Markets Brace for China Chill

Markets Brace for China Chill

In its aftermath, the economic cognate will have to shift from production to consumption; therefore we should see the stock prices of exporters falling even as those of companies servicing domestic demand will increase. Banks will have to absorb billions of yuan in defaults from the export sector, particularly to the many inefficient state-owned companies in northern China. That will cause a sharp decline initially in their stock prices, but I expect the outlook to improve rapidly thereafter.

For the rest of Asia, a yuan revaluation would set off increased volatility as investors try to take profits and other Asian countries adjust their currency values. In turn, their holdings of US and European government bonds as part of foreign-exchange reserves would diminish, sending up bond yields globally. That is how the adjustment in China would likely set off broader stock-market declines globally as investors come to terms with both higher interest rates and lower Asian appetite for Group of Seven assets. Sharp declines in stock prices would necessarily follow in most major Asian markets.

This correction would prove cathartic to the performance of Asian economies in the decades to come, but in the short term, pain is unavoidable.

As always, you have to know your own situation. One should plan accordingly and make investments in all things future shock proof.

It has been the conlcusion for here and some time that this Great debt has been coming along towards us with a historical certainty. Make sure that you are not already in debt before it comes. This must be the number one fact to have begun x(ing) your debt...yesterday.

The Great Debt

Bloomberg reports:

March 22 (Bloomberg) -- The Federal Reserve could have acted faster to prevent a meltdown in the subprime-mortgage market by curbing the lax lending standards that contributed to the crisis, the Fed's chief bank supervisor said.

``Given what we know now, yes, we could have done more sooner,'' Roger Cole, the Fed's director of banking supervision and regulation, told the Senate Banking Committee in Washington today, as regulators testified for the first time before Congress on the market rout.

It cannot be said that they did not know about it then, but only that they did not care to do much about itbecause of their own itnerests at the time. This is not the case, since the Federal REserve did not want to cause panic. Perhaps it is a sign of the times, however, since we might be on the verge of the wave collapsing into a new era of depression. Perhaps, this one will be called The Great Debt. America has persevered through troubled times, but in those were not days of interconnections and complexities.

s

Scottish Scam

As this blog has been informing the good reader, the national debt does effect the personal debt. This is due to the complex interaction of exchanges occurring between the producers and consumers in the global political economy. It is the case that there is a similarity when thinkng about the dynamic enviroment in which global financial interactions playing out and affecting one another. Its a ying yang sort of thing.

The subject matter at hand, is the interaction between producers and consumers at the domestic level. Looking at Europe as a case on the flipside of the American case. In Europe, the state tries to forbear debt. It seems that the EUropeans know a thing or two about misery and suffering. This is because of bad economic policies and the backlash of the people. However, trying to alleviate the problems of the people using subsidies is not always a good thing, since it does not always mean positive results.

Consider this article for example, as one piece of evidence:

A Scottish dairy farmer has exploited a glaring loophole in European law to annually earn the right to claim more than £1million in subsidies.

So, this man got the cash, exploiting the good faith and intententions of the state....leaving others in debt, and the state needlessly spending its cash. America has its own sores....

A Game as Old as Empire

This book is quite revealing. It describes how economics has been used by great powers to maintain their balance in the balance of power scheme of things.

Basicly, it is the story of economic hit-men. These are people who are responsible for the decline and fall of otherwise good economies. By manipulating various economic variables, they are able to bring economies to their knees.

Essentially, this is the same thing as the concept of identity theft. Someone fakes your economic variables by pretending to be you, and then, your personal finances are in disarray.

With economic hit men, it is not on a personal level, but on a national one.

Read more about this book. An excerpt from the review is below:

In gripping detail, they describe the schemes and subterfuges that multinational corporations, governments, powerful individuals, financial institutions, and quasi-governmental agencies use to line their pockets behind the façade of “foreign aid” and “international development.”

The China Game

This article is for more information for those that are interested in China Inc.

It is interesting to read various analysis such as this. It is true that China has America in a tight spot, however, the plunge protection team will without a doubt have thought of something in its secret meeting rooms. Have faith, and think about what the analysts are saying.

As always, "Follow the Money!" The next run up in the metals could be dynamic. Thursday the 15th is my guess for when the start of the push will begin. The Chinese may use derivatives on metals, but delivery of the real commodity has always been China's shown strategy. When done, the fundamentals of supply and demand in true form will come to play.

This is all part of a history we cannot as of yet fully comprehend. After all, this is just the start of the long war. International trade can be used for operations other than war. China may just be trying to wage just that.

This does not mean doom and gloom for America. Indeed, the opposite is true. Our financial engineers are invisible and invincible. We started this game, and have our own back up plans.

One example in the current economic infrastructure is the argument that outsourcing is bad because it makes America vulnerable. This is not necessarily true. While we will delve into this in a later post, for now keep the following account in mind.

It is the case that America has built up the Chinese infrastructure to a point that its newest factories are the products of American foreign direct investment. With such investments in place, it is possible, and quite likely, that American companies have the blueprints to the factoris. The point to this case is this: in times of war, these open sources of intelligence will allow for American war planners to target with great efficiency all of China's industrial production.

And in this exactly is the danger in allowing China to begin divesting from T-Bills and investing in American companies. If they have the same opportunity, the American advantage will have been nullified.

Subprime Psychology

The market often behaves as if it is one collective netity. Nobody would guess that it is the result of collective action on the basis of individuals in the sense that globalization makes everything appear to be unified. However, the way that markets behave are similar to the way that viruses spread. There are contagious effects of certain individual actions.

It is usually the little things that count in big market fluctuations. As you are trying to get out of debt, or remain out of debt, you should be aware of what might rock the subprime house of cards.

Since at least the market rally that started in early 2003, optimistic Pollyanna has ruled the markets, and greed has run rampant. As the markets wait for Fed chairman Ben Bernanke to put on his best Donna Reed mask to bail out the subprime lenders with the Bailey family's honeymoon money, Cassandra and her fear are ruling the day.

A lot of wags have noticed that for the US stock market, bad news is frequently treated as good news. Unemployment is up, or industrial production is down, and stocks rally (due to attendant possibility seen in these reports of upcoming Fed interest-rate cuts). However, when major financial institutions have what are delicately called "liquidity issues" (ie, their loans aren't being paid back - they have no income), that is always bad news. What if the bank defaults, declares bankruptcy? Other banks that it had borrowed money from now won't be getting paid back, they'll lose whatever income stream they were receiving from the first bank. The same with that bank's creditors, and then other banks and so on.

This kind of cascading financial catastrophe is often called a "contagion", and with good reason. Like a virus, it can spread and bankrupt the entire financial system. It almost did in 1998, during the LTCM hedge-fund crisis; in 1929,in an era when the worldwide financial system was far less globalized and integrated than it is today, after the Great Crash it actually did, and so initiated the Great Depression of the 1930s.

Enjoy the whole article. It is insightful and will make you aware of a volatile world that does not exist in the mainstream media.

Iran is a perfect distraction. The Navy is there!

Know Thyself

A common theme is the past and the present and the future identity of mind. When you are going through the phase of getting out of debt, you are essentially producing a new form of neural behavior because your decision in is one that requires change from one state of behaving and into another one.

So, from where does the sense of self come from? As declared previously, it is not enough to come to an oracle and try to understand what you can do with your unique financial condition. This is an impossibility.

Therefore, you have to know yourself.

However, the question does arise: How can I know that my senses are not deceiving me into thinking that I know myself. And this is precisely why it is important to continue examining and pondering your CURRENT existence. Neural chemicals can condition your being into knowing ones self that is not exactly "known" because he lives on false conditions. Therefore, the self you know is the self in debt rather than the self in actual financial conditions. This is something that we are currently researching, and will continue to report on.

Understanding how your brain works will be essential to assuring the maintenance of your finances so far. It's gonna be a long year.

Red Cross

Picture of the red cross raising funds

Grapes of Wrath

When dem willows weep, and the farm closes...the farm men will come.
They have their own customs

When Germany Crashed