June 02, 2009
– Comments (4)
I hope Schiff runs for the Senate in CT. It would put Stamford back on Hope St. *big smile* Rarely, if ever, do I find my mind disagreeing with what he says about the exact structure of economies and the potentialities and dangers inherent to BOTH PARTIES in this madness of trade we have let run amuck. There have been folks working for awhile now trying to figure out how to rebalance things so that trade functions efficiently between Nations. The current exchange rates between Nations are imbalanced. Sadly, the remedy for us is a witches brew of prescription. But it will in fact work. That I am certain about. It is this walking through the fire part that Americans always find so difficult. The 'New World Order' that everyone seems to fear is about this single issue and imbalance. The idea is simply to rebalance currencies in a different manner, or to create one World currency, which is really the simplest solution. Just as Europe went EU and Euro for currency, the world needs to do the exact same thing. Otherwise, we're gonna have problems.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
roach on asia
Very strange to see multiple interesting items touching on the financial world in Time, but here we have an interesting opinion piece by Stephen Roach. For those not familiar with Roach I guess I'll point you to the ultimate fact based resource on the internets (sic) - Wikipedia. ;) Essentially he was the Chief Economist for Morgan Stanley for a long time (16 years) but about 2 years ago was "promoted" to Chairman of Asian operations. Many say his pessimistic views landed him the 'promotion' ;) - after all in the business of financial snake oil sales, you want to put a good spin on as much as possible.
We've been speaking often about the "China will lead us" thesis, and I wrote a quite exhaustive piece this week on my updated views (really no different than my views the past year+) [May 27: How is China Spending their Stimulus... and How Many of their Loans Will Go Bad?] Much like Roach I just have to scoff at anyone believing in 6 months an economy based so heavily on exports with a nation of savers with little safety net will suddenly "turn American" and drive internal consumption (ex government handouts). This is a process that will happen over years and in fact a decade+. Until then many of these Asian economies still need Europeans and especially Americans to shop 'til they drop.
So as you read this piece from Roach keep in mind his general 'pessimistic' view (or as people off Wall Street call it: realistic) and the fact he "knows" Asia ... much more than the stock jockeys who are driving stocks up on "thesis".
(Apr 2007) Morgan Stanley is betting that Roach’s strong connections in Asia, built through frequent travel in the last decade to regional conferences and calls on high officials, will help it win more business. He is known to enjoy regular one-on-one audiences with Singapore’s minister mentor, Lee Kuan Yew. Last month, he met in a small group with Chinese Premier Wen Jiabao to hear firsthand about China’s latest economic tightening measures. Roach, who has spent the last 25 years at Morgan Stanley, will assume his new job in June and move to Asia in September.
In addition to predicting China’s stunning ascendance politically and economically onto the world’s stage, he was also an early bull about India.
But also always remember, reality does not matter to Wall Street; only its perception of reality matters. At least in the short to intermediate run.