View Full Version : Andy Xie: On implications of strengthening Dollar
http://articles.marketwatch.com/2013-02-04/commentary/36742665_1_global-reserve-currency-euro-crisis-dollar-bull
Consequences of a strong dollar: Andy Xie
Caixin Online
February 04, 2013|Andy Xie
BEIJING (Caixin Online) — Since the end of the Bretton Woods system in 1971, the U.S. dollar has experienced a bull market twice. The first one in the 1980s was due to Paul Volker’s high interest-rate policy to cure chronic inflation. The second began in the mid-1990s as the information technology revolution sucked investment into the United States.
The coming dollar bull is due less to the United States’ strengths than the weaknesses in other major economies.
Since depegging from $36 per ounce of gold, the dollar has been in bear market 70% of the time. The reason is that the Federal Reserve has a dual mandate of maintaining price stability and full employment. Hence, the Fed is more tolerant of inflation than other major central banks.
Its dual mandate is helped by the dollar’s unique status as a global reserve currency. Its loose monetary policy doesn’t trigger capital flight like in an economy with a normal currency.
Regardless of economic strength, a central bank more tolerant of inflation tends to produce a weak currency in the long run. Germany and Japan were vigilant against inflation. Most of the appreciation of the yen (US:USDJPY) and mark against the dollar could be explained by the inflation differences with the United States.
Paper money not anchored to gold is a recent phenomenon. During its 40-year experiment, paper currencies have depreciated greatly against gold. When we say a currency is in bear or bull market, this is relative to other currencies.
Paper currencies as a whole have been depreciating in value due to inflation. This is why gold is up 45 times against the dollar since the gold standard was abandoned four decades ago. While gold fluctuates in price and enters bear or bull markets alternately, its value will appreciate against paper currencies in the long run because, without a firm anchor, central banks inevitably expand money supplies to fix short-term problems and worry about inflation later.
The dollar bull market ahead is one of those episodes that will see the dollar outperform other major currencies. In the long run, the dollar will still underperform, and paper currencies in general depreciate in value.
The weak euro
The euro crisis has been raging for three years. The focus is on debt sustainability in southern European economies.
The solution so far is: (1) transfer of money from the north to the south, and (2) fiscal retrenchment in the south.
It isn’t working because the measures don’t deal with the competitiveness gap between the two. Fiscal retrenchment addresses the competitiveness issue by forcing deflation in the south. But, deflation worsens their debt problems. It is a vicious cycle.
The only solution to the euro crisis is more inflation in northern Europe to balance the competitiveness problem of the south. The rising property price in Germany is the beginning of this process. The underlying force is the European Central Bank’s monetary expansion.
When it is recognized that the solution to the euro crisis is inflation, not deflation, the euro (US:EURUSD) will decline to address the competitive consequences for the whole euro zone. The chances are that the euro will be a weak currency during this process, possibly for five years.
The yen’s bear market
The Japanese yen is in its own bear market independent of the dollar situation. The yen has been a strong currency for the past four decades, quadrupling in value against the dollar. Low inflation, a savings surplus and competitive industries have underpinned the yen’s strength. The situation now is quite different.
The strong yen has pushed Japan into deflation for the past two decades. Japan’s nominal gross domestic product has been declining, while its national debt has skyrocketed due to fiscal stimulus to offset the impact of deflation on demand.
The two trends will trigger an explosion sooner or later. Weakening the yen is the only way out, which would decrease the need for fiscal stimulus and boost fiscal revenue. The Japanese government is weakening the yen now for that reason.
A rapidly aging population is turning Japan into a savings deficit country. Its trade deficit is likely to last. Its current account could run into deficit within two years, as income on foreign assets becomes insufficient to offset the trade deficit.
Lastly, Japanese companies are stuck with yesterday’s products and suffer price erosion. Automobile and electronics are Japan’s main industries. Japan has pretty much lost its competitiveness in the electronics industry. It has become a burden for the economy due to its massive negative earnings.
The auto industry has chronic overcapacity around the world. Even though Japan’s auto industry is still strong, it is unlikely to earn high returns on capital or have significant growth.
All three factors point to a fundamental change in the yen’s direction. Its recent 12% decline against the dollar is the first step in its revaluation. After the Liberal Democratic Party wins the upper house in the mid-year election, the Bank of Japan would take further steps to weaken the yen, possibly to 100 against the dollar.
The yen has been a strong and safe-haven currency. The dollar has been weak, but also a safe-haven currency. There is plenty of liquidity still parked in the yen. As the dollar becomes a strong currency and the yen a weak one, the reversal in liquidity flow would strengthen the dollar’s appreciating trend.
Crisis in emerging markets
The first dollar bull market in the 1980s triggered the Latin American debt crisis, the second the Asian Financial Crisis. Neither was a coincidence. In a dollar bear market, the liquidity goes into emerging economies, causing their currencies and asset prices to appreciate. The double gains attract more inflow, eventually causing inflation.
These economies lose competitiveness along the way. It isn’t noticed when asset appreciation supports domestic demand. When the dollar changes direction, so does liquidity. The virtuous cycle on the way up becomes a vicious one on the way down.
The emerging economies already suffer inflation. The liquidity outflow leads to currency depreciation, which worsens inflation.
During a prolonged dollar bear market, dollar debt tends to rise in emerging economies. The weak dollar decreases the debt service burden, which emboldens the debtors to borrow more. Extrapolation is a recurring phenomenon in financial markets. Hence, over borrowing by emerging economies is inevitable in a dollar bear market.
When the dollar turns strong, the debt burden becomes unsustainable. Hence, no lenders want to roll over the loans anymore. A liquidity crisis ensues. This is what occurred in Latin America in the 1980s and Southeast Asia in the 1990s.
The vulnerable BRIC
In the dollar bear market of the past decade, the BRIC countries [Brazil, Russia, India and China] have been the darlings of international speculative capital, like Southeast Asia fifteen years ago.
Even though they have little in common, just a phrase has launched numerous funds in their name. Whenever there is a hot concept like BRIC, there is a bubble. There has never been an exception.
The BRIC countries exhibit all the symptoms of binging on cheap credit: high levels of indebtedness, inflation and strong currencies. In the past decade broad money has risen by 17.2% per annum in India and 18.2% in China, while their real gross domestic product rose by 7.5% and 10% respectively.
The faster money growth has turned into inflation. The broadest gauge for inflation is the difference between nominal and real GDP growth rates or GDP deflator. It averaged 7.5% per annum in India and 7.3% in China.
High inflation and a strong currency have propelled demand for foreign capital. It is essentially to arbitrage the difference in the cost of capital on and offshore. High inflation makes the real cost of capital onshore low or negative.
In recent months, the BRIC countries no longer receive strong inflows anymore. Their currencies have been under downward pressure. The BRIC economies now are similar to Southeast Asian economies in 1996. Wrong policy moves could aggravate the situation and trigger a full-blown financial crisis.
The strong currency gives foreign capital providers high returns offshore. This arbitrage is self-fulfilling in the short term. Foreign capital inflow supports their currencies, increasing their money supplies and inflation.
In recent months, the BRIC countries no longer receive strong inflows anymore. Their currencies have been under downward pressure. The BRIC economies now are similar to Southeast Asian economies in 1996. Wrong policy moves could aggravate the situation and trigger a full-blown financial crisis.
Loosening or tightening?
India just cut interest rates. Its latest inflation rate is 7.2%. Though it is at a three-year low, the level is still high. The moderating inflation gives the central bank the excuse to cut interest rates. Its goal is to stimulate growth. However, declining interest rates could speed up capital outflow. The resulting currency depreciation could worsen inflation again.
The real angle to the rate cut is the confidence game. Foreign capital, especially the footloose kind, plays the bubble game. It needs growth to embolden its risk appetite. The rate cut may increase capital inflow in the short term. The wrong policy in a conventional sense could work in a bubble environment.
The confidence game works when speculators want to play. It requires the global environment to be supportive. The most important supporting factor is the weak dollar.
The chances are that the market consensus on the dollar will change within three months. The dollar index (US:DXY) has fluctuated between 76 and 82 for two years. It is now at 80. Within three months, it would break through 82. The market consensus will follow then.
The confidence game doesn’t work when the dollar is strong. The BRIC economies need to shift their priority from growth at any cost to financial stability. The biggest mistake that Southeast Asian economies made 15 years ago was their reluctance to sacrifice growth despite the inflation challenge.
The right policy for the BRIC countries would be tightening now, ahead of the curve. Unfortunately, all policy makers are oriented to the short term nowadays. Some emerging market turbulence is quite likely within the next 24 months.
Andy xie is a jobless economist.. Who like to make big statement so he can get some employment
Andy Xie
Andy Xie (Chinese: 谢国忠; pinyin: Xiè Guózhōng; born 1962) is an independent economist based in Shanghai, and the former Morgan Stanley star chief Asia-Pacific economist [1] famous for his contrarian and provocative views.[1] He left Morgan Stanley abruptly in October 2006 [2] when an internal email[3] that he penned was leaked out. He derided Singapore as a money laundering centre for Indonesia, and the ASEAN group of nations as a failure.
phantom_opera
06-02-13, 08:42
The BRIC countries exhibit all the symptoms of binging on cheap credit: high levels of indebtedness, inflation and strong currencies. In the past decade broad money has risen by 17.2% per annum in India and 18.2% in China, while their real gross domestic product rose by 7.5% and 10% respectively.
The faster money growth has turned into inflation. The broadest gauge for inflation is the difference between nominal and real GDP growth rates or GDP deflator. It averaged 7.5% per annum in India and 7.3% in China.
=> the same thing for Singapore, in last 8y, M3 grows by more than 10% pa
DBU + ACU (M3)
2004
Dec 282,243.0
2012
Dec 632,690.4
=> this explains why real assets in China, India, Singapore are rising non-stop despite cooling measures
Actually, I enjoy reading andy's articles. At least he offers some insight to the macro. As long as he doesn't try amd act smart and just focus on talking about economics, he'll be fine.
The BRIC countries exhibit all the symptoms of binging on cheap credit: high levels of indebtedness, inflation and strong currencies. In the past decade broad money has risen by 17.2% per annum in India and 18.2% in China, while their real gross domestic product rose by 7.5% and 10% respectively.
The faster money growth has turned into inflation. The broadest gauge for inflation is the difference between nominal and real GDP growth rates or GDP deflator. It averaged 7.5% per annum in India and 7.3% in China.
=> the same thing for Singapore, in last 8y, M3 grows by more than 10% pa
DBU + ACU (M3)
2004
Dec 282,243.0
2012
Dec 632,690.4
=> this explains why real assets in China, India, Singapore are rising non-stop despite cooling measures
SG going forward how huh ? :D
phantom_opera
06-02-13, 08:58
SG going forward how huh ? :D
what do u think is the trend? ... will those stuck in CCR properties engineer a "Ponzi" or not?
Andy xie previous masterpiece
Andy Xie Tells CNBC China Real Estate Market Will Not Crash
Andy Xie, one of the leading prophets of the China Bear movement, backed away from his previous calls that China’s real estate market will crash. But Xie, in a debate Wednesday on CNBC Asia with China Market Research Group head Shaun Rein, reiterated his forecast that the real estate market in China has peaked.
Andy Xie said around the 4:20 mark that the “property market has peaked; it is going down” but “it is not crashing like I expected in 2012 because the government now is determined..they..do not want my scenario to work out.” Xie had originally called for a crash before 2012 but then pushed it back.
Actually, the government has been pretty clear all along that they do not want the market to crash. In April PBOC adviser Li Daokui told Bloomberg that “The property market will not see price falls of 20 to 30 percent because that could ‘could lead to new social problems‘”.
If China’s real estate market doesn’t crash, how will things work out for China bears like Jim Chanos?
what do u think is the trend? ... will those stuck in CCR properties engineer a "Ponzi" or not?
need to find lots of carrot heads to fuel the bubble leh. i can't imagine owners of the marq (as an example), flipping for a 20% profit in this kind of climate.
Actually, I enjoy reading andy's articles. At least he offers some insight to the macro. As long as he doesn't try amd act smart and just focus on talking about economics, he'll be fine.
The thing is macro is long term, in the short term, 1-3 years, the market may deviate from macro due to government interference and market manipulation. Andy Xie can predict his own govt giving out false information to drive up market, etc.
Now is still too early to talk, the US real estate market only just bottomed last year. It may only be 2014 or 2015 when we see the real effect.
phantom_opera
06-02-13, 09:05
a history of M3 in US ... the exponential curve fueled by NASDAQ bubble and subprime bubble is where Singapore will go??
http://inflation.us/images/m3.png
phantom_opera
06-02-13, 09:08
need to find lots of carrot heads to fuel the bubble leh. i can't imagine owners of the marq (as an example), flipping for a 20% profit in this kind of climate.
how else do u think 7m is the target :tongue3:
need to find lots of carrot heads to fuel the bubble leh. i can't imagine owners of the marq (as an example), flipping for a 20% profit in this kind of climate.
Ccr will be stuck in the 1st gear, while ocr is closing in the gap. There will be no more ccr, ocr, or rcr. Its an obsoletes concept. A pasir ris condo with a good sea view will be as good as a river valley condo.
The thing is macro is long term, in the short term, 1-3 years, the market may deviate from macro due to government interference and market manipulation. Andy Xie can predict his own govt giving out false information to drive up market, etc.
Now is still too early to talk, the US real estate market only just bottomed last year. It may only be 2014 or 2015 when we see the real effect.
I may have a different intepretation of his macro picture. But anyway, that's besides the point. What I am saying is this guy gives you food for thought. There are the not so good analyst featured in our papers that tell me what I ate for dinner yesterday. Heh heh.
Your point about the real effects in 2014 is something that I think about. And that scares me. If what we have seen so for isn't full blown. Then when the real cahuna comes, I cannot fathom what it will look like.
phantom_opera
06-02-13, 09:20
I may have a different intepretation of his macro picture. But anyway, that's besides the point. What I am saying is this guy gives you food for thought. There are the not so good analyst featured in our papers that tell me what I ate for dinner yesterday. Heh heh.
Your point about the real effects in 2014 is something that I think about. And that scares me. If what we have seen so for isn't full blown. Then when the real cahuna comes, I cannot fathom what it will look like.
bulls climb walls of worries so don't worry ;)
the world is controlled by money printing freaks nowadays
how else do u think 7m is the target :tongue3:
eh, that's a lot of carrot heads!! :scared-5: :scared-5: and these carrot heads are probably going to be driving ferraris (and beating red lights), while local SGs are struggling to afford COEs, and perhaps a proto saga or kancil
Ccr will be stuck in the 1st gear, while ocr is closing in the gap. There will be no more ccr, ocr, or rcr. Its an obsoletes concept. A pasir ris condo with a good sea view will be as good as a river valley condo.
eh, give me the river valley condo any time. i still prefer a central location
The thing is macro is long term, in the short term, 1-3 years, the market may deviate from macro due to government interference and market manipulation. Andy Xie can predict his own govt giving out false information to drive up market, etc.
Now is still too early to talk, the US real estate market only just bottomed last year. It may only be 2014 or 2015 when we see the real effect.
We have only 30 years of productive life at best. Now the gov around the world are actively manipulating market. U have to find something of value to hold on to. If no gov is willing to swallow the bitter medicine. Are u asking me to trust the fiat money they so generously throwing around and sit here waiting for the return of perfect market?
I may have a different intepretation of his macro picture. But anyway, that's besides the point. What I am saying is this guy gives you food for thought. There are the not so good analyst featured in our papers that tell me what I ate for dinner yesterday. Heh heh.
Your point about the real effects in 2014 is something that I think about. And that scares me. If what we have seen so for isn't full blown. Then when the real cahuna comes, I cannot fathom what it will look like.
No one can predict the future. They control the game. You never know what they will do. They let Lehman go under in 2008.
In recent years, Obama has been busy pushing up US oil and gas production by encouraging local production while preventing exports. It is said that it a couple of years, the US will be self-sufficient in oil.
http://www.marketwatch.com/story/us-oil-supply-up-nearly-4-million-barrels-api-2013-02-05?link=MW_latest_news
http://www.upstreamonline.com/live/article1315830.ece
He has also been forcing US banks to capitalize with many rounds of stress tests - http://www.ft.com/intl/cms/s/0/a59d2992-699f-11e2-8d07-00144feab49a.html#axzz2K5D5KCAV
At the same time, he has increased the sanctions on Iran. Iran's Rial is plummeting. Me thinks he is preparing for the final showdown.
All this shows that he is plotting something. Just like he plotted to go after Bin Laden quietly while announcing withdrawals from Iraq and Afghanistan.
If Iran closes the Persian Gulf from which Singapore gets most of its oil, we'll all need to walk or ride bicycle to work. Not saying it will happen now, but from the way things are going, no one can rule this out over the next 5 years.
America doesn't care as they got plenty of oil.
No one can predict the future. They control the game. You never know what they will do. They let Lehman go under in 2008.
In recent years, Obama has been busy pushing up US oil and gas production by encouraging local production while preventing exports. It is said that it a couple of years, the US will be self-sufficient in oil.
http://www.marketwatch.com/story/us-oil-supply-up-nearly-4-million-barrels-api-2013-02-05?link=MW_latest_news
http://www.upstreamonline.com/live/article1315830.ece
He has also been forcing US banks to capitalize with many rounds of stress tests - http://www.ft.com/intl/cms/s/0/a59d2992-699f-11e2-8d07-00144feab49a.html#axzz2K5D5KCAV
At the same time, he has increased the sanctions on Iran. Iran's Rial is plummeting. Me thinks he is preparing for the final showdown.
All this shows that he is plotting something. Just like he plotted to go after Bin Laden quietly while announcing withdrawals from Iraq and Afghanistan.
If Iran closes the Persian Gulf from which Singapore gets most of its oil, we'll all need to walk or ride bicycle to work. Not saying it will happen now, but from the way things are going, no one can rule this out over the next 5 years.
America doesn't care as they got plenty of oil.
We are already in war.. USA already losing the world power status and USD already losing the shine as the world's reserve currency...
Why does the Japan and Philippines try to provoke China in the island dispute?
Why does Germany as for the gold to be send back to German?
Why does Japan go into QE so late?
We are already losing the growth condition that we enjoy in the last few 10 - 20 years... China growing through export and USA just print USD and importing goods from China. This is the reason why USA turn a blind eye to China rise into power. As China is feeding them with goods and paying China with USD. Now now the debt is too high for USA.. The population is aging.. And USA already lose the ability to produce anything else other than USD. That is the real reason why USA is unable to recover from 2008. If now China just announced to stop buying US bonds, USA will go bankrupt.
Singapore..... Brace yourself from yen tsunami
Aggressive Bank of Japan? Sooner Than You Think
CNBC.com | February 05, 2013 | 10:02 PM EST
The early departure of the Bank of Japan's (BOJ) governor can only mean one thing: aggressive monetary easing from Japan's central bank could now come sooner rather than later.
This certainly seems to be the view in the markets following news late on Tuesday that BOJ Governor Masaaki Shirakawa will step down on March 19, three weeks before his five-year tenor ends in April.
The yen hit a 2-1/2 year low versus the dollar and Japanese stocks jumped up to 3 percent on Wednesday on expectations that the early departure of Shirakawa, who analysts say did not share the government's view that the BOJ is responsible for ending deflation, will bring forward a shift in monetary policy.
Up until now, markets were not expecting much action from the central bank until after Shirakawa's term ended in April and were also left a little disappointed after the BOJ said last month it would only start making large-scale asset purchases from the start of next year when its current program ends.
(Read More: BOJ Deputy Governor Signals Further Monetary Stimulus)
We have only 30 years of productive life at best. Now the gov around the world are actively manipulating market. U have to find something of value to hold on to. If no gov is willing to swallow the bitter medicine. Are u asking me to trust the fiat money they so generously throwing around and sit here waiting for the return of perfect market?
And so fiat money returns to its intrinsic value... in the dragma, before they gave it up for the euro, I see the past, present and future.
No one can predict the future. They control the game. You never know what they will do. They let Lehman go under in 2008.
In recent years, Obama has been busy pushing up US oil and gas production by encouraging local production while preventing exports. It is said that it a couple of years, the US will be self-sufficient in oil.
http://www.marketwatch.com/story/us-oil-supply-up-nearly-4-million-barrels-api-2013-02-05?link=MW_latest_news
http://www.upstreamonline.com/live/article1315830.ece
He has also been forcing US banks to capitalize with many rounds of stress tests - http://www.ft.com/intl/cms/s/0/a59d2992-699f-11e2-8d07-00144feab49a.html#axzz2K5D5KCAV
At the same time, he has increased the sanctions on Iran. Iran's Rial is plummeting. Me thinks he is preparing for the final showdown.
All this shows that he is plotting something. Just like he plotted to go after Bin Laden quietly while announcing withdrawals from Iraq and Afghanistan.
If Iran closes the Persian Gulf from which Singapore gets most of its oil, we'll all need to walk or ride bicycle to work. Not saying it will happen now, but from the way things are going, no one can rule this out over the next 5 years.
America doesn't care as they got plenty of oil.
very interesting post:o
too cheem for me. can our economics experts like Leeds summarise? is a crisis coming?
The chances are that the market consensus on the dollar will change within three months. The dollar index (USXY) has fluctuated between 76 and 82 for two years. It is now at 80. Within three months, it would break through 82. The market consensus will follow then.
The confidence game doesn’t work when the dollar is strong. The BRIC economies need to shift their priority from growth at any cost to financial stability. The biggest mistake that Southeast Asian economies made 15 years ago was their reluctance to sacrifice growth despite the inflation challenge.
The right policy for the BRIC countries would be tightening now, ahead of the curve. Unfortunately, all policy makers are oriented to the short term nowadays. Some emerging market turbulence is quite likely within the next 24 months.
phantom_opera
06-02-13, 14:57
too cheem for me. can our economics experts like Leeds summarise? is a crisis coming?
this is easier for u ?? lol
Tokyo's Nikkei sees best close since September 2008 (AFP)
+3.77%
this is easier for u ?? lol
Tokyo's Nikkei sees best close since September 2008 (AFP)
+3.77%
other than telling me all major indices seeing historical high recently (except sgp)... so what does it mean? after adjusting for inflation, are the indices still at a high? euphoria coming? how is this linked back to the article?
too cheem for me. can our economics experts like Leeds summarise? is a crisis coming?
Seletar had just posted this article which seems to be the answers to your concerns.
This 'crisis' if it happens is too complex for someone like me who merely read economics for fun.
http://www.channelnewsasia.com/stories/economicnews/view/1252417/1/.html
Bank of Mexico head warns of 'perfect storm' for global economy
By Sylvia Paik | Posted: 05 February 2013 1930
Channel News Asia
SINGAPORE: A "perfect storm" could be brewing in the global economy, according to Bank of Mexico Governor Agustin Carstens who was speaking at the Monetary Authority of Singapore lecture on Tuesday.
Mr Carstens warned that massive capital flows to emerging markets and some strong performing advanced economies could lead to asset price bubbles.
He cautioned against financial markets being overly optimistic as this could cause mis-pricing in some asset classes.
He feared these countries could later face a reversal in capital flows as the major advanced economies start exiting their accommodative monetary policy stance.
Such conditions could create major financial stability risks to such capital recipient countries, he added.
Mr Carstens urge these countries to adopt "thoughtful macro-prudential policies".
He also warned emerging economies of the risks of letting their domestic currencies appreciate as this could hurt their growth especially when some advanced economies actively pursue a depreciating real exchange rate policy.
- CNA/fa
Don't need to understand all those complex economic theory because they will end up useless and unable to predict anything of accuracy anyway.
Just remember, with so much paper money printed, just hold on dearly to your physical assets tightly! (If you have not converted your paper money to physical assets, do so fast! You will see your paper money fast becoming as abundant and as worthless as toilet papers!). :scared-1:
Seletar had just posted this article which seems to be the answers to your concerns.
This 'crisis' if it happens is too complex for someone like me who merely read economics for fun.
Don't need to understand all those complex economic theory because they will end up useless and unable to predict anything of accuracy anyway.
Just remember, with so much paper money printed, just hold on dearly to your physical assets tightly! (If you have not converted your paper money to physical assets, do so fast! You will see your paper money fast becoming as abundant and as worthless as toilet papers!). :scared-1:
poor man cannot buy anything lah..
:banghead:
Don't need to understand all those complex economic theory because they will end up useless and unable to predict anything of accuracy anyway.
Just remember, with so much paper money printed, just hold on dearly to your physical assets tightly! (If you have not converted your paper money to physical assets, do so fast! You will see your paper money fast becoming as abundant and as worthless as toilet papers!). :scared-1:
Agreed with you that economists can only be more right after the facts.
Please do remember that when crisis hits, 'cash is king'.
Agreed with you that economists can only be more right after the facts.
Please do remember that when crisis hits, 'cash is king'.
Err ... heehee said convert money to concrete. U say cash is king .. so should take simi position huh? :ashamed1:
Agreed with you that economists can only be more right after the facts.
Please do remember that when crisis hits, 'cash is king'.
wah piang..now u say keep cash
:banghead::banghead:
this global economy will soon make me study phD for economic ! :doh:
Didn't we just pass one of the worst economic crisis, one that may end up as bad as the 1929 great depression? I doubt there will be any more economic crisis that can beat the one we just passed given all the money printing... So your take? :p
Err ... heehee said convert money to concrete. U say cash is king .. so should take simi position huh? :ashamed1:
Didn't we just pass one of the worst economic crisis, one that may end up as bad as the 1929 great depression? I doubt there will be any more economic crisis that can beat the one we just passed given all the money printing... So your take? :p
Hmm .. not sure if the one that you mentioned abt having just passed, was really as bad as the great depression, but your pt sounds more optimistic. I'm more gear twd wat the other said .. get ready cash as you may need to bullet to buy when others flee (for watever reasons, interest rate hike, over supply, real crisis, etc., etc..). Think so far, most have been talking about inflation, only a few mentioned deflation lei :2cents: .. wonder if the latter were to ever happen, does that lead to fearful consumder spending less, things get cheaper, then the wiser ones shld chiong ah?
Btw, ever read this humorous phrase somewhere long time ago about Depression: Recession is when your neighbour is out of job; Depression is when you are out of job *kidding of coz* ;)
Agreed with you that economists can only be more right after the facts.
Please do remember that when crisis hits, 'cash is king'.
Fully agreed 'cash is king' before the QE but not after QE.
Debt = Money, Money = Debt
http://theeconomiccollapseblog.com/archives/debt-money-money-debt
Money As Debt - Full Length Documentary
http://www.youtube.com/watch?v=jqvKjsIxT_8
In a deflationary environment, things are generally getting cheaper. But does it feel that way right now? And with m3 expanding, does it give a chance for deflation to set in?
If you enjoy reading economy and Andy's writing, he has published a few books, you can get them at all major book stores in China.
Worth reading
"cash" is paper money.
QE is to print lots and lots of paper money.
So, after printing so much paper money, is the "cash" still valuable?
I think the answer is so obvious that even a 5 years old will understand :p
Fully agreed 'cash is king' before the QE but not after QE.
Debt = Money, Money = Debt
http://theeconomiccollapseblog.com/archives/debt-money-money-debt
Money As Debt - Full Length Documentary
http://www.youtube.com/watch?v=jqvKjsIxT_8
Originally Posted by Leeds
Agreed with you that economists can only be more right after the facts.
Please do remember that when crisis hits, 'cash is king'.
Too cheem for me even after reading it three times :doh:
The best position is to have physical asset(s) while at the same time keeping some cash and not to be over-leveraged :tsk-tsk:
This thread gives me déjà vu.
If you enjoy reading economy and Andy's writing, he has published a few books, you can get them at all major book stores in China.
Worth reading
in mandarin or english? available here?
his is the type of provocative articles that make you think. rather than list out the things i bought in the supermarket last night.
Cash is king when M3 is shrinking or V is nose-diving. Cash is an inappropriate choice when M3 is ballooning and V is threatening to take off.
Fully agreed 'cash is king' before the QE but not after QE.
Debt = Money, Money = Debt
http://theeconomiccollapseblog.com/archives/debt-money-money-debt
Money As Debt - Full Length Documentary
http://www.youtube.com/watch?v=jqvKjsIxT_8
Mind blowing videos. Thanks.
Not sure if the full length has part II:
http://www.youtube.com/watch?feature=endscreen&v=lsmbWBpnCNk&NR=1
Cash is king when M3 is shrinking or V is nose-diving. Cash is an inappropriate choice when M3 is ballooning and V is threatening to take off.
what is V?
what is V?
velocity of money.
Mind blowing videos. Thanks.
Not sure if the full length has part II:
http://www.youtube.com/watch?feature=endscreen&v=lsmbWBpnCNk&NR=1
The part II means version 2.
After I watch the video, I get myself the next flight to Singapore to get more debt.
The part II means version 2.
After I watch the video, I get myself the next flight to Singapore to get more debt.
if i take loan from bank to finance my property, isn't this another start of capitalism in asia?
if i take loan from bank to finance my property, isn't this another start of capitalism in asia?
After CNY you might find the purchasing power of your $300k decline by 5%. Serious.
what if my spending habit is minimum ..not big spender type.. no luxury ..
will this help people like me to weather through the storm? :o
phantom_opera
07-02-13, 06:45
if US economy recovers fast enough and short term rates goes up ... at least your bank savings get a little interest to hedge against inflation ... but it looks like SIBOR will stay at 0.4% for another 3y
http://goldsilver.com/re/common/images/images/foodstamps-vs-payrolls_0.jpg
what if my spending habit is minimum ..not big spender type.. no luxury ..
will this help people like me to weather through the storm? :o
If you can save faster than the dilution rate of purchasing power, you should be fine. But usually how fast an average person save also cannot match the increase in price of big ticket items. E.g. $1 mil house up by 1% due to inflation = $10,000. Can your increase in saving in 1 year outdo this mere 1% increase?
if US economy recovers fast enough and short term rates goes up ... at least your bank savings get a little interest to hedge against inflation ... but it looks like SIBOR will stay at 0.4% for another 3y
the chart guy! :tongue3::tongue3:
If you can save faster than the dilution rate of purchasing power, you should be fine. But usually how fast an average person save also cannot match the increase in price of big ticket items. E.g. $1 mil house up by 1% due to inflation = $10,000. Can your increase in saving in 1 year outdo this mere 1% increase?
no choice..me not into loan :banghead::banghead:
somemore interest rate will up very fast in next 5 years time.., i think :(
Too cheem for me even after reading it three times :doh:
The best position is to have physical asset(s) while at the same time keeping some cash and not to be over-leveraged :tsk-tsk:
this sounds more like english. :D
and a good way to sum up everything.
if money = debt, so the more debt i have, the more money i have?
in that case, why should i pay down my debt?
your statement money = debt, whose money, whose debt?
is your debt = banks' money ??
old time slavery = have to feed the slaves etc
modern debt slave = no need to feed the slaves.
Seletar had just posted this article which seems to be the answers to your concerns.
This 'crisis' if it happens is too complex for someone like me who merely read economics for fun.
thank goodness.. i thought i was getting stupid.
if you also cannot understand, how can i? :banghead: :banghead: :banghead:
thank goodness.. i thought i was getting stupid.
if you also cannot understand, how can i? :banghead: :banghead: :banghead:
Professional economists have to make things sound complicated to earn their keep. Haven't you heard of consultant? If they cannot convince you, they confuse you.
The major economies are getting into QEs to retrieve their stalling economies. By their doing, they affected the emerging economies with inflation and asset bubbles. Some vulnerable economies like Singapore are actually experiencing slow growth with high inflation to the extend of a contraction. Some emerging economies are experiencing higher growth with high inflation.
As we all know, slow growth with high inflation and high growth with high inflation economies are not sustainable. The west are currently experiencing slow growth and low inflation (or recession) while Asia has a mix of slow growth high inflation and high growth high inflation.
The west will very quickly reverse its monetary policies once the QEs result in higher inflation and this reversal of monetary policy would create 'unstability' to many emerging economies
From a marco-economic perspective, many of the global economies are at some 'unstainability' stage with the QEs. This is the major concerns of most governments and economists
If we believe in natural economic cycle, then the high growth high inflation and low growth high inflation economies will be affected if no 'effective' fiscal and monetary policies are in placed.
The more serious economic challenges we are facing is the effect of prolong QE and the damages to other emerging economies and their own economies (the west) that no amount of monetary policies could balance the equation.
Is crisis going to hit us soon? We are like s frog in a slow heating bowl of water. The frog will continue to feel comfortable until the water gets too hot and die. This is what a crisis will be.
Anything that we can predict wil not turn into a crisis.
nice post, LEEDS!:cheers5:
:cheers4:
The more serious economic challenges we are facing is the effect of prolong QE and the damages to other emerging economies and their own economies (the west) that no amount of monetary policies could balance the equation.
Is crisis going to hit us soon? We are like s frog in a slow heating bowl of water. The frog will continue to feel comfortable until the water gets too hot and die. This is what a crisis will be.
Anything that we can predict wil not turn into a crisis.
nice post ... so wat would be the black swan which most cannot predict? Deflation?? :p
Agreed with you that economists can only be more right after the facts.
Please do remember that when crisis hits, 'cash is king'.
Cash may be worthless this time round given that governments have gone even deeper into the marital bed with finance.
Cash is king when M3 is shrinking or V is nose-diving. Cash is an inappropriate choice when M3 is ballooning and V is threatening to take off.
Benny is frustrated at how the velocity of money keeps falling despite QE to eternity.
if US economy recovers fast enough and short term rates goes up ... at least your bank savings get a little interest to hedge against inflation ... but it looks like SIBOR will stay at 0.4% for another 3y
http://goldsilver.com/re/common/images/images/foodstamps-vs-payrolls_0.jpg
There is no recovery.
in mandarin or english? available here?
his is the type of provocative articles that make you think. rather than list out the things i bought in the supermarket last night.
u should his hairy crab article....
I doubt you can find his books in Sg. Not many can be found in HK as well.
Available in Chinese and English
phantom_opera
07-02-13, 10:42
Blackswan has just happened in 2008 ... but this time is different, instead of allowing system to punish the reckless, central banks use dangerous tool like QEs to prevent deflation from happening ... and export inflation to other countries ... this will of course further embolden the 'too big to fail'
It all going to explode one day .. but that day is not in radar yet
Cash may be worthless this time round given that governments have gone even deeper into the marital bed with finance.
Allow to me share with you what I mean by 'cash is king' when there is a crisis.
Look at the US before the crisis. People were buying assets with cheap money at 'inflated' prices. When the crisis hit, people with cash were 'safe' while those with money invested in various assets were punished. Now the people with cash are able to buy distress assets at cheap prices while those who were invested lost the opportunity to buy at low or worst, still struggling to pay off their loans.
Keep more cash if you expect a crisis coming. Do not throw every dollar into investment which you are not able to get out when crisis hits. You may be able to hold up your investments but you would probably miss out good opportunity when the economy starts to heal because you use up all your cash.
Of course, if you do not see the crisis coming, go ahead to do what you want with your cash. It could turn out well.
thanks Leeds. as usual insightful comment with no bias. :D
Allow to me share with you what I mean by 'cash is king' when there is a crisis.
Look at the US before the crisis. People were buying assets with cheap money at 'inflated' prices. When the crisis hit, people with cash were 'safe' while those with money invested in various assets were punished. Now the people with cash are able to buy distress assets at cheap prices while those who were invested lost the opportunity to buy at low or worst, still struggling to pay off their loans.
Keep more cash if you expect a crisis coming. Do not throw every dollar into investment which you are not able to get out when crisis hits. You may be able to hold up your investments but you would probably miss out good opportunity when the economy starts to heal because you use up all your cash.
Of course, if you do not see the crisis coming, go ahead to do what you want with your cash. It could turn out well.
Everyone knows this, but the greed is telling you that you will lose the opportunity to earn a bit more money if the crisis doesn't come next month. :p
Of course, no one can know when the crisis will come just as no one predicted 2008 bust.
Everyone knows this, but the greed is telling you that you will lose the opportunity to earn a bit more money if the crisis doesn't come next month. :p
Of course, no one can know when the crisis will come just as no one predicted 2008 bust.
Exactly! This reminded me of a post from vic below.
U will know eventually as your grow older & smarter why 10% of the smart investors are very successful in investing.
Why 90% among us are still struggling to earn a decent money for our future retirement fund or for our future genration. I am still learning to be among the 10% smart investors.
We dont need to have a very high IQ in investing. We need to have HIGH EQ. Emotionally steady , calm , strong etc. Be very different from your friends , neighbours, among the herd investors when come to investing.
GREED will bring disaster. EXTREME FEAR bring opportunities. Patience bring profit.
rdgs,
Vic
Allow to me share with you what I mean by 'cash is king' when there is a crisis.
Look at the US before the crisis. People were buying assets with cheap money at 'inflated' prices. When the crisis hit, people with cash were 'safe' while those with money invested in various assets were punished. Now the people with cash are able to buy distress assets at cheap prices while those who were invested lost the opportunity to buy at low or worst, still struggling to pay off their loans.
Keep more cash if you expect a crisis coming. Do not throw every dollar into investment which you are not able to get out when crisis hits. You may be able to hold up your investments but you would probably miss out good opportunity when the economy starts to heal because you use up all your cash.
Of course, if you do not see the crisis coming, go ahead to do what you want with your cash. It could turn out well.
When your currency is the "World currency", you can do what you like. US now is the World net exporter of energy. Singapore is the world net importer.
So true!
It is also possible that greed is telling those who are waiting and waiting that if they can just wait a little longer they can make a killing? :scared-2:
Everyone knows this, but the greed is telling you that you will lose the opportunity to earn a bit more money if the crisis doesn't come next month. :p
Of course, no one can know when the crisis will come just as no one predicted 2008 bust.
https://fbcdn-sphotos-a-a.akamaihd.net/hphotos-ak-ash3/819144_4723475397755_899744161_o.jpg
u should his hairy crab article....
I doubt you can find his books in Sg. Not many can be found in HK as well.
Available in Chinese and English
ok will do a google later, thanks for the pointers.
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