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

To: Cogito Ergo Sum who wrote (65988)	9/11/2010 7:51:54 PM
From: TobagoJack	Read Replies (1) \| Respond to of 218068

daughter erita getting to be expert with ipad grilling bbq, baking cup cake, doing her sums, manipulating photos, and making entries to "my secret diary" etc getipad

To: Cogito Ergo Sum who wrote (65988)	9/14/2010 11:36:16 PM
From: TobagoJack	Read Replies (1) \| Respond to of 218068

just in in-tray "The strange thing is Mac, 20% money supply growth will produce recession not inflation (the inflationary episode was last year and the inevitable symptoms of inflation eg, rising prices and increased malinvestment activity are already showing through). Once you have inflated the money supply by 30%+ (the equivalent of adding 40%+ of 2008’s GDP to China last year) you start all sorts of activity rolling that requires even MORE monetary inflation to keep it all going. But steadily withdrawing the money injection China will drive profits to zero, increase bad debts in the banking system and then have a nasty recession shakeout. Of course it needs to raise rates and I think the decision on that is already taken. The last remnants of opposition – Wen Jiabao and his faction – are being swept aside now. Chinese punters are laughing in the face of government in the “knowledge” that it won’t burst the property bubble. I heard exactly the same arguments when the punters tried the same thing with the stock market in 2007. By mid that year the market’s response to rate increases was to go up when they happened – then it fell off a cliff and the government let it go. It will do the same to the property market this time. Why? Because it cannot hope to bring the economy back into balance while resources – physical and financial – are all concentrating in one, zero-return sector (residential property, not to mention local government infrastructure). While this is happening relative prices are shifting all over the country – mostly against the productive, self-sustaining growth parts. As for exporting inflation, I doubt it. You can only export inflation to countries that are accommodating (ie, growing money supply and credit) fast enough to absorb the import price increases and domestic growth/price increases. In countries where there is zero income growth (Japan, the US, most of Europe), slowing money supply and declining credit all you do by raising export prices is to cut into the demand for those goods and, where the exports are essential, the demand for all other domestically produced goods and services. Inflation is caused by increases in money and credit, not by rising export prices, consumer prices or the array of silly price indices beloved of mainstream economists and central bankers. Blaming the Fed for China’s policy failures is also a bit rich. No-one asked Beijing to peg its currency to the US dollar, did they? In fact, if I recall correctly, the US has been pushing it to de-peg for most of the last 10 years. You can only import someone else’s mistakes when you make a whopper of your own. Beijing is doing a perfectly good job of running the Chinese economy into a brick wall on its own. PS We have launched a sister company to Asianomics today called Forensic Asia (run by an ex-CLSA colleague of mine called Gillem Tulloch). Hopefully the name gives an indication of what the company is about. By all means ask to go on Gillem’s email list if you are interested (gillem@forensicasia.com) but I have to warn you that it will be a subscription only service after the first couple of months. The inaugural report is attached. Feel free to pass on to anyone you know in fund management – future reports will contain equity recommendations. "