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Meanwhile In The Shanghai Composite

Tyler Durden's picture




 

Remember that 50 bps RRR cut a week ago which was supposed to telegraph to the market that the PBoC has commenced a monetary easing phase? It appears quite a bit more telegraphing will be needed: unlike in the developed world, where the central banks are entirely in control of capital markets, in China capitalism still has a foothold, however weak, and a result the Shanghai Composite is indicating the direction of where the global economy is truly headed, pro forma for that ridiculous most recent speculation that the US will decouple form something or another.

SHCOMP - 4 straight days of declines since the RRR announcement:

 

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Tue, 12/06/2011 - 09:26 | 1950457 GeneMarchbanks
GeneMarchbanks's picture

RBA also cut rates.

The asian contagion will be the real source of the disinflation bust not EZ.

Tue, 12/06/2011 - 10:05 | 1950576 Oh regional Indian
Oh regional Indian's picture

Very good Gene. I feel it too. Asia will feel a swift kick in the shins BEFORE Europe goes totally into the black hole (or the Euro rather).

I feel like I'm living in a Sand Castle here in India and watchign more castles in the air coming up all around me.

Hard landings and tightening as an earlier article suggested. Thud, bump, etc.

ORI

/the-plan/

Tue, 12/06/2011 - 10:14 | 1950607 GeneMarchbanks
GeneMarchbanks's picture

ORI,

Never been to India, not even close. My feeling is India is incredibly rich and diverse culturally and anthropologically speaking. Sadly that is at odds with your London based occupiers plans. The brutalized masses will be assimilated or disposed like waste.

Hope I'm wrong.

 

 

Tue, 12/06/2011 - 10:17 | 1950625 Oh regional Indian
Oh regional Indian's picture

your observation is spot on Gene. The masses are being "sickened" and TeeVee-ed at a dizzying pace.

It's pretty sad to watch it unfold, black tar, barriers, tolls, holes, ass-holes, electric poles, radio towers, hot tea in thin plastic cups... on and on. With the Colas and the fast food and Big Boss too.

ORI

Tue, 12/06/2011 - 10:24 | 1950649 GeneMarchbanks
GeneMarchbanks's picture

Christ. I wish you hadn't replied. I'll stick to the tourist commercials run here in Europe and my imagination about what the real India is like:

http://www.youtube.com/watch?v=rNWeBVBqo2c

Tue, 12/06/2011 - 11:05 | 1950773 Oh regional Indian
Oh regional Indian's picture

I do miss the clean of northern california from time to time.

ORI

Tue, 12/06/2011 - 10:26 | 1950657 SteveNYC
SteveNYC's picture

A truly rich and wise culture, it will be a shame. The spiritual realizations and discoveries made in India between 500BC - 1000AD are truly to be treasured. More than ever, the world needs this wisdom right now. Instead, the collective human mind has been led into a quagmire that is fully obstructing all that is to be realized, zombifying much of the world.

Good luck to you guys.

Tue, 12/06/2011 - 11:06 | 1950780 Oh regional Indian
Oh regional Indian's picture

Indeed Steve. In fact, in a strange twist on things, it is the west that is showing true depth in the practise and understanding of the wisdom you speak of (actually common to all spiritual faunts of the various religions).

ORI

Tue, 12/06/2011 - 13:24 | 1951313 EhKnowKneeMass
EhKnowKneeMass's picture

India - where people are more fertile than the land.

Tue, 12/06/2011 - 12:13 | 1951013 FMR Bankster
FMR Bankster's picture

"So those castles made of sand, melt into the sea, eventually."

Tue, 12/06/2011 - 09:27 | 1950461 writingsonthewall
writingsonthewall's picture

Decouplisation - bitchez!

Tue, 12/06/2011 - 09:27 | 1950462 Cdad
Cdad's picture

Cannot even believe that the BlowHorn [CNBC] is floating that decoupling thesis again.  For all those who are busy swallowing that crap, prepare for impact.  Literally....Duh.

Tue, 12/06/2011 - 09:28 | 1950463 writingsonthewall
writingsonthewall's picture

What do we need China for anyway - I mean what do they even make anymore?

 


Tue, 12/06/2011 - 09:44 | 1950507 Dapper Dan
Dapper Dan's picture

They make smog.

BEIJING -- Beijing authorities cancelled hundreds of flights and shut motorways on Monday as thick smog descended on the Chinese capital, reducing visibility at one of the world's busiest airports.

Tue, 12/06/2011 - 09:29 | 1950464 machineh
machineh's picture

Rate cuts are like potato chips (or dim sum, if you prefer): having just one leaves you hungry and frustrated.

More, please, kind sirs. 

Tue, 12/06/2011 - 09:37 | 1950486 Ancona
Ancona's picture

Strange that the truth comes out of......China.

We're truly in bizarro land now boys and girls.

Tue, 12/06/2011 - 09:37 | 1950487 apberusdisvet
apberusdisvet's picture

One good thing about a controlled society;  incidents of unrest and riots go unreported; but there are 100s per day in China.

Tue, 12/06/2011 - 09:40 | 1950495 Nemo01
Nemo01's picture

RRR is not a stimulus toll, but a sterilization tool trying to shore up/improve the liquidity caused by the foreign in/outflow.

Tue, 12/06/2011 - 09:42 | 1950501 I am Jobe
I am Jobe's picture

Here here. I agree. The CCB is getting scared and is trying to find ways to esnure that the  bubble leak is controlled to avoid any panic.

Americans need to just shop more period. COnsumerism does not need edcation. Buy more TV's , printers and towels and waffle makers dammit.

Tue, 12/06/2011 - 10:50 | 1950726 RockyRacoon
RockyRacoon's picture

It used to be a good joke, but it seems the day is actually coming:  I bought a toaster and they gave me a bank.

Tue, 12/06/2011 - 09:46 | 1950506 DormRoom
DormRoom's picture

Chinese hard landing.  very few nations in economic history have survived a property bubble without a hard landing.  If you're a commodities trader, you may want to update your CV.

Tue, 12/06/2011 - 09:48 | 1950518 youngman
youngman's picture

we are all worried about the EU and the USA printing trillions...what if its China that prints trillions??????

Tue, 12/06/2011 - 09:57 | 1950546 Nate H
Nate H's picture

they already have.

 

(and I would beg to differ - MOST people on this site are NOT worried about US and EU printing trillions, they are looking forward to it because they own gold and silver)

Tue, 12/06/2011 - 12:00 | 1950955 RoadKill
RoadKill's picture

Another confused gold bug.

Go look at the history of hyperinflation. Gold and silver go up at most inline with living expenses. Stocks go up too FYI as earnings hyperinflate (offset somewhat by multiple compression). In fact all assets go up except fixed rate bonds and cash (which aren't assets, but are claims). So those that get killed are people on the sidelines, lenders and shorts.

Also - wages take a hit relative to expenses. I doubt most people on here have enough $ in gold and silver to offset the damage that will be done to their next 30 years of wages.

Hyperinflation is only a net benefit for people with no assets and tons of debt.

Likewise, deflation is good for people that lend money, people I'n cash and shorts. It's bad for hard assets that don't produce income. It's bad for some stocks relative to living costs and good for others.

So before you place your bets remember.

Non-consumable non-income producing assets change with inflation.

Consumable assets change with supply / demand fundamentals.

Income producing assets change with REAL ROE.

Lenders, cash an shorts want deflation.

Borrowers and Hedge Fund managers want inflation (because 2/20 usually isn't inflation indexed).

If you think hyper inflation is coming the best way to benefit is to start a hedge fund, borrow at fixed rates, invest in highly levered stocks with real-time pricing power (commodity producers) and collect 2/20 on your 1000% annual returns.

If you think deflation is coming, short stocks and carry no debt. Lend money to people that can pay it back.

Pretty simple

Tue, 12/06/2011 - 13:14 | 1951262 MrSteve
MrSteve's picture

You say "borrow at fixed rates"; from whom? 

I think most gold bugs are just looking to maintain the value of the purchasing power of their existing wealth. The gold is insurance, not a speculation in anticipation of a huge trading "capital gain". An ounce of gold is a constant value. That's what makes it a standard of value.

Why would anyone exchange PM for ever-increasingly worth less fiat currency? They won't and it has a name- Gresham's Law.

Your advocating that in a deflation, someone should "lend money to people that can pay it back" is illogical. Deflation is a process where those "people" will find it ever more difficult to generate the increasingly costly cash flow to enable them to repay the loan. Its better to follow Polonius' famous advice.

The time factor works against even the best credits in a deflation. You can't overrule thermodynamics in a heat transfer and you can't overrule the tide in a deflation or inflation until it turns according to its own nature.

Tue, 12/06/2011 - 09:50 | 1950523 dcb
dcb's picture

that's just because we have the most regulated markets.

Tue, 12/06/2011 - 09:56 | 1950535 Joaquin Juarez
Joaquin Juarez's picture

Decoupling in not the proper economic term.  From Dictionary of Economics Online:

The term "decoupling" is often misused by the uninformed, mainly CNBC.  The proper term is  post-coital.

Tue, 12/06/2011 - 10:33 | 1950676 overmedicatedun...
overmedicatedundersexed's picture

As we asked in the zendo: what is the sound of criminal banks failing?

Master replies : CNBC

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