Archive - 2010

I took all of the 782 comments on the Holiday Open Thread and ran them through a word cloud generator...

For the second time in the last few months, China’s Central Bank has raised its rates to fight internal inflation. The new rate goes into effect Sunday. Here is an English version of their announcement.

After a year of endless propaganda surrounding the imaginary jobs boom, which as we have been pointing out for months, is nothing more than the permanent transfer of full time jobs to part time, perhaps the one chart that captures the full effect of said "recovery" is the comparison of number of employees added by China's sweatshop behemoth FoxConn, which at 300,000 in 2010 was just under one third of all non-farm payrolls added by the entire United States in the same year! In other words, this year one company added nearly one third the total number of jobs as the entire world's greatest economy.

BusinessWeek has finally outdone itself: the recent Bloomberg acquisition has come up with what can be described as the definitive visual summary of the key themes and trends of the past year. What we certainly can appreciate is the magazine's attempt to be as focused, concise and cohesive as possible, which is why the punchline is as follows: "Normal, Jobs, Stuck, Currency, Spills and Gaga say all that needs to be said about 2010." From an economic perspective it is the jobs and the currency that are the all important variables. And unfortunately, both are moving in the wrong direction. But before we get into the meat of this series, with part one (jobs) and part two (currencies) here are two appetizer charts of what the biggest movers and shakers in 2010 were, together with a focal node chart that demonstrates the key strange attractors of the past year.

You don't need to be Bill and Melinda Gates to give back to your community...

Down on the Exchange the tape inches along

Brokers bargained and traded as they hummed an old song

The Fed struggled and struggled to make payrolls renew

They went back to their playbook and began QE2

The new airport pat downs put some folks in a funk

Prompting one fellow’s warning don’t dare “touch my junk”

A lady named Kagan has joined the Supremes

And Rahm left the White House with mayoral dreams

Following Friday's failed 3 Month Bill auction, things in China are once again getting interesting, just as the rest of the world has decided to sleep right into 2011. The PBoC, in a surprise move, hiked its lending and deposits rates by 0.25%, the second time the bank has done so since October 19, when its then-raise was the first in 3 years. And by all accounts the PBoC is not done: consensus is for three 25 bps moves by the end of 2011: that the PBoC is starting early may be an indication that the country is starting to seriously worry about its soft landing prospects. Yet one thing that is certain is this move cements the CNYUSD peg: despite all the rhetoric, China will keep the currency peg come hell or high water, as it eliminates any monetary trump card Bernanke may have (just as Germany loves being part of the EUR which has such insolvent countries as all PIIGS members backing up the rear). What is unclear is whether the PBoC has now decided to avoid the RRR hike path as the preferred approach to combating inflation. It is assumed that his action will have a soothing impact on the Chinese 7 and 30 Day Repo rates come Monday, as else more failed bond auctions are certain to be in store for Shanghai in 2011.

China has been ranked as the top growing country among the G20 since 2001 and is expected to retain that title for at least another five years. However, the news coming out of China for the past three months has not been good.

So often with managing wealth, it is too easy to focus on the really important issues that are making central bankers behave like drunken poker players. While we have (in our opinion) covered the big issues very well during 2010, we would be ashamed if we didn’t finish the year by expressing our unbridled love for the Good in the World – gold, commodities, and the commodity driven theme. In our opinion, the humongous demographic & sociographic wave slowly and surely pushing China and India into the 21st century is creating an enormous end market for commodities. Which commodities? Take your pick – oil, wheat, corn, copper, rare earths, we could go on and on. The fact is, there are millions of people on the verge of permanently entering the middle class - the very economic stage in life that many of us take for granted in the developed World. These new entrants will undoubtedly adopt better diets (read: agriculture), require transportation to work (read: energy) and demand a roof over their head (read: anything housing related). The simple question to ask is “who sells commodity related stuff?”

Christmas (circa 1920s), in pictures...

The Danish tax authority has been robbed blind by a carbon trading scandal that has rocked the market for carbon off sets: while the story saw some press a year ago, significantly higher losses have since been reported and the MSM has ignored the story.

Posting on Zero Hedge over the next 24 hours will be sporadic and infrastructure contingent. Please use this forum for any urgent news, notifications, or pent up venting. Regular posting will resume shortly. Happy holidays to all.

Update [sacrilege]: I'd like to take a moment to thank the staff -- particularly boney -- at portlane. Their continued support has been phenomenal. Also: Merry Christmas.

Sovereign Man, Simon Black, writes in from Santiago Chile, shares his latest observations on gold and provides his two most recent recommendations for those who have decided to expatriate and are now just contemplating which country to call home. In summary: "I would recommend the country for pioneer expats who don't mind putting up with squalor and the lack of amenities... but Cuba makes up for it in other ways, like warm weather, gorgeous women, great salsa culture, and zero crime against foreigners." It will be the most supremely ironic end of the US empire if those disgruntled with the regime end up defecting to the one country which currently best exemplifies Regan's "evil empire. "

Calling for a "bank run" in public will possibly become a criminal offense. Ministers Opstelten of Security and De Jager of Finance are preparing a proposal for a new law. They want to be able to penalize people who are openly calling for a "bank run" a maximum of 4 years or a fine of 19.000 euro. According to the ministers a bank run can seriously endanger a bank.

The data starkly show a comatose Wall Street being resuscitated with whatever financial might the Federal Reserve could pump into its tangled web of funding vehicles. It also points to how the Fed was dispersing sums which dwarfed the U.S. Treasury’s $700 billion TARP (Troubled Asset Relief Program) bailout program...