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     holycow
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Username: holycow
Post Number: 3242
Registered: 08-2004
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| | Friday, September 21, 2007 - 09:08 am: | 
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http://tinyurl.com/38bbtw
"The fundamentals of our nation's economy are strong," Mr Bush said. "There is no question that there is some unsettling times in the housing market."
*** you didn't hear this part I am sure... he continues with his recent visit to the OPEC meeting in Sydney, New Zealand, where he met with all the world leaders, and had a few good parties, had a few good bbqs, had a few good drinks. He said the blokes over there are very very nice people, that there's no question about that.
He says he was glad to have met all the crews and cast in IC, people like Colin, he makes a bloody good host, good bloke, he said. Then there's HC, the cow with a lot of hot air, then there're others... so many others that he has problem counting, and he sort of run out of fingers, so he can't remember exactly just how many he has met.
...except, he knows, and he is very sure, there are more than 10, because he knows, and he is very sure, the last time he counted, he has 10 fingers.
And there is no question about that!
HC
...with charts will travel
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holycow
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Username: holycow
Post Number: 3243
Registered: 08-2004
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| | Friday, September 21, 2007 - 09:15 am: |
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http://tinyurl.com/3265lp
Jim Rogers, the commodity king and former partner of George Soros, said the Federal Reserve was playing with fire by cutting rates so aggressively at a time when the dollar was already under pressure.
The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, the driving the property market into even deeper crisis.
"If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.
*** I give up... the US$ will be thrashed. The world will end. We are all going to die!
HC
...with charts will travel
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ohkoolnutz
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Username: ohkoolnutz
Post Number: 662
Registered: 10-2005
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| | Friday, September 21, 2007 - 10:15 am: |
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http://www.zdf.de/ZDFheute/inhalt/10/0,3672,7006506,00.html
The article is in German but I will give you a short summary.
EU law since 1998 states that all credit institutions need to be secured by law in case of a bankruptcy. In Germany this law is EdB. It establishes a relief organisation that will provide the payouts if necessary.
If your bank goes under your funds are secured with 100% certainty. The only drawback is that they are only secured up to 20,000 Euro. The payout rate does not have to be 100% either. In Germany the payout rate is 90%.
Examples:
50,000 Euro turns into 20,000 Euro
22,222 Euro turns into 20,000 Euro
15,000 Euro turns into 13,500 Euro
It reminds me of what happened to my money when they changed the Mark to the Deutsche Mark in 1990:
http://en.wikipedia.org/wiki/East_German_mark
Upon adoption of the Deutsche Mark in East Germany on 1 July 1990, the GDR Mark was converted at par for wages, prices and basic savings (up to a limit of 4000 Mark except for children (less) and pensioners (more)). Larger amounts of savings, company debts and housing loans were converted at a 2:1 rate whilst so-called "speculative money", acquired shortly before unification, was converted at a rate of 3:1. This inflated exchange rate was intended as a massive subsidy for eastern Germany by the government of the Federal Republic of Germany, and remains controversial among economists, with some arguing that the exchange of currency was the most practical way of quickly unifying the German economy, and others arguing that the exchange increased the disruption of German unification beyond what they otherwise would be, by among other things, making eastern German industries uncompetitive.
Example
June 30, 1990
Bread 2 Mark
Savings 20000 Mark
Purchasing Power 10000
July 1, 1990
Bread 2 Deutsche Mark
Savings 12000 Deutsche Mark
Purchasing Power 6000
---
ohk
Lies, Damn Lies and Technical Analysis
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holycow
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Username: holycow
Post Number: 3244
Registered: 08-2004
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| | Friday, September 21, 2007 - 10:54 am: |
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OKN,
1) I think the unification of both Germany(s) is quite different, since they are sort of all in the family. The W.Germans are willing partners here, to help their E.German fellow citizens.
2) between two sovereigns, I think it's a different kettle of fish. If Malaysia back in '98 didn't control the currency inflow/outflow, the whole economy would be in ruin. At one time, the banks in Singapore are paying as much as 20% or more interest rate (if I remember it right) to buy up Malaysian Ringgit for speculation. With the freeze, billions of these speculative money were caught. Many hedge/investment funds to this day are still sore with Mahatir, the PM of Malaysia at that time.
3) for the Middle East bloc, I think, they are running out of option very quickly, if they don't act fast, they are going to suffer because of the USA's indiscipline - facing inflation not of their fault, facing currency instability not of their own doing, facing a quickly diminishing saving... I can't see how they can avoid a freeze and then coming out with their own currency or a common Middle East currency. This just my view... could be wrong here.
Cheers.
HC
...with charts will travel
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ohkoolnutz
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Username: ohkoolnutz
Post Number: 663
Registered: 10-2005
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| | Friday, September 21, 2007 - 12:17 pm: |
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I wasn't saying the political scenario is the same. I was just trying to paint a picture of how the financial scenario changes if there is a collapse.
---
ohk
Lies, Damn Lies and Technical Analysis
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holycow
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Username: holycow
Post Number: 3245
Registered: 08-2004
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| | Friday, September 21, 2007 - 12:35 pm: |
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http://tinyurl.com/2nbuxs
Inside the Mind of the Fed...
“Alan Greenspan’s conundrum is becoming Ben Bernanke’s calamity,” said Robert Barbera, the chief economist of ITG, recalling that when the Fed raised short-term rates under Mr. Greenspan, long-term rates did not follow. Now the opposite is happening, a fact that will make it that much harder to stimulate the economy. Those wanting to understand the Fed’s reversal can profit from reading two papers by Fed officials, released this summer as the credit squeeze was worsening.
...
Mr. Mishkin (a FED Governor) said he had modified one Fed economic model, and concluded that a 20 percent fall in home prices could cause consumer spending to fall by 2 percent within two years, about twice what the old model forecast.
But that was not the point Mr. Mishkin wanted to emphasize. Instead, his model showed that much of that damage could be averted if the Fed acted rapidly to cut rates — as it is now doing.
In the background is a debate that has been simmering in central bank circles as to whether the banks should pay attention to asset prices in setting monetary policy. It flared after the technology stock bubble popped six years ago, and is back now, with some saying a too-easy Fed policy brought on a housing bubble.
Mr. Mishkin doubts the Fed could do a good job of bubble spotting in home prices or anything else, and he sees no need to try. After all, he writes, “the monetary authorities have the tools to limit the negative effects on the economy from a house-price decline.”
Mr. Mishkin’s view remains the standard one for central bankers, but not the only one. He notes with disapproval that the Swedish central bank raised rates last year in response to soaring home prices, and says surveys showed that the move “confused the public and led to a general weakening of confidence in the Swedish central bank.” (gotta say Mr.M's view expressed here is very enlightening and convoluted... but bloody typical!)
That may be so, but it is far too early to reach any conclusions. What can be seen is that, so far, housing starts have fallen much more rapidly in Sweden than in the United States, but the Swedish economy is still growing a bit faster than the American one.
Mr. Mishkin is an economist who has done extensive work on financial instability, and his confidence is reassuring, even though the Fed’s actions will do nothing to directly affect the drying up of loans for risky borrowers.
Mr. Mishkin’s paper also included a conclusion that investors may not be happy to hear:
“Making sure that a house-price collapse does not do serious harm to the aggregate economy in no way eliminates sharp declines in house prices and so does not provide insurance against such declines,” he wrote. (this dumb cow has problem understanding this para... I need help. Help!)
“The same reasoning holds true for stock prices. Indeed, we have seen substantial declines in housing and other asset prices in many countries even when monetary policy has been eased substantially.”
*** has anyone ever wondered why the Americans are so sensitive to recession? I can venture a guess here - they are so heavy in debt that if their econ were to stop growing for two quarters, it may take them ages to get it going again. Hence they can't afford to let the "R" word creeps in. It's like an over used, over run, sick and dying engine... once stops, it won't restart until it has a complete overhaul. The American economy is like that old dying engine...
HC
...with charts will travel
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holycow
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Username: holycow
Post Number: 3246
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| | Friday, September 21, 2007 - 04:38 pm: |
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http://tinyurl.com/2kszyp
*** here's an interesting note... is the copper market cornered or not?
Copper advanced $30 to $7,915 a ton. The contract for immediate delivery traded at $48 a ton above the benchmark three- month price yesterday. The spread, known as a backwardation, was the lowest since April 27, indicating more availability of the metal on the LME.
One company held between 80 percent and 89 percent of deliverable copper stockpiles monitored by the LME as of Sept. 18, according to the LME's latest report. The position has existed since Sept. 4.
HC
...with charts will travel
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holycow
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| | Saturday, September 22, 2007 - 11:15 am: |
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http://tinyurl.com/28rdmm
How did your experience in Taiwan influence your activities in mainland China?
We discovered Chinese culture and the way to work with the Chinese in Taiwan when the retail sector in mainland China was totally closed. International companies that decided to enter Taiwan--not Hong Kong--15 or 20 years ago have a fantastic advantage in China, and that was the case for Carrefour.
For example, you learn how to adapt. When Carrefour arrived in Taiwan, we had a very clear picture of what we wanted to do--open a 10,000-square-meter store on the ground floor, with a big parking lot in front, just as in France. But it was impossible to do that kind of store. Then we tried something different: We opened a 3,500-square-meter store in a basement in Kaohsiung, Taiwan's second-largest city, with 250 parking spaces for motorcycles. That was the beginning of Carrefour in Taiwan.
Another aspect was Chinese business dealing. When I arrived in Taiwan, my former boss told me I was lucky: I was set for the first year because he had already signed five contracts for five new stores. Then I started talking with one of our Chinese partners who had signed those contracts, and nothing seemed to be happening. Finally, my assistant told me, "Just because he signed a 20-year contract two years ago with your former boss--a person who is not you--does not mean he will respect the contract." That was a big shock to me; the contract was notarized and everything. But we started to renegotiate article by article. Five years later, during the Asian crisis, I invited this same partner to my office and said, "Just because I signed a contract with you does not mean I will respect it. We are in a crisis." So he said, "Fine," and we started to renegotiate, to reduce the rent.
It was these very interesting experiences that showed me that we are in another world. If you come to China with preconceived ideas after having been successful in Europe or the U.S., you make mistake after mistake.
*** how the Chinese see the world and see their business partner... the comment above is made by Jean-Luc Chéreau, who came to the mainland after running the company's business in Taiwan for seven years, has led Carrefour China since 1999. He knows how to do business with the Chinese, ie, it's beyond paper contracts. It's a relationship. There's no winner take all, but, profit sharing. The difference lies in how big the portion of the pie you take home.
The comment below comes from a Chinese businessman. He is reminding their business partners that when they drink from the stream, remember where the source of that stream is from. He is telling the Aussie miners... not to try the winner take all approach. And this is the part I think some/most foreign businessmen would fail to grasp, the hidden message - if they don't play ball, and when the tide turns, the Chinese would be doing exactly the same, in reverse. They will squeeze every drop of blood from the miners. Just watch.
The moral? Do not do to others what you would not like yourself. Then there will be no resentment against you, either in the family or in the state. Analects 12:2.
A win-win business relationship is always more superior than a win-lose one - it will certainly ensure the longevity of the super cycle; else, the commodity boom-bust cycle will repeat.
http://tinyurl.com/23aymo
China Iron and Steel Association chairman Zhang Xiaogang is calling for a "co-operative partnership" with Australian iron ore exporters ahead of critical price negotiations which start in October, The Australian Financial Review reported today.
"It is due to the growth of the Chinese steel industry that the Australian mining industry is booming," Mr Xiaogang told the paper.
"We need a co-operative partnership ... when the market is good we all take profit together, when the market is bad we share risks together.
"Australian iron ore suppliers and Chinese mills are linked into a chain (and) if one part is broken all of us will fall into the sea."
Mr Xiaogang said a "long term strategic approach" was needed rather than a deal based on the tight supply environment...
HC
...with charts will travel
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ingot54
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Username: ingot54
Post Number: 1936
Registered: 05-2004
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| | Saturday, September 22, 2007 - 11:48 am: |
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As always HC I really enjoy your (prolific) stuff.
But this last post really has me intrigued.
1) How will the average Aussie businessman get his head around the supply/demand mindset of maximising profits, to come up with a resource-sharing win-win relationship?
2) How will the average Aussie businessman get his head around the trust-principle? There is an intrinsic mis-trust of Asians, courtesy of the USA foray into VietNam and the resultant fallout from that propaganda era.
3) Is such a deal possible? Could it be Utopian?
China has just surpassed Japan (in August 2007) as Australia's biggest Trading partner. This would have occurred years earlier had Australian Governments both State and Federal, foreseen the need to improve freighting infrastructure.
In WA and QLD there are up to 60 ships in demurrage every day of the year. We simply lack the infrastructure to get the coal, iron ore, bauxite and so on from the mines to the boats.
Our governments are nor proactive at all. They think the Chinese will just line up with the rest and wait their turn.
But what is happening in North Africa probably has not gotten through to the State Governments yet ... China "owns" their own mines there, and I think indirectly this will be the beginning of the awakening of the African Nations.
I can not possibly keep up with all your work HC, but keep it up - the bits I do see are great reading.
Keep Smiling - Don't look back
Trading style: Chartist Artist _ Breakouts and Shakeouts.
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holycow
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Post Number: 3248
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| | Saturday, September 22, 2007 - 01:24 pm: |
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Ingot,
I was told a story the other day by a friend who is a specialist in cross cultural consulting and training... an Aussie biz manager went to Thailand for business dealing, and off work, went for a golf session with a few local managers.
He found out... he got a gal caddie, half his size, carrying all his golf gears, and an umbrella shielding him from the hot sun. As an Aussie bloke, he found he was caught in a situation because as a typical Aussie, and with an egalitarian attitude, he felt he should be the one who should be carrying all the heavy gears, as well as the umbrella, shielding the gal caddie from the sun! He did just that!
The consultant, has her story to tell too... she had a similar experience when she went to Japan for a biz visit. Her Japanese manager offered to carry her luggage for her, all the way from the airport to the office - something she found quite awkward because she was aware of the Japanese male dominant society and the local custom... and so she rejected the offer.
Without knowing, her "nice" gesture has a "side effect" - the rest of the Japanese office workers were seeing that Japanese manager as being rude to his guest! Upon realising her mistake, in her next visit, she did the most sensible thing - she let him carry her luggage!
The moral? When you are in Rome, try to do things the Roman way. In Chinese, they have a similar proverb, when you go to a rural area/village, follow the local customs.
That good old Aussie bloke in Thailand could have cost that gal caddie her job! I am not saying this is the case, but, if we were to look at the situation from her boss'es eyes - she must be doing a poor job that her client has resorted to carry his own bag and umbrella - one possible explanation. But this is just my guess.
Doing business in China I believe has to be considered with a long term perspective. (I am not talking about Chinese crooked businessmen here btw). The keyword is TRUST. And trust needs to be earned, and proven. The only way to earn and prove one's trust I think, is thru' the test of time, and possibly events!
The Singapore Govt took closed to 13 years working with their Chinese partner in establishing the Suzhou Industrial Part (http://tinyurl.com/22dmnx) to make it a success. And most of the Singaporean managers are Asians, if not, overseas Chinese... and in many ways they do know the importance of business relationship, and yet it took them that long to get the whole thing sorted out.
Try imagine someone from the West, has no idea of the local customs, no prior business relationship, and is banking on a paper contract alone! I am not saying it won't work... but man, it's gonna be a long hard road.
(They should at least seek some advice/consultation into the local business culture and customs... or they are going to learn it the hard way. Just try relating your own experience in interacting with me - you may find it fascinating or "unusual" because I am talking/writing with a slightly different "grammar" and my expressions are not typically Aussie, and my philosophy, and how I see this world, don't exactly rhyme... but I can assure you this - I am probably the odd man out here, I belong to the 20% hotair category, while the other 80%, they won't tell you a thing on how they think or feel! 
In business, by the time your partner comes forth to tell you what's wrong, you are probably in some kind of big sh*t...)
The bottom line here, I guess the "foreigners" have to learn the local way of doing business, and the Chinese too, have to learn doing business the Western way. The truth is lying somewhere in between. But for people wanting to do business in(side) China, I think, they don't have a choice but to go through the "test" of time and events. The good thing is, once they break the trust barrier, the business relationship will last for a very long time, until, there's a change in the man-in-charge, which typically would require a new round of getting-to-know-you between the business parties.
That's why many find it hard to do business in/with China because while you are dealing with the present man-in-charge, you have got to keep a working relationship with the next (few) future man-in-charge...
Some local family business in SE Asia I am aware, have been doing business with China for decades, some last 100 years or more.
Cheers.
ps: The current round and possibly the next of iron ore negotiation will probably set the ground work for future business relationship. If they work out well, I think BHP and RIO will have a good long term steady growth business relationship with their Chinese partners. I sincerely hope they won't be so short sighted as to kill this goose that lays all the golden eggs for the local mining industries.
The alternative would see the Chinese resorting to doing things their own ways - seeking alternate sources throughout this globe, Africa, Australia, SE Asia, Central Asia and possibly S.Americas - through acquisitions, or direct explorations. Longer term, they will not want be held hostage to the big three iron ore producers.
The trick is for the big three not to drive them into this route, which could possibly set the scene for future boom bust cycle as the Chinese are not well-known for good business managements esp in overseas mining ventures. They could simply swamp the world with iron mines, suck away all the funds, and kill the whole industry - like the way they drive the recent booms in every conceivable commodity!
HC
...with charts will travel
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holycow
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Username: holycow
Post Number: 3249
Registered: 08-2004
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| | Saturday, September 22, 2007 - 01:55 pm: |
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http://tinyurl.com/2uc783
All Apologies
Mattel To China: Oops
Tom Van Riper, 09.21.07, 6:00 PM ET
Never mind, our bad.
That was the message toy maker Mattel brought to Chinese manufacturers Friday, acknowledging that the company's design flaws and safety control system--not Chinese manufacturing glitches--were to blame for the recent recalls of more than 20 million toys.
"Mattel takes full responsibility for these recalls and apologizes personally to you, the Chinese people, and all of our customers who received the toys," Mattel Vice President Thomas Debrowski told Li Changjiang, the head of China's product-safety operation, in a visit to Beijing. Debrowski admitted that Mattel recalled more toys than necessary, and that only a small percentage of the recalls were lead-paint related...
*** just wondering - how much is the life of that "Chinese Toy King" who took his own life... and the negative impact on the business of numerous Chinese toy factories that are supplying Mattel in the recent spates of bad worldwide publicity. It's not good enough with an apology in my view.
HC
...with charts will travel
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