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

To: carranza2 who wrote (62073)	3/18/2010 9:50:25 PM
From: RJA_	Respond to of 218505

>>Must be a joke. No. Not from the Onion. Not from the Spoof. If you follow the link, you will find it from here: Chairman Ben S. Bernanke Federal Reserve's exit strategy Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C. February 10, 2010 federalreserve.gov So then, banks literally could create money from nothing. Good business if you can avoid bad loans.

To: carranza2 who wrote (62073)	3/18/2010 9:53:30 PM
From: RJA_	Read Replies (1) \| Respond to of 218505

I expect a drop in the stock market... and PM's to follow it down, not sure how far. But given that post, how could one have confidence in fiat money?

To: carranza2 who wrote (62073)	3/18/2010 10:35:06 PM
From: TobagoJack	Read Replies (2) \| Respond to of 218505

just in in-tray, per fear n greed · World stock markets continue to trade in a narrow range on subdued volume. Normally when markets drift sideways for a period it precedes a violent move one way or the other. Still GREED & fear would caution that the sheer scale and drama of the collapse in markets in 2008 and the subsequent sharp rebound in 2009 means that an extended period of “boring” trading could persist for some time. · The bullish view on this is simply that the market is consolidating ahead of its next upward move, climbing the proverbial “wall of worry”. GREED & fear has a lot of sympathy with this view from an Asian and emerging market perspective. The negative headwind here is rising monetary tightening expectations with China at the forefront. · GREED & fear remains unconvinced that monetary tightening in the West is at hand. Sooner or later this should prove bullish for emerging markets since the lack of US monetary tightening should culminate in a renewed weakening trend in the US dollar. Still, further conviction on the lack of tightening in the US will likely hinge on the realisation that Western growth is not healthy. This would be near term equity market bearish. · There is a growing risk of a row between Washington and Beijing on the Chinese exchange rate. GREED & fear still believes that China will resume incremental appreciation of the renminbi in the middle of this year at a 5-7% annualised pace. · If the US job numbers in the next few months come through positively, then the looming protectionist scare will doubtless subside like numerous previous scares in recent years and China will resume its gradual appreciation in a relatively calm context. This is also what China needs to do if it is to have the best chance of making a smooth transition to a more consumption-led economy and reduce the asset bubble risk. · Still if the US employment picture does not improve as expected then the stage would seem set for a major political row which would most likely disrupt stock markets. This is also because the lack of job generation would be seen politically as confirmation that the American economy is not healthy, and would also resuscitate concerns on GREED & fear’s longstanding liquidity trap thesis. · Any conviction in Washington that the US economy is not really healthy would cause focus in Washington not only on the Chinese exchange rate, but also on the need for a renewed depreciation of the US dollar as the most obvious potential source of effective stimulus. · It still makes sense to give the PRC the benefit of the doubt, in terms of its ability to “keep the game going”, so long as three key criteria are met. First, that China continues to enjoy healthy deposit growth into its state controlled banking system. Second, that it continues to run a largely closed capital account. Third, that Chinese consumers and corporates continue to respond to government policy signals. · There is no doubt that the main risk for the Chinese banking system lies in its aggressive financing last year of local governments’ infrastructure projects. But it is also the case that central government officials freely admit to this risk which is a positive in the sense that there is no denial. · Chinese policymakers are apparently on the point of announcing a pre-emptive package designed to control the risks stemming from last year’s local government infrastructure financing surge. The regulators are acting preemptively about a problem which has not yet blown up in stark contrast to the incompetent attitude of Western bank regulators during the recent credit boom. · Beijing cannot afford a systemic crisis in local government debt. For the central government is both the owner of the banks and also the owner of local governments. But even based on the highest guesstimate of local government debt of Rmb11tn or 33% of GDP, the overall exposure is not a disaster since it raises total government debt to a still comfortable level of about half of GDP. This is very manageable providing China can continue to achieve its real GDP 8% growth rate and so grow out of the problem. · For now GREED & fear is assuming the PRC can make its 8% plus growth target in 2010. But if the West is in a liquidity trap, then China’s prospects on a five to ten year view clearly hinge on how the hoped for transition to a more consumption driven economy can be managed, and whether China can also avoid a boom-bust asset bubble in the interim. · The outlook is becoming more positive for Chinese bank stocks with about half the expected fund raising digested. While the worst of the crackdown on lending has now passed since the regulators are now back in control with bank lending in February having declined sharply. · GREED & fear will add another one percentage point to Thailand in the relative-return portfolio this week by removing the out of index bet in Vietnam. If foreign investors become convinced politics has stabilised for now in Thailand there is the potential for a significant catch up rally led by foreigners buying bank shares in an economy which will be driven by pent-up domestic demand. · With the Indonesian stock market now only 3% below its pre-financial crisis high in rupiah terms, and foreigners buying markets like Thailand and the Philippines again, Asean is enjoying its moment in the sun. Still for Asia as a whole to break out in a convincing fashion, China surely needs to perform. That requires investors to become less concerned about tightening, which should happen sooner or later. But it also probably requires a lack of open conflict on exchange rate policy. CLSA CLEAN & GREEN: Please consider our environment before printing this email. The content of this communication is subject to CLSA Legal and Regulatory Notices These can be viewed at clsa.com or sent to you upon request.