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

To: THE ANT who wrote (61214)	2/16/2010 2:20:21 PM
From: elmatador	Read Replies (2) \| Respond to of 218758

China will not turn into consumer society in two years. A couple is supporting four elderly. Son parents and wife's parents if they do not have had employment and have a pension. Since Chinese are getting old, those four elderly -above do not die and once their sons and daughters are no longer working, the younger couple -their descendants- will be join the pool of elderly. So there is always less young and working supporting the elderly. Thus Chinese savings and not consuming.

To: THE ANT who wrote (61214)	2/16/2010 2:46:29 PM
From: elmatador	Read Replies (2) \| Respond to of 218758

how might the debt/GDP ratio be reduced? There are four basic mechanisms. First, GDP can grow rapidly enough to reduce the ratio. This scenario requires a robust economic recovery from the financial crisis. Second, inflation can rise, eroding the real value of the debt held by creditors and the effective debt ratio. With foreign creditors holding a significant share of the dollar-denominated U.S. Federal debt, they will share the burden of any higher U.S. inflation along with domestic creditors. Third, the government can use tax revenue to redeem some of the debt. Fourth, the government can default on some of its debt obligations. nber.org

To: THE ANT who wrote (61214)	2/16/2010 2:48:52 PM
From: elmatador	Read Replies (3) \| Respond to of 218758

a 4-6% inflation target for the Fed Former IMF chief economist Kenneth Rogoff, now a Harvard University professor, has advocated a 4-6% inflation target for the Fed, and ex Bank of England MPC member David Blanchflower has made similar proposals. And Professors Aizenman and Marion calculate - in a different framework - that a "moderate" inflation rate of 6% could reduce the debt/GDP ratio by 10 percentage points within four years (see "Using Inflation to Erode the US Public Debt", NBER Working Paper 15562). Last Friday, the IMF published a paper, “Rethinking Macroeconomic Policy,” part of a series of policy papers prepared by staff of the 186 member international institution that reassesses the macroeconomic and financial policy framework in the wake of the devastating crisis. In an internal interview, IMF chief economist, Olivier Blanchard, one of the authors answered questions: Central banks have chosen low inflation targets, around 2%. In your paper, you argue that maybe we should revisit this target. Why? Blanchard:"The crisis has shown that interest rates can actually hit the zero level, and when this happens it is a severe constraint on monetary policy that ties your hands during times of trouble. As a matter of logic, higher average inflation and thus higher average nominal interest rates before the crisis would have given more room for monetary policy to be eased during the crisis and would have resulted in less deterioration of fiscal positions. What we need to think about now if whether this could justify setting a higher inflation target in the future." IMF Survey online:Isn’t that risky? Blanchard:"The crisis has shown that large shocks to the system can and do happen. In this crisis, they came from the financial sector, but they could come from elsewhere in the future—the effects of a pandemic on tourism and trade or the effects of a major terrorist attack on a large economic center. Maybe policymakers should therefore aim for a higher target inflation rate in normal times, in order to increase the room for monetary policy to react to such shocks. To be concrete, are the net costs of inflation much higher at, say, 4% at 2%, the current target range? Is it more difficult to anchor expectations at 4% than at 2%? At the same time, it is clear that achieving credible low inflation through central bank independence has been a historic accomplishment, especially in several emerging markets. Thus, answering these questions implies carefully revisiting the list of costs and possible benefits of inflation. Nevertheless, it is worth considering whether these costs are outweighed by the improved policy maneuverability that would be available in times of crisis from having slightly higher inflation." Morgan Stanley says investors should take note - and buy TIPS (Treasury Inflation-Protected Securities), rather than CDS (credit default swap), if they are worried about ‘default': while hard default is inconceivable, soft default through inflation is a clear risk. Whatever about the Fed becoming more tolerant of inflation, it's hard to envisage the European Central Bank, built on the German Bundesbank model, being prepared to loosen the levers, in the absence of much tougher Eurozone fiscal controls. finfacts.ie

To: THE ANT who wrote (61214)	2/18/2010 9:26:16 AM
From: elmatador	Read Replies (1) \| Respond to of 218758

Suddenly China change into a consumer society looks viable!China May Choose Wages Over Yuan Gains to Cut Surplus “Wage increases are a better option because they largely benefit Chinese workers,” Tao Dong, a Credit Suisse economist in Hong Kong who has covered the Chinese and Asian economies for more than 15 years, said in an interview yesterday. “Currency appreciation will only result in Chinese exporters losing out to competitors in countries such as Malaysia and Mexico.” Better even. It does not look like bowing to pressure from abroad. 'Resisting Pressure’ “Beijing will continue to resist pressure from the U.S. and other nations and look for ways that will benefit its own economy when it seeks to contribute to global rebalancing,” Tao said. “Higher wages will aid policy makers’ aim to boost domestic consumption and move away from depending on exports.” President Hu Jintao on Feb. 3 urged “no delay” in efforts to reduce dependence on exports and investment and boost service industries and consumption. China’s current-account surplus fell 35 percent last year to $284.1 billion as exports declined because of the global slump. Improved global trade is boosting demand for labor in China, which overtook Germany last year as the world’s biggest exporter. China’s overseas shipments jumped a more-than-forecast 17.7 percent in December from a year earlier and imports surged to a record. --Li Yanping. Editors: Paul Panckhurst, Chris Anstey businessweek.com