said it was often powerless in the face of local governments that craved new factories for the tax revenue and jobs they could generate and that have done everything to keep existing plants from going under. “Local protectionism kicks in,” Mr. Wuttke said. “So even if Beijing sees a problem and wants to tackle it, they are very often derailed by local politics.” Apart from generating trade friction, rampant overcapacity would weigh on foreign direct investment into China. “Why would you invest if that market is already oversupplied?” he asked. By wasting resources and eroding profits, overcapacity deters research and development and encourages companies to cut corners on health and safety standards as well as environmental protection. Further, the creation of unneeded capacity raises the risk of nonperforming loans for banks that finance the investment. It also generates trade tension as producers sell their surplus production overseas at cut-rate prices, the study said. The State Council, China’s cabinet, recently singled out the iron and steel, cement, electrolytic aluminum, glass, coal, chemical, polysilicon and wind power equipment sectors as the worst offenders when it came to overcapacity and announced steps to rein in their expansion. The chamber applauded the cabinet’s actions but said the fundamental answer was to shift from investment-led and export-led growth and to focus more on domestic consumption and services. The report made a series of recommendations that amounted to a root-and-branch overhaul of China’s economic model. The recommendations included the redistribution of national income from companies to households. It said state-owned enterprises should disgorge dividends for the government to spend on social security, health and education instead of plowing profits back into fresh investment. It also recommended a sharp reduction in corporate capital expenditure in coming years. In addition, the report said that China should remove subsidies for energy and other inputs, which are provided indirectly by households. Claiming that the manufacturing sector has become addicted to these subsidies, it recommended increasing resource and environmental charges.