The Hunnish News Invasion, Dec 1 Edition
December 01, 2009
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Time for the second edition of the Hun's News Invasion! Found a ton of interesting article for today, so here we go:
Economic Recovery? Commodity Volume Says Otherwise
Link - Seeking Alpha
Very insightful article on how much of the commodity buying has been speculative in nature, rather than being based on increases in demand. Inventories have been increasing at a rapid rate in some commodities. I have become increasingly bearish over the past month or so on metals and this article has moved me even more in that direction. Today, I sold out of two of my remaining three metal related stocks - SWC and TIE. Both might have some upside from here and I'm not particularly concerned about TIE; just thought that upside from the current price isn't as much as some other things I want to buy into (mainly commercial banks). I'm still holding some X and will probably hold onto it and see what happens.
UAE Stocks Fall Further
Link - Al Jazeera
No surprise here. This Dubai episode isn't all that scary to me, in and of itself. Rather, the circumstances surrounding it are frightening. I don't want to say the UAE is a "closed society", but it is a secretive society, where open information is rarer. When bad news finally escapes, confidence is undermined and markets can fall precipitously. Since everything is dependent on the word of the actors and the "word" becomes less valuable with incidents like this, a vicious cycle can occur. Dubai doesn't frighten me --- rather what frightens me is that China, still a somewhat "closed society", could see its real estate market collapse precipitously, which would create a second leg of the Great Recession.
Import Fears for Indian Farmers
Link - Al Jazeera
A reminder that "globalization" has not been kind to everybody and creates new issues. Which isn't to say it's "bad" --- just different. It also reminds me that I want to punch Thomas Friedman in the face for being a simplistic moron.
Morgan Stanley Warns of UK Debt Crisis
Link - Seeking Alpha
Interesting analysis on UK debt levels. One thing I believe that most people fail to analyze in these boom and bust cycles is that countries are very different in nature. The US is like a big, diversified conglomerate; we have mini-boom and mini-bust cycles going on all over the place, but people rarely think about it. Places like Memphis, Baltimore, and St. Louis have experienced very rough times over the past few decades. Meanwhile, places like DC, Atlanta, and NYU have thrived since the early '90s. The end result is that the American economy doesn't seem as volatile as smaller nations like the UK, Japan, and Iceland. Maybe this is a bit of a tangent, but I mention it because it's why smaller nations always have greater risks in busts and provide greater benefits during booms.
The Frugal Republic (China)
Link - New Yorker
Article analyzing Chinese consumer spending. I believe China is going to have a difficult time jumpstarting domestic consumption because wealth disparities and the lack of a large middle class prevent American-like consumption (or even consumption of a more reasonable developed nation). The NY'er is right to look beyond Confucianism, because I don't see that as a major driver of this process. Entrenched spending attitudes that develop from living in poverty are a bigger hurdle.
Profile of Brazil's Powerhouse Bank, BNDES
Link - Al Jazeera
Al Jazeera doesn't get enough credit as a news organization. Behind the BBC, I'd say this is the best news source in the world and this piece on BNDES is one of the reasons why. Nominally, this article is about infrastructure projects in the Amazon that might harm aboringe tribes, but it's also about the bank itself and it's interesting if nothing else.
Wither the US Dollar
Link - Al Jazeera
Another great Al Jazeera piece, this time on the US Dollar.
New Afghan Strategy Highlights Limits of Nation-Building
Link - Washington Post
A friend and I were talking in the car the other day about a few Eastern African nations. One thing we both agreed upon is that these "nations" are very rarely "nations" at all. We look at a map and we see a "nation", but that's a fantasy created by Western mapmakers, based on ideas that are taken for granted in the Western world. In reality, places like Afghanistan, Somalia, and Ethiopia are not "nations" at all, but fragmented areas with more decentralized sources of power. The problem with "nation-building" is that we are trying to create a "nation" in the psyche of the population of these areas, but they don't think that way in most cases. "Nation-building" can work in a place like East Timor because its a small area and the population thinks of themselves as all belonging to a certain group. Afghanistan is a completely different beast. I hope we are successful there, but I have extreme doubts on this.
Italian Bank Workers to Inherit Jobs
Link - Al Jazeera
Yesterday, I alluded to the creeping influence of hereditary aristocracy in the US. I don't think I've seen this nearly as much in Europe, but this article opens some eyes. I'd agree with the Italian newspapers that strongly condemned this action by the bank. This is downright absurd in the modern era! Yet, I wouldn't be surprised one bit if the trend continues, unfortunately.
Venezula Seizes Four Banks
Link - BBC
I very rarely throw around words like "socialism" in haphazard fashion because the debate that results inevitably becomes geared towards the lowest forms of life. Rather, I'll look at this from a different angle --- absolute power corrupts absolutely. Chavez has been successful in consolidating power and becoming a somewhat de facto dictator. When you have a situation like that, one's well-being is dependant on the whims of one person. Chavez decided he didn't like these bankers any more. This is why a command economy run by a dictator does not work.
Let the Yuan Rise
Link - Al Jazeera
China is in a tricky situation IMO. If they let the Yuan rise too much, exports will fall further, thereby making overcapacity problems even worse. This could slow the economy down and push people away from Chinese RE. Once that happens, the Chinese RE bubble could burst, which could drag the world into a second leg of the Great Recession. Of course, if China keeps manipulating its currency, its people will have a more difficult time purchasing goods, which hinders domestic consumption. One way or another, I'm very skeptical of the "Great Chinese Economic Miracle" right now. This is not to say that I don't believe China can continue to grow and improve its power in the future --- I just think they have some serious near-term issues that they are trying to sweep under the rug.
Qatar Hires German Firm to Build Metrorail
Link - Al Jazeera
As a lover of public transit and passanger rail, I liked this article. Now, if only we'd start doing more of this in the US.
Solar Panel Costs to Fall
Link - BBC
Study that predicts solar panel costs will continue to fall, which is good news.
Bank of Japan's Recent Moves
Link - BBC
Finally, an article on the Bank of Japan's recent moves. Not sure I have an opinion on it one way or another.
That's all for now.
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