2011-09-28

Liu Jun Luo: Six to ten months until Chinese hyperinflation

Liu Jun Luo has a new blog post up. He's notorious for not laying out all the details, so I will set this up a bit. The following is my interpretation of what he's writing, filling in some spaces. You can read his writing below in Chinese or English. The Chinese economy is unbalanced with far, far too much investment directed by government owned companies or government bureaucrats. Government investment is often negative in and of itself (relative to a similar private investment) since it tends to be less efficient, and while there were good infrastructure projects before, a lot of the recent spending only fueled real estate. China desperately needs to rebalance as fast as possible, and one way to do that is to create wage inflation. In this article Liu Jun Luo talks about how on a battlefield, you destroy some areas to slow the enemy. There's a depression in the West that's about to become more severe, exports are going to drop and Chinese will become unemployed. Defending this sector of the economy makes no sense. The bigger threat is that deflation takes hold in China because of the credit bubble. When investment bubbles in Asia burst, it's the currency that gets annihilated. Mr. Liu's advice is that China create the inflation itself, rather than suffer the "super" inflation that will result from a currency collapse that will wipe out stocks, real estate and the savings of ordinary Chinese. 回复刘军洛新浪微博粉丝提问
正确的预期是非常重要的,目前全球债务膨胀,美国、德国、英国的长期债券收益率全部下降的创记录低点,这已经说明全球大量私人资本正在大规模退出劳动力市场和资本市场。
中国目前的通货膨胀现象是一个严重的假现象,这就好像2008年3月份中国通货膨胀达到当时的高峰,结果,在2008年9月份的世界外部冲击打进了大萧条。
所以,目前正确的方式是中国中央银行要制造通货膨胀,就是大幅度提高工资。因为,如果我们再被外部像2008年9月份打进了大萧条,那么,中国将用6~10个月时间演变成真正的超级通货膨胀。这是,人民币汇率崩盘的通货膨胀,那么,这就是不可救药失控的通货膨胀。
目前,如果我们大幅度提高工资后的通货膨胀是不会危害的汇率的,但是,我们错误的选择了大萧条,那么,人民币汇率就必定崩盘。
这就好像战场,你必须选择局部地区的大量牺牲,因为,这也意味着大量敌人被你也严重拖延在局部地区。中国现在最失败的地方就是没有居民免费食品券机制。
你需要明白我们实际是在谈论人民币汇率问题。中国大萧条后演变的超级通货膨胀是迅速消灭所有人的股市资产、房地产资产和储蓄资产。
现在,中国的宏观层面无法理解我们真正问题是人民币汇率上面,所以,中国普通人只能自保,因为,这是一场中国普通人的人生灾难。
同时,世界的套利者也把这个事件看的清清楚楚,他们会顺应市场的趋势,把这场大规模的灾难变成更大数量级的灾难。
Below is the Google translation, which I touched up a bit.
Correct expectations is very important, the current expansion of global debt, the United States, Germany, the UK's long-term bond yields fell to a record low point, which has indicated that a large amount of private global capital is a large-scale withdrawal from the labor market and capital market.
China's current appearance of inflation is a serious false appearance, similar to China in March 2008 when inflation reached a peak as a result, in September 2008 global external shocks turned into the Great Depression.
So, now the proper way to create inflation is for China's central bank to substantially increase in wages. Because, outside shocks similar to September 2008 again bring the Great Depression, then, in 6 to 10 months China will evolve into a real super-inflation. This is the collapse of the RMB exchange rate inflation, then, this is hopelessly out of control inflation.
Currently, if we significantly increase wage inflation it is not harmful to the exchange rate, but we wrongly choose the Great Depression, then, the RMB exchange rate will collapse. It's like the battlefield, you must choose to sacrifice a large number of local areas, because this also means that a large number of enemies are seriously delayed in some areas. China most failed area now is that there are no food stamps.
You need to understand that we are actually talking about the RMB exchange rate issue. After China's Great Depression, the evolution of super-inflation will mean the rapid annihilation of all stock market assets, real estate assets and savings assets.
Now, China's macro level cannot understand our real problem is that of the RMB exchange rate, so all the Chinese ordinary people can do is protect themselves, because this is a catastrophe for the lives of ordinary Chinese.
Meanwhile, the world arbitrageurs also clearly see this event, they will follow the market trend, the large-scale disaster of this magnitude will become an even greater disaster.

Wenzhou factory owners run away from debt

温州老板批量跑路反思
自2011年4月江南皮革董事长黄鹤失踪以来,温州民企老板跑路事件愈演愈烈,已有近40名老板不知所踪。仅9月一个月,就有接近20起,甚至在中秋之夜出现多个老板集体出逃。近期,一份温州老板跑路清单也在微博上被火热传播。 温州的民间放贷全国有名,如今,正是这些民间资本,使温州老板们“背井离乡”。温州老板跑路该不该怪高利贷,又是谁让温州变成了高利贷之城?是温州人贪婪,还是是中国金融体制?或者是央行紧缩政策?我们需要认清真相。
40 business owners have fled from Wenzhou this year, a center of private market capitalism in China, and 20 have fled in September. Last year, in Wenzhou private interest rates hit 96% I covered the situation in Wenzhou (article has several links and video). The Chinese government was already tightening lending and the reduced flow of funds goes to the state-owned companies first. Private companies depend on loans that have monthly interest rates that can run as high as 180% annualized. Then, at the start of 2011, I covered this story on the blog, Rising costs destroy profit margins in Wenzhou, firms shift to real estate. Some factories operated at 0% profit margins, while many started up real estate divisions to engage in real estate speculation and development. Clearly, things were headed for a disaster, despite assurances that the rumors of widespread bankruptcy were false. (There have also been persistent rumors in the Guangdong, Pearl River manufacturing area, which exports as much as the next two provinces.)
以下都是今年媒体报道过的或比较大的知名企业老板逃跑事件。无数逃跑的小企业,私人的不包含其中。
时间 事件
4月初 温州龙湾区江南皮革有限公司董事长黄鹤失踪。目前公开的原因黄鹤参与大额赌博,欠下巨额赌资出逃……
4月 温州波特曼咖啡因经营不善,企业主向民间借入高息资金,最终导致资金链断裂出走,相关门店停止经营……
4月 位于乐清的三旗集团董事长陈福财,因资金链出现困境、企业互保出现问题出走……
6月初 温州铁通电器合金实业有限公司的股东之一范某出走,估计涉及上千万元民间借贷……
6月中旬 位于乐清的浙江天石电子公司老板叶某出走,据传叶某欠下7000万巨债无法偿还……
7月 瑞安的恒茂鞋业老板虞正林出逃
7月底 位于温州龙湾区海滨街道的巨邦鞋业有限公司老板王某出走,据记者了解其参股一家担保公司,涉资金约一亿……
8月24日 位于温州瓯海区的锦潮电器有限公司老板戴某失踪,原因可能是其参与经营的担保公司出了问题……
8月29日 位于温州鹿城区的耐当劳鞋材有限公司宣布停工,传言老板戴某因欠巨债潜逃……
8月31日 永嘉县温州部落之神鞋业公司老板吴伟华失踪了……
9月1日 永嘉县蝶梦儿鞋厂老板黄杰失踪了……
9月9日下午 在龙湾颇有名气的家电老板郑珠菊,郑珠菊共欠债权人现金借款、银行承兑汇票等高达2.8亿元,其中现金1.8亿元,银行承兑汇票1亿元左右“落跑”半个月之后,在温州经济开发区滨海园区被警方抓获。
9月13日左右 温州奥米流体设备科技有限公司老板,送全体员工集体去雁荡度假。其间公司董事长和总经理等负责人不知所踪。 40多台、总价值上千万的精密加工设备全部不翼而飞。
中秋节期间 温州龙湾新耐宝鞋业老板跑路……
中秋节期间 温州唐风制鞋老板黄伯鹤跑路……
中秋节期间 温州金竹工业区的星际鞋业老板跑路……
中秋节期间 温州欧霸标准件有限公司老板跑路……
9月15日左右 浙江祥源钢业、温州宝康不锈钢制品有限公司董事长吴保忠失踪,欠银行贷款2亿多元,民间借贷8000万元,承兑汇票5000万元没有归还。
9月19日 开业仅2年的信河街温州福燕兄弟实业有限公司(燕窝之类饮食的)倒闭,房产易主,老板跑路。老板欠了几个亿的高利贷资金链断了,房产被银行转卖。
9月21日 公司占地200亩,年总产值达10个亿的浙江温州东特不锈钢制造有限公司老板姜国元跑路……
9月22日 温州龙湾蓝天大药房老总跑路,涉案资金8000万……
9月22日 温州最大的眼镜企业浙江信泰集团董事长欠款8亿跑路(具知情人透露,实际欠款达20多亿)。
9月24日早上 温州市经济技术开发区的温州正德鞋业有限公司大门围着上百人,有员工,也有供应商,而欠钱的老板已经不知所踪。
9月25日 温州综艺鞋业老板跑路……
9月25日 温州龙湾泰尔铜业老板跑路……
**月**日 温州老板跑路名单还在陆续增加中……
Almost all of the above cases involve high interest loans. There are quite a number of articles that accompany this story if you want to click through and use Google translate to get a gist of the stories. There's been a long history of private loans and the situation is more complex than just a credit cycle story, but this is now turning, I believe this is the beginning of the end. Already, a domino effect taking place as other business owners watch their peers flee their debts. Overseas consumers in Europe and America will be cutting back in the wake of austerity. Even if the PBOC loosened monetary policy now, it is probably too late.

This story in Wenzhou has been around for well over a year, and similar stories cropped up in 2008. A lot of China bears  have been early in their calls and the country just surprises and surprises with its ability to push ahead with growth. It's powered through so many times, but this may finally be the canary in the coal mine for a major slowdown in China.

2011-09-27

US vs EU

Germany slams 'stupid' US plans to boost EU rescue fund
"I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said. Mr Schauble told Washington to mind its own businesss after President Barack Obama rebuked EU leaders for failing to recapitalise banks and allowing the debt crisis to escalate to the point where it is "scaring the world". "It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," he said.

Euro's troubles an Anglo-Saxon plot
The "markets" -- a typically Anglo-Saxon invention -- are taken as being both wildly irrational and at present engaged on a concerted attempt to destroy the Euro as a common currency. For believers in the Anglo-Saxons as the secret movers of the world, it could not be that the whole idea of the common currency was flawed in the first place and was bound to lead either to financial catastrophe or to a completely undemocratic and authoritarian central control of the economic life of the continent, or to both. Not a sparrow, or a French bank share, falls, but the Anglo-Saxons are behind it.

European break-up begins?

Only last month I covered the Hungarian political situation. Right ascendant in Hungary. I focused on the domestic issues, along with what could be a larger shift towards the right as social mood declines. However, on the international side, the move to the right also comes with increased nationalism. This doesn't mean ideological nationalism (yet), for now it's just part of the same trend seen by individuals, who focus more on the family. People turn inward during declining social mood and nations follow suit. Everyone has been looking to Greece, Spain, France and Germany for a European split, but these governments are still committed the the euro. Meanwhile, the Hungarians and tossed a spanner in the machinery of the EU. This isn't outright protectionism, but it is the type of populism that will be very popular with the public and tough to counteract. The Europeans who dislike the Hungarian right-wing government can't act in a way that will not end up helping them. They'll either allow the policy, or punish the country, helping the anti-EU forces become more popular. We aren't going to see full-on protectionism until mood drops significantly, but this is the type of political signal that aligns with the recent drop in stock markets and paves the way for it. EU urged to probe Hungary mortgage move
Hungary’s parliament last week passed a law allowing mortgage borrowers in Swiss francs and euros to repay their loans by the year-end at exchange rates about 25 per cent below current market rates. Losses would be borne by the banks, including Hungary’s OTP and foreign lenders such as Erste Bank and Raiffeisen Bank International of Austria, and Bank Austria, a unit of Italy’s UniCredit. Two-thirds of Hungarian mortgages are in Swiss francs – taken out to take advantage of low interest rates, mostly when the Swiss currency was weaker. The franc’s sharp gains against Hungary’s forint have left many borrowers struggling to make repayments. But the plan to ease the burden on borrowers has caused the most serious clash to date between foreign businesses and the unorthodox economic policies of the government of Viktor Orban. Investors had already been unsettled last year by the largest banking levy in the EU, and retroactive “crisis” taxes imposed on the telecoms, energy and retail sectors. “This early repayment act is clearly an interference with private contracts, to a certain extent it is changing property rights,” said Josef Christl, former executive director of the Austrian central bank and now a banking consultant. “There is a general feeling that Hungary is not going in line with the European environment it operates in.” Maria Fekter, Austria’s finance minister, wrote last week to Gyorgy Matolcsy, Hungary’s economy minister, that “forcing market participants to take enormous losses on their books through legally decreed prices and exchange rates is not acceptable practice in a market economy”. Zoltan Kovacs, minister of state for government communication, told the Financial Times that the size and severity of the problem justified the measures taken. He also said that “in our perception” the law was not against EU rules. “The banks made Swiss franc loans to very risky population groups,” he said. “We consider the practices of the banks, especially in the last couple of years, as unethical.” He suggested there had been elements of mis-selling of loans to customers who did not understand the risks.
See the full story at the FT. This story is going to have legs because in terms of the politics, it's brilliant. Most people will read this as being anti-bank and will be in favor of it, even though the real important move is a national government within the EU pursuing a self-interested economic policy.

2011-09-25

Potentially big credit story unfolding in China

China's Banking Regulator Reviews Trust Loans to Developers
"Given that the nature of trust loans is short term, the key question would be whether or not developers have sufficient cash to repay the outstanding loan amounts," Samsung Securities Asia Ltd. analysts led by Wee Liat Lee, said in a report today. "We believe that developers should be financially secure should the trust loans not to be rolled over." Trust loans are usually debt that's repackaged into investment products and sold to retail investors, and the loans are typically funded by banks or the investors themselves, according to Samsung Securities. For most developers, these make up less than 10 percent of their loans and the debt maturity is a few months to a year, the brokerage said, adding that the interest rate ranges from 10 percent to 30 percent.
Here's an article in Chinese.
绿城被查行业恐慌 内房股“熊”冠全球
"Gold September Silver October", normally big months for real estate, may not meet expectations this year. It's too early to jump to a conclusion about the investigation into trust loans. However, if real estate slows down and there are repayment problems, the pieces seem to be falling into place for regulatory action. This action would most likely come after any type of crisis (as socionomics forecasts), so it won't have any direct impact, but the news of investigations can help fuel stock declines, as we saw last week.

Autumn austerity surprise for U.S.?

Orignially posted April 20, 2011. Bumping for accurate call. Interesting forecast from GEAB. FOFOA has spoken highly of them in the past. Some social mood predictions (though not presented as such) in their latest summary.

GEAB N°54 is available! Global systemic crisis: Autumn 2011 – Budget/T-Bonds/Dollar, the three US crises which will cause the Very Serious Breakdown of the global economic, financial and monetary system
The context, therefore, is no longer mere paralysis but really an all-out confrontation between two visions of the country’s future. The closer the date of the next presidential election gets (November 2012), the more the confrontation between the two sides will intensify and take place regardless of any rule of good behaviour, including safeguarding the country’s common good: "Whom the gods would destroy they first make mad", says the ancient Greek proverb. The Washington political scene will increasingly resemble a psychiatric hospital (26) in the coming months, making "the bizarre decision" increasingly likely. If, in order to reassure themselves about the dollar and Treasury bonds, Western experts repeat in turn that the Chinese would be crazy to get rid of these assets which would thus only hasten their fall in value, it’s that they haven’t yet understood that it’s Washington and its political mistakes that can come to the decision that hastens this fall.
Emphasis mine. Also, here's tidbits from the latest (must be a subscriber to read it). GEAB N°57 - Contents
End 2012 – Neo-protectionism establishes itself as the new paradigm of world trade Because of the simultaneity of the global economy relapsing into recession and key political events affecting the world’s major economies, we anticipate a sharp rise in protectionism from the end of 2012. In its initial phase, it will mainly take the form of various non-tariff barriers, more discreet than traditional customs duties, but it will, de facto, cause the most important change in the terms of world trade since the signing of the GATT (General Agreement on Tariffs and Trade, the WTO’s predecessor) in 1947… (page 14) Subscribe Gold 2011- 2014: LEAP/E2020’s anticipations Of course, as after each significant increase in an asset’s price, the debates rage between, on the one hand, those who analyze this increase as the emergence of a bubble inevitably destined to burst in the more or less near future and, on the other hand, those who believe that it is only the beginning of a long rise culminating with the return of the gold standard at the heart of the international monetary system. Therefore, in this issue, LEAP/E2020 presents its anticipations on this subject for the period 2012-2014 to help investors make their gold arbitrage trades…
Also, please see: GEAB N°57 is available! Global systemic crisis - Fourth quarter 2011: Implosive fusion of global financial assets. It is a long counter argument to the euro breakup speculation.

Chinese government hurting for income?

Sleeping taxes awaken. “休眠税”醒了 The article is in Chinese and it discusses dormant taxes that are not currently enforced. If real estate cools or worse, contracts, local governments will lose a major source of revenue (land sales).

China credit crunch

2011-09-23

Euro to bounce or collapse

Speculators turned very bearish, very fast.

Why does social mood change?

I can't embed this YouTube clip from the Matrix, but it gets at one of the root ideas behind socionomics, that of the cyclical shifting between optimism and pessimism. perfect world Matrix

2011-09-22

Social mood: Cruises kill!

why have 165 people gone missing from cruise ships in recent years?

OTB Portfolio Update 09/22/11

The last OTB portfolio update was in June 2010. I've kept an eye on this portfolio and it has been deteriorating steadily. Since the end game may be afoot, it's worth an update. OTB stands for Obama-Turbo-Bernanke. These are the financial firms receiving some of the most direct aid from USG and the Fed: AIG, Bank of America, Citigroup, Fannie Mae and Freddie Mac. It was initiated on August 26, 2009. Here is a snapshot as of the market open on September 22, 2011:

2011-09-19

Sign of the times

Dancing with the Fund Manager Stars Gets Canceled
Last week, Fidelity changed managers at Magellan once again. This time, it didn't even make the business page. Sure, Magellan (FMAGX) has gone from being the world's largest fund to the ninth-largest fund at Fidelity. Today it has $17 billion and carries, ironically enough, a "one-star" rating from investment researcher Morningstar Inc.
The bigger point is that virtually no manager's departure today would make headlines. Yes, Pimco's Bill Gross will make news someday when he calls it quits, and a few others will cause a stir or a buzz, but the heyday of the "star manager" appears over. "At exactly the market moment when star managers should matter most, they've vanished quicker than a tax dollar in Washington," said Jim Lowell, editor of the Fidelity Investor newsletter. "While there are many managers whose track records are stellar, the days of building industry behemoths on the backs of one star have dwindled to a flickering flame."
Social mood...and also the fact that most mutual funds are long only and must stay close to fully invested. Only in a raging bull market can these retail mutual funds compete with managers with few or no restrictions on their investments. For a comparison, here's this from Zero Hedge:

Hugh Hendry Fund Soars 40% YTD As China Sinks

2011-09-18

Crushing the Chinese consumer

China's economic policy favors investment and exports to an extreme degree. Most developing nations have a consumer sector that's well above 50% of GDP, but China's is below 40%. Chinese complain about the prices and it's one reason, I believe, why so many Chinese would like to immigrate to the U.S. As this story shows, prices for U.S. consumer goods are actually LOWER than in China, which is amazing when you consider that the average income in the U.S. is about 2 to 3 times that in Beijing and Shanghai, and closer to 6 times or more in the countryside. Furthermore, not a few of these consumer goods are made in Chinese factories. Are mainland prices higher than in U.S?
A respondent wrote that a monthly salary of US$2,000 could afford him all the necessary home appliances in the US, but it was enough for just an LED television on the mainland. Another respondent cited a US-based Chinese friend as saying that US$100 could buy three pairs of Levi's jeans in the US, while it cost 700 yuan, or about US$110, to buy just one pair in Guangzhou. Most respondents' shopping lists focused on daily necessities such as food, clothing and transport. And there was rife debate about rising food prices, which account for a third of the consumer price index. Soaring prices of pork, a mainland food staple, was of particular interest. A respondent said 3kg of pork costs 90 yuan, while 5kg of soy bean oil cost 100 yuan, which would have bought 10kg just two years ago. Another said 100 yuan, which was enough to last him half a month in 2004, lasts just four days now. He said inflation has far outpaced his salary since 2004. The survey found that 100 yuan was enough to buy food for five people in Guangdong for a day, but it was barely enough to buy a piece of clothing for a Shanghai resident.
What's the solution? Rapid inflation of wages or general deflation? It may be for Europe and the U.S. to decide...

Pirates win in Germany; governments and leaders falling

The Pirate Party won 9% of the vote in Berlin this weekend. The Pirate Party is modeled after the electorally successful Swedish Pirate Party. Their main position is reform of copyright laws to allow the free flow of information. They get their name from the government and media description of file-sharing, which declares those who illegally share as pirates. This is an interesting development to watch because these parties are now pulling close to 10% in elections. This may be important for the U.S. as well. Rick Perry's description of Social Security as a "Ponzi scheme" has exposed a large young-old split. The Pirate parties are mainly pulling young voters as well and while they may favor ideological purity, politics makes strange bedfellows. Thus, I would not view this development as a joke. Even without the factor of declining social mood which will tend to support fringe parties, the Pirates are in a good position to at least have their ideas co-opted by a major party and a similar party or at least their ideas, could easily appear in the U.S.
Berlin pirates force FDP to walk the plank

At this point, finding evidence for the social mood is like shooting fish in a barrel. I haven't posted some news items because there's a steady stream of them. Pick a country, read the political news, and you'll probably find a leader in jeopardy. From August 29: Yoshihiko Noda wins Japan leadership race
Japan's governing Democratic Party (DPJ) has chosen Finance Minister Yoshihiko Noda as its leader, lining him up to become the country's sixth prime minister in five years. Mr Noda secured victory in a run-off against Trade Minister Banri Kaieda, after a first-round vote in which no candidate won a clear majority. Prime Minister Naoto Kan later formally resigned with his entire cabinet. He has been criticised for his handling of the quake aftermath.
Correspondents say the new prime minister will face a daunting agenda, including trying to unify a divided party.
Japan’s hunt for new leaders
Japan has had 15 prime ministers in 20 years. Few have managed to sell the public on a vision about how post-bubble Japan should adapt as its population shrinks and workforce declines. The five prime ministers since 2006 who preceded Noda lasted, on average, 360 days. Four were either the sons or grandsons of former prime ministers. A poll conducted last month by the Yomiuri Shimbun, Japan’s largest newspaper, suggests that both major parties have support ratings of less than 25%. That dissatisfaction points to a broader problem, said Gerald Curtis, a political scientist.
Australian Prime Minister Julia Gillard defiant in face of mounting pressure
Speculation that Julia Gillard's days as Australian Prime Minister were numbered intensified this week, after a series of perceived gaffs and missteps that make the first-term leader about as popular as Barack Obama at a jobs fair.

2011-09-11

Infighting spreads to G7

Conflict is increasing, just as predicted by the socionomic model. In a sense, nothing has changed from the Why so serious? post from last year. Eurozone blamed by US for world's economic plight
But instead of the predicted economic debate, it emerged on Saturday that the bad-tempered meeting was dominated by American and British warnings that political failures and broken promises in the euro zone were in danger of triggering a wider crisis. "Seventy-five per cent of the dark things happening in the world economy are because of the euro zone," said a senior US official after a round of talks ended in the early hours of yesterday morning. The beautiful surroundings of the 19th century Palais du Pharo, overlooking the old port of Marseille, did nothing to soothe America's growing anger at the euro zone's inability over recent weeks to take the steps needed to prevent a full blown global economic crisis. "It was the principal cause of the slowdown we had last summer, and it's been a significant cause of the slowdown we've had this summer," said Timothy Geithner, the US Treasury Secretary.
Turbo is mad because the Europeans are going to get his boss fired.
The clashes at G7, which put Britain and the US together on the sideline as members of the European single currency struggle to resolve its internal contradictions, foreshadow an autumn of disarray within the EU. Their parliaments must ratify the plan for the new EU rescue fund, which is unpopular with many voters, especially in the richer countries. And just when scepticism among its population is at its greatest, there is finally a realisation among eurozone members that the only way to save the single currency may be a dramatic move towards more integrated economic governance.
Common sense says the bad economy and financial crisis are causing the declining mood, but this shows it's the reverse. There's still time for a delay, there are ways to save the euro if people accept the pain. Instead, the politicians at the top, who want to delay, who want to prevent a breakup or generational currency crisis in Europe, are fighting with each other. This is because social mood is driving the crisis! During positive/rising social mood, nations will come together to solve a problem. During falling/negative social mood, they will create problems! Why so serious? It's the social mood.

2011-09-10

Social mood this weekend

Egyptian protesters pull down Israel embassy wall Egyptian protesters raid Israeli embassy as ambassador and family flee the country (with pictures)
The demonstrations against Israel coincide with increasing discontent among Egyptians with the Supreme Council of the Armed Forces, which took control of the country when Mubarak was forced out on February 11 after nearly three decades in power. Several thousand massed Friday in Cairo's Tahrir Square, as well as in the cities of Alexandria, Suez and elsewhere. Demonstrators in Cairo also converged on the state TV building, a central courthouse and the Interior Ministry, a hated symbol of abuses by police and security forces under Mubarak. Protesters covered one of the ministry's gates with graffiti and tore off parts of the large ministry seal. Seven months after the popular uprising that drove Mubarak from power, Egyptians are still pressing for a list of changes, including more transparent trials of former regime figures accused of corruption and a clear timetable for parliamentary elections. Activists accuse the council, headed by Mubarak's defense minister, Field Marshall Hussein Tantawi, of remaining too close to Mubarak's regime and practicing similarly repressive policies, including abusing detainees. The trials of thousands of civilians in military courts has also angered activists. 'In the beginning we were with the military because they claimed to be protectors of the revolution, but month after month nothing has changed,' said doctor Ghada Nimr, one of those who gathered in Tahrir Square.
Social mood certainly hasn't changed for the better. In the U.S., President Obama looks increasingly to be a one-term president. Democrats Fret Aloud Over Obama’s Re-election
“In my district, the enthusiasm for him has mostly evaporated,” said Representative Peter A. DeFazio, Democrat of Oregon. “There is tremendous discontent with his direction.”
But a survey of two dozen Democratic officials found a palpable sense of concern that transcended a single week of ups and downs. The conversations signaled a change in mood from only a few months ago, when Democrats widely believed that Mr. Obama’s path to re-election, while challenging, was secure.

2011-09-09

Change you can believe in

Euro bears come out in force.

Androgyny in the bear market

Grab Your 'Murse,' Pack a 'Mankini' And Don't Forget the 'Mewelry'
Men's Fashion, Lingo Take a Feminine Turn
For an long and in-depth look at the latest issue of Vogue and the socionomic implications see The Socionomic Implications Of September Vogue by Marz Bonfire.
This Vogue issue was likely being produced during May and June – always 3 months ahead at a minimum -- near the 1370 highs in the S&P. Therefore, the focus on color is to be expected. Bright colors, in a socionomic sense, reflect optimism and confidence. What is interesting is that color is not being used overtly but as an accent. People don’t seem bold enough to lead with it (with all due respect to the editor that insists people are “clamoring for scarlet, shamrock, and tangerine.”) What they feel bold about is privacy, protection, layers . . . concealment, hiding behind oversized sunglasses, grommets and chain, comfortable armor, blending in. Great concepts here: rock ‘n’ roll Gatsby, utilitarian military, country strong, all very intriguing.

2011-09-08

Markets about to collapse?

Here's an interesting video with comments from NBC's Chuck Todd, discussing Obama's low poll numbers:
"Now this has taken a hit on the president politically. 44-percent approve of the job he’s doing, all time low of his presidency. A more important number that our pollsters say is in there is this idea that is this a long-term setback for him or a short-term one? 54-percent said long-term. Our pollsters are concerned. That’s kind of numbers you have when the public starts to give up on a president as a problem solver,"
A market collapse can be described as a collapse in confidence. Obama's poll numbers are very low and he is even started to lose support from black voters, who vote 90% Democrat, let alone the fact that he's the first black president. If the market collapses, people will have no confidence in the president, Federal Reserve, banks, government, and so on. Consumer confidence is also at levels last seen in 2009 during the financial panic, but the market hasn't even started a major slide.

Watch Europe falling apart

Jean ClaudeTrichet angrily responds to a question about how the ECB will defend its failure as a monetary authority.

Currency reform nears the end goal

Yuan Will Be Fully Convertible by 2015

2011-09-05

Shorting the euro

If the highest aim of a captain were to preserve his ship, he would keep it in port forever. —Thomas Aquinas

2011-09-04

"Extreme" parties pick up seats in Germany

Much of Europe is turning to the right, but mainly because the left is in power. In Germany, the center-right government will fall soon and the farther left- and right-wing parties continue to see increased support. Merkel's Party Loses Home-State Election, TV Projections Show
The anti-capitalist Left Party took 18 percent in the state, the projections showed, making it a potential candidate to enter government as junior partner to the SPD. The Social Democrats have ruled Mecklenburg-Western Pomerania in coalition with Merkel's CDU since 2006. The Greens took 8.5 percent to enter the state parliament for the first time, while the Free Democratic Party, Merkel's coalition partner in the national government in Berlin, had 3 percent, below the 5 percent threshold needed to win seats in the state parliament in Schwerin. The anti-foreigner NPD took 5.2 percent, the projections showed.
In Merkel's home state, the communists won 18% of the vote and her own party had its worst showing ever. This is important because a vote on the latest Greek bailout is coming up this month and it will almost assuredly seal not only her defeat, which seems inevitable now, but a massive landslide against her own party. Will her coalition partners join her in defeat or try to save their political career by voting against the unpopular bailout?

Social Mood in the Middle East part II

The U.S. is trying to delay a vote on Palestinian sovereignty. America is in decline and President Obama has rescued Jimmy Carter from the history books by replacing him as the worst President for foreign policy. Odds are that the U.S. cannot stop what is coming: Jewish 'settlers' prepared for Palestinian onslaught
Israel fears that following the Palestinian Authority's September 20 bid at the United Nations to secure recognition of a sovereign Palestinian state in Judea and Samaria (the so-called "West Bank"), Palestinian mobs will march on any Jews they see as "invaders" in that new state. In fact, that is precisely what Palestinian leaders are telling the public to do. "The appeal to the UN is a battle for all Palestinians, and in order to succeed, it needs millions to pour into streets," Palestinian official Yasser Abed Rabbo told the Associated Press following a Palestinian Authority vote endorsing a mass protest march on Israel. Rabbo and other Palestinian leaders insist the protests will be peaceful, but Israeli officials noted that more often than not the Palestinians' definition of "peaceful" does not match Israel's. And even if the intention truly was for a peaceful march, the Israelis say that having tens or hundreds of thousands of Palestinians march on Israeli civilian neighborhoods is a situation that can quickly spiral out of control. While Jerusalem is certain to be a primary target of such a march, it is pretty heavily barricaded from the north and east, the directions from which the Palestinian protestors would be coming. But the Jewish settlements make much softer targets. That's why the IDF, which will preoccupied defending the northern neighborhoods of Jerusalem and the portion of the "Green Line" separating the Tel Aviv metropolitan area from the West Bank, is busy preparing the Jewish residents of Judea and Samaria to defend themselves.