The big news in the past two weeks has been the slew of economic data suggesting that China has firmly turned the corner on its economic closedown. Growth is up, investment is up, and inflation is down. Here, for example, is the New York Times, a newspaper whose website is no longer available in China without a VPN: …
Read More…Is there an Asian RMB bloc?
In the past two weeks we have been treated with a mostly positive but nonetheless mixed bag of economic data from China. There has been good news, bad news, good news with worrying underlying trends, and bad news with silver linings. Analysts have announced that things are getting worse and that things are getting better. …
Read More…When the Growth Model Changes, Abandon the Correlations
Chiwoong Lee at Goldman Sachs has a new report out (“China vs. 1970s Japan”, September 25, 2012) in which he predicts that China’s long-term growth rate will drop to 7.5-8.5%. I disagree very strongly with his forecast, of course, and expect China’s growth rate over the next decade to average less than half that number, …
Read More…How to be a China bull
I recently “debated” twice with senior Chinese officials on the future prospects for China. In both cases they made the argument that Chinese growth rates were going to rise in the next few years and that the current deep pessimism is unwarranted. I argued, of course, that growth would slow even more. Neither of the …
Read More…Can China increase export competitiveness?
Three weeks ago the Wall Street Journal published my OpEd piece about concern that China may try to make the rebalancing process less painful by allowing the RMB to depreciate. In the piece I argue that this isn’t as obvious as you might think. From July 2005 to February this year the RMB rose by just over 30% …
Read More…By 2015 hard commodity prices will have collapsed
For the past two years, as regular readers know, I have been bearish on hard commodities. Prices may have dropped substantially from their peaks during this time, but I don’t think the bear market is over. I think we still have a very long way to go. There are four reasons why I expect prices to …
Read More…How do we measure debt?
In the last issue of my newsletter much of the first half was dedicated to a discussion of recent events in Spain and Italy and why they reinforce the argument that several countries will be forced to leave the euro and restructure their debt. The most worrying, but expected, fact was the amount of capital …
Read More…Has the Great Rebalancing already started?
The following was written a month ago for my newsletter but because of the virus problem I had on my site I wasn’t able to post it until today. China’s official GDP growth rate has fallen sharply – on Friday Beijing announced that GDP growth for the second quarter of 2012 was a lower-than-expected 7.6% …
Read More…Apologies
I apologize to my readers but over the past two weeks my site was infected by a pretty sophisticated virus that made it impossible for me to get into the site, so I was unable to approve comments and to post new entries. Since I also spent much of the past two weeks traveling, it …
Read More…The unacceptable behavior of the market
Last night I arrived at my family’s home in Spain just in time to catch Spain play Italy. The whole family and lots of friends watched it, while feeding on great seafood and lots of wine, at a neighboring chiringuito on the beach, and I guess if you weren’t there you can only imagine the excitement. I suppose this spectacular win …
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