Post From Philosophy of Metrics (Free PoM)
No G20 Stimulus Sets The Stage For Structural Reforms By JC Collins
Muad'Grumps: The takeaway point of this summit is that the Prisoner’s Dilemma is at play. Competition, not cooperation as Ben Hunt predicted.
How many times did China deny RMB devaluation this weekend? They are going to devalue.
JC Collins: They might in the short-term. Appreciation is more long-term. It will turn this year.
Smukster: It should be too obvious to even mention it that RMB has to (and will) appreciate vs. the $. “Planted the seeds for later this year”, exactly.
I perfectly agree with your analysis and would like to stress the concurrence of steps towards monetary reform and geopolitical events (in this case, the Syria ceasefire/ surrender).
But there is one thing I’m not too sure about: You mention the stimulus efforts which are no longer effective – what efforts exactly? QE is no stimulus in most cases, unless if it concerns MBS, and in recent years there have not been major traditional stimulus programs.
Tony: Greetings Mr. Grumps; I agree,,,They’re going to devalue….
Raoul Pal [Global Investors Fund] forecasts 50%….and that is only the smallest part of their problem…..DEBT over hang is way larger than anything on this planet… Take Care Tony
Tony: Greetings JC; I particularly like the quote you picked out;
US Treasury Secretary Jack Lew stated the following:
“We need to redouble our efforts to boost global demand, rather than relying on the United States as the consumer of last resort.”
To me the under lying message is that previous efforts have NOT been successful, and we are in fact in a structural Global deflationary collapse….
You must remember that all debt is nothing more than future consumption…
And with the Global debt over hang, there is nowhere to go but to have some type of monetary reset/re-alignment on currencies & debt, at some point in the not to distant future…
A quick look at commodities should tell you something “”BIG”” is happening….Global consumption is faltering..and more debt CANNOT solve the problem.. Take Care Tony
JC Collins: Tony, you really need to read all the material on this site. Most of what you bring up has been addressed here many times, including sovereign debt restructuring.
Jackie Boer: I read Ben Hunt’s “The Silver Age of the Central Banker” http://www.salientpartners.com/epsilontheory/post/2016/02/19/the-silver-age-of-the-central-banker
He argues the world has passed from cooperation to competition in solving each countries particular economic, monetary, and political problems.
We are now in the phase of competitive devaluation, after the BOJ and ECB initiated NIRP(negative interest rate policy) to devalue the Yen and Euro making their individual economies more competitive at the expense of other nations.
“Chinese Finance Minister Lou Jiwei said in a news conference that the G20 nations will “use all tools – monetary, fiscal, and structural – to boost growth.” He went on to say that “what each country does will be dictated by its circumstances.””
It is clear each nation will pursue it’s own best interest while working within a common framework. It is very interesting to observe without the pretense of knowledge….a little like high stakes poker.
JC…there is a very interesting post on Seeking Alpha this weekend, “Oil: The Big Long”. http://seekingalpha.com/article/3937256-oil-big-long
I thought you might be interested in Chris Cook’s take on whether supply and demand for oil have much to do with oil markets. Prediction of the future is difficult when we only read press releases!
Safenet: Hey J.C,did you notice the 11th point in the “issues for further actions”section in the communique:
11-) We look forward to the IMF’s report to examine and reflect on the possible broader use of the SDR by July.
That’s apparently three months in advance of October, the earlier determined period. That mostly strengthens your claim for commodities turnaround. So, the lack of attention to that point by media is interesting, isn’t it?
JC Collins: I did notice that as well. I will be writing more on it soon. It is a reference to more than just the RMB being included and the new weightings. It specifically targets a “broader use”.
This could cover major parts of the SDR and multilateral thesis which we have been discussing for over two years, including the substitution accounts and a large issuance of new SDR. Extremely interesting.
irrelevant111: Heroes Fall
Wasn’t that long ago One of my brothers stood tall…
Never was sure of the call Became one of few, heroes fall…
He climbed every tree in the yard Never complained, simply charge
He played each and every card He merely would grin and try harder…
He woke up each day with a smile The journey was more than a mile…
Never asked nothing at all He was one of the few, heroes fall…
Casting aspersions away Nothing would get in his way…
Still heard a beckoning call
He earned his way Earned his way, heroes fall…
Went to battle and serve in his way Saved many souls every day…
The day came he was meant to stay Our Father welcomed him, it’s time to play…
Casting aspersions away Nothing would get in his way…
He still heard a beckoning call
He earned his way Earned his way….
Heroes fall… Heroes fall… Heroes fall… Standing tall…
-fade- Written By: John Riley 1/23/16
Daneackerman: This is a nice article showing the evolving relationship with the US and ASEAN. --- “A unique display of political will between US, Asean”
And another which shows the growing US, ASEAN and AEC relations.
“US, Asean enjoying unprecedented relations”
Dane: Sorry folks I should have posted this search link with more articles.
Muad'Grumps: Gold mining rights “relaxed” How much will bring positive?
Dane: “Watch what they do and not what they say” laid over a photo depicting not being able to see the forest due to the trees….Excellent, thank you for sharing this Maud’Grumps.
Alan: some interesting news: AMRO now on similar standing as IMF -- Feb 19, 2016
AMROs purpose is to contribute to securing the economic and financial stability of the region through conducting regional economic surveillance and supporting the implementation of the CMIM.
Tony: Greetings JC; Well, I think this is an outlier for anybody doing research on China…
Predicting how 6 million people getting ‘pink slips’ will react to the evolution of a consumer based economy, rather than a manufacturing export based… Take Care Tony
JC Collins: Why is that? China will not transition without some issues. To think that everything will evolve in perfect harmony is silly. Watch for the over-dramatization of things. Not ever negative event is sign of imminent market doom. Equally so, not every positive event is sign of market manipulation.