The deeper layer to it: Euro Breaks $1.40 Support

From Zerohedge: "Time to recalibrate all those long stock-weak dollar correlation engines."
Euro Breaks $1.40 Support

It's not a Dollar weakness-Stock Strength correlation. But then in a way it is.

Let me explain the "mechanism": Creditors of Dollar denominated debts want to swap the stuff for non-debt securities like American equities.

The mechanism doesn't involve people from EU in any massive way as they are not the main creditors of Dollar Debts (Far East).

So the mechanism doesn't "work" with Dollar strength against Euro.

The deeper layer to it: Euro Breaks $1.40 Support

Heart warming, tear-pumping TV propaganda from Japan

This is off topic. You are forewarned.

I am not trying to be mean with the use of the word "propaganda" here. But it is nevertheless smelling suspiciously as such. What do I mean? I mean by propaganda, it is deliberate and it is government directed.

How things have changed in Japan. There is a saying about Japan in Asia: they have no friends. Why? For historical reasons, of course. That doesn't stop them from trying to "educate" their citizens to strive to make friends with their neighbors, most importantly, the Chinese.

I have just got tears in my eyes after watching a recent modern-settings Japanese TV drama. And it looks very "propaganda" like.

The theme is about how the Japanese staff members are incorporating the Chinese interns into the integral part of their team. Together, they pulled all-nighters to make up the lost work after a bad accident that erased the critical computer files of that "Chinese girl's".

The Chinese girl is set to have to leave the next day and the team leader asked his supervisor, another Japanese to hire the Chinese as a permanent staff.

A Japanese woman breaks the news about "You don't have to go" to the Chinese girls and tears breaks out for everybody.

Okay, it is not trivial matter. Maybe it is just me. I am not amazed at "the rise of China" is so fast and strong that now the Japs have to make propaganda films to "befriend" China.

Really, I am more amazed at the propaganda machine that Japan has on its people. Or thought they could impose on its highly sophisticated people (with an average IQ of 105-107).

So this is an admiration blog post, not a bragging post for the Chinese.

P.S. Okay, I just realized how creepy it might have sounded. "Admiration of the propaganda machine". I need to clarify. As long as the propaganda is harmless to the people and that dissident voices are not silenced in the society, I guess propaganda is not such a monster after all.

Heart warming, tear-pumping TV propaganda from Japan

Now that's a profitable idea: hire more women hedge fund managers

As they are only a puny 6% of the whole.

Women Hedge Fund Managers Outperform Men

A new study by Hedge Fund Research found that, from January 2000 through May 31, 2009, hedge funds run by women delivered nearly double the investment performance of those managed by men. Female managers produced average annual returns of 9%, versus 5.82% for men and, in 2008, when financial markets were cratering, funds run by women were down 9.6%, compared with a 19% decline for men.

"Moreover, several studies show a link between profit and gender. Companies with several high-ranking women at either officer or director levels tend to have higher earnings per share, return on equity and stock prices than competitors with few or no senior women. Look at some of the more stunning losses incurred at banks in recent years: Barings, Société Générale and UBS. All were caused by men betting with other people’s money."


http://www.businessweek.com/careers/workingparents/blog/archives/2009/12/its_generally_k.html

Now that's a profitable idea: hire more women hedge fund managers

Geopolitics: Will U.S. invade China for "debt cancellation"?

I am not sure if invading China is the best idea though. China is pretty resource poor to begin with. So I am not sure what can be gained from invading China.

If the "reason" is to prevent Chinese from dumping "treasuries", I guess the act of invasion would probably give away the clue that the Dollar is rubbish from now on (and/or irredeemable to other currencies). So it wouldn't be a "booster" of Dollar confidence. One way or the other.

Moreover, let's say "debt cancellation" is the "goal" of the invasion. As such, No one would essentially want to do what China did from before: namely selling to the U.S. and accumulating the dollars.

So what good does it do to the daily lives of Americans? Imports would be expensive to most people and vast sections of the society would fall into poverty as a result.

Remember Taiwan is also heavily armed with weapons purchased from the States. They would be in an awkward situation should Mainland China-U.S. War breaks. Russia would probably side with China, I guess as China would have been the major customer of Russian gas/oil/resources. Same goes for Australia and Japan (China is the biggest trade partner to Japan).

Creditors of U.S. alliance, anyone?

Geopolitics: Will U.S. invade China for "debt cancellation"?

No, this is not gonna work Paul Krugman!

I used to think he is "cool". I stopped following him after his debate or more like "cat fight" with historian Niall Ferguson.

Then he sort of justified my "dis-following" of him by acting like a fool.

Really? Full fledged trade wars/protectionism will help America? Really?

Let's examine his logic:

1)"Instead, it[China] follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory."

Um.....Keeping trade surplus high is predatory? Is Germany predatory as well? You can argue the currency peg is "not helpful" but you then have to take into account the GIGANTIC TREASURIES HOLDINGS in the Chinese Foreign Reserve do we? It is quite *CONVENIENT* to DEVALUE/INFLATE your currency when you found the DEBT BURDEN is starting to bother you???

So predatory huh? Who forced a gun at Americans' temple to buy cheap cheap cheap Walmart goods? No one! I may say it is *cheating* when you devalue your currency after consuming so much in the form of debt when it comes to the time to honor your vast debt obligations.

2) "Again, right now the world is awash in cheap money. So if China were to start selling dollars, there’s no reason to think it would significantly raise U.S. interest rates. It would probably weaken the dollar against other currencies — but that would be good, not bad, for U.S. competitiveness and employment. So if the Chinese do dump dollars, we should send them a thank-you note."

Sorry Krugman, Yes, dollar will further depreciate should China or other debtors dump dollars debts/instruments. AND that the U.S. interest rate probably WON't rise(thanks to Fed Reserve). All true. But DOLLAR itself will be "no good" from that point onwards. Imports will be PROHIBITIVELY EXPENSIVE and many Americans will just have to live in stark poverty or even starvation. So my advice: Don't try it.

No, this is not gonna work Paul Krugman!

Inflation and deflation is too 2 dimensional

What we have been wondering about the inflation and deflation axis has been wholly too 2D.

What we might have been neglected is that the world is at least 3D:

1) Good Old "Inflation-deflation" dimension

2) Time

Most people stopped here. The third dimension:

3) individual "indentations" and "mole hills" of the 2D space allowing the 3rd D axis to exist.

Namely, with the bulk of workers from Asia and other low waged nations. There are at least all these indentation and little mountains forming from the landscape.

A) The price component from wages will be shrinking fast - Indentation (deflationary)

B) The price component of commodities or raw materials go up - Hills (inflationary)

C) Credit has been shrinking due to the retirement spending of the world's old human beings (ahem, babyboomers mostly) and general debt overloaded government (also thanks to the go-go deficit-spending of the babyboomers) - Indentation (debt-deflationary)

D) Food shortages - Hills (inflationary)

E) Commercial Real Estate (Rental costs of land and shop floor spaces) - going down or flat due to C)

An extension of A) This is from Dr. Batra "Wage is source of demand; Productivity is source of supply" - Indentation (deflationary as the wages are going down A) and thus demand is going down and that's deflationary; productivity is going up and that means supply is going up which is deflationary as well)

Since for most DEVELOPED WORLD's commercial transactions/goods/services ever produced and consumed, the price components are mostly from A, C and E, it is going to be "DEFLATIONARY" for the "1st world". More like debt-deflation as debt burden has been excessive till this day.

Since for most of the DEVELOPING WORLD's commerical transactions the major price components are B and D (cos wages has always been dirt cheap and poor people from developing world tends to have less access to credit), it will be inclining towards more of an "INFLATIONARY" situation. More like "stagflation" cos wages are not going up.

Oh well. Happy 2010 anyways!

Inflation and deflation is too 2 dimensional