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A New Decade: Crossing Mountains



January 17, 2010 – Comments (11)

Tis the season for predictions, and as many people suppose I am in the business of predictions, I will make an attempt to put a few out there.  I will break our discussion into three parts, higher probability likelihoods, potential surprises and some thoughts about how to deal with both categories. Of course, I am not really in the business of predictions, I am in the business of preparing for likelihoods and surprises.

click for complete letter

your foolish input appreciated before I make completely public later this week.


11 Comments – Post Your Own

#1) On January 17, 2010 at 2:07 PM, Tastylunch (28.61) wrote:

"You are not authorised to view this resource.
You need to login."

sorry can't view it Kirk


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#2) On January 17, 2010 at 3:37 PM, Option1307 (30.41) wrote:

Ditto what Tasty said.

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#3) On January 17, 2010 at 7:08 PM, HarryCaraysGhost (61.33) wrote:

Ditto +1

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#4) On January 17, 2010 at 8:02 PM, kirkydu (89.86) wrote:

sorry guys, missed a check box, was distracted by Brett!!!

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#5) On January 17, 2010 at 8:18 PM, Tastylunch (28.61) wrote:

Nice letter Kirk,

Notable things I didn't see included that you could if you wanted to

-opinions on Brazil's future

-China vs India,escalating military and economic rivalry (China has already poached several indian towns on the Tibet border and India is angry over the renmibi dollar peg)

-Potential food and warre shortages as China and especially India modernize

-employment in the US

-Future Fed Policy implications. I, perosnally am nervously awaiting to see what happens if the Fed drains the liquidity swamp

-US Housing market outlook

-whether the EU can survive a member's economic collapse (e.g.Greece if it gets worse)

- and lastly whether the US equity market gets supplanted as the World's dominant one.

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#6) On January 17, 2010 at 8:53 PM, kirkydu (89.86) wrote:

points well taken tasty.  If I write too much people stop reading.  I may add the point about a potential soviergn default next to my mention of a potential black swan.

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#7) On January 17, 2010 at 9:35 PM, Tastylunch (28.61) wrote:

If I write too much people stop reading.

that's very true

well I'm sure you know what your clients want to know most! It's a nice letter I hope your readers feels the same!

What I liked best is that it is semi- outline form which makes it easy to  to read without getting "wall of text" syndrome.

Given my guesstimate of who our targeted readership is, I think that' a very smart way to go about it.

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#8) On January 17, 2010 at 9:38 PM, Option1307 (30.41) wrote:

Great letter, thanks for sharing!

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#9) On January 21, 2010 at 2:35 AM, ikkyu2 (98.54) wrote:

I enjoyed it.  I'm not sure how a strengthening renminbi helps China clear inventories, though.

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#10) On January 23, 2010 at 12:01 AM, kirkydu (89.86) wrote:

"I'm not sure how a strengthening renminbi helps China clear inventories, though."

China has over a 100m people who work fulltime and live in subsidized housing, yet buy almost nothing.  Instead, they save and save and save.  If the Renminbi is re-pegged at say 20% higher, that is instantly more money that a 100m people have to spend on buying "things" to improve their SOL.  Remember, the Chinese gov'ment is discouraging buying property by raising rates and tightening lending standards to avoid a huge real, estate bubble.  Interestingly, since the Chinese gov'ment owns a lot of real estate, it could sell that to those 100m people with the appreciated currency, simultaneously pricking their real estate bubble by adding supply, putting money back in the national coffers, lowering their cost of commodities and clearing their product inventory as people spent (as many new home owners do).  I'm 90% certain they re-peg this year sometime, next year at the latest.  Only thing that stops them is another global financial collapse that does everything they need without a re-peg.

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#11) On February 05, 2010 at 2:53 PM, ikkyu2 (98.54) wrote:

I've been chewing this over, kirkydu, and I still don't see how re-pegging the RMB helps Chinese retailers clear their domestic, domestically produced inventories.  If anything, re-pegging the RMB against a basket of foreign currencies, so that each RMB buys 20% more foreign currency than it did yesterday, will make imports more attractive to the Chinese buyer than domestically produced products.  In other words, imports get cheaper, domestic products stay the same price; suddenly Chinese people are going to stop saving and buy domestic products because of this?

I think China would have to make some other changes in monetary policy to stimulate RMB velocity; I don't see where re-pegging would have that particular effect. 

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