While the predictions of Blackstone's Byron Wien (born in 1933), who may not be in the senate or "sleep-deprived", but this year will become an octogenarian, may have been all over the place in the past 10 years, some correct, but most miserably wrong (with a recent hit rate of about 25%), he always does provide entertainment value. Which is the only value in the latest release of his 10 forecasts for 2013. Naturally, take all of these with a salt mine.
- Senate-Passed Deal Means Higher Tax on 77% of Households (BBG)
- Bipartisan House Backs Tax Deal Vote as Next Fight Looms (BBG)
- Fresh stand-off looms after US cliff deal (FT)
- Congress Deal Averting Tax Increase Curbs Risk to States (BBG)
- How Colombian drug traffickers used HSBC to launder money (Reuters)
- Danes Face New Reality in Struggle to End Crisis, PM Says (BBG)
- Ban on demanding Facebook passwords among new 2013 state laws (Reuters)
- Oil Climbs to Three-Month High as U.S. House Passes Budget Bill (BBG)
- Cameron seeks bold steps from G8 leaders (FT)
- China to outstrip Europe car production (FT)
- North Korea Picks Stronger Economy, South Ties as Top 2013 Tasks (BBG)
"Are the key governments and their leaders able to maintain confidence in this fragile system?" "Are 'they' going to do the 'right' things?"
The return of inflation, in official Japanese liberal newspeak, will make the economy less sickly even if the strategy "has risks". One of these is war with China, if only as a (Japanese) crowd pleaser, and another is selling off Japan's over-one-trillion dollar holding of US Federal debt at exactly the right psychological moment to implode the US economy, already teetering on the brink of its fiscal cliff. Japan's endgame flirt with Neoliberal mindwarp, what we can call the "slogan based economy", has brought about a situation where War and Circuses is surely on the Japanese political agenda, along with Japan's threats to sabotage the global economy. The inventors of kamikaze suicide war now have an Old Guard of political deciders who are prepared to pilot the economy straight into the ground, while bleating about "national pride".
It's 815ET on New Year's Eve and China PMI just printed below expectations at 50.6 - very marginally in expansion. The trouble is this is now the most divergent from the HSBC China PMI since January 2011 indicating once again that nothing matters and yet at the same time - the PBOC ain't coming to the rescue anytime soon. Meanwhile, in another epic realm of imaginary finance, Japan just increased its growth expectation to 2% for next year - whilst we are at it, we 'expect' rainbow-pooping unicorns for everyone next year (we just 'hope' noone is disappointed).
The Fed's inflationary policies will damage Emerging Markets... not push them higher.
There’s a much bigger cliff than the so-called fiscal cliff. The absolute worst result of the fiscal cliff would be a moderate uniform tax increase at a bad time, resulting in a moderate contraction. It is an obvious - but ultimately rather cosmetic - stumbling block on the so-called “road to recovery”. The much bigger cliff stems from the fact that the so-called recovery itself is build on nothing but sand. This is a result of underlying systemic fragilities that have never been allowed to break.
Shinzo Abe's re-election on the basis of his monetary policy aggression plans have sent the JPY reeling (as he hoped for) and the NKY soaring - but it is his more aggressive perspective on patriotism that could lead to far greater problems. As the Chinese Academy of Social Sciences recently noted,all eyes are fixed on Abe as "Japan’s nationalization of the Diaoyu Islands destroyed the framework for keeping a balance, which means ‘shelving a conflict'," a Chinese diplomatic source said, adding that "China has no political methods to return the situation to the (pre-nationalization) state. Therefore, there are no other ways except for looking for a new framework." As a precondition for establishing the framework, an executive of the think tank said, "Prime Minister Shinzo Abe should not take actions that heighten the tensions further. It is the same as a game of go. If Japan escalates the conflict, China will be prepared to respond to the move." As a result, Japan-China relations will enter into a highly volatile period, ruining any hope of a resurgence in Japan's real economy, and more worryingly, the think-tank concludes, China's conflict with Japan is inevitable.
- Japan PM Abe wants to replace landmark war apology (Reuters) - to summarize Abe's strategy: crush the JPY even as China is alienated so much not a single Japanese export goes to Beijing. Brilliant
- Unthinkable Cuts Almost a Reality (WSJ)
- Signs of Negative Economic Impact Growing (WSJ)
- Carlyle Agrees to Buy Duff & Phelps for $665.5 Million (BBG)
- Greek retail sales slump deepens in October, recession bites (Reuters)
- Congress Dysfunction as Deadline Arrives Poses 2013 Risks (BBG)
- For Euro, All Eyes Are on Central Bank's Actions (WSJ)
- France Seeks New Path to High Tax (WSJ)
- Japan Rebuke to G-20 Nations May Signal Moves to Weaken Yen (BBG)
- Portugal braced for ‘fiscal earthquake’ (FT)
- Monti's reform path faces test beyond Italy elections (Reuters)
- South Korea’s Inflation Slows Even as Economy Gaining Momentum (WSJ)
- China factory sector strongest since May 2011 (Reuters)
There was a time when the US was the cleanest dirty shirt; it seems now, given the US equity futures' (total lack of) reaction to tonight's 19-month-high surge in the ever-trustworthy over-invested mal-allocated Chinese PMI that for once, all that matters is domestic issues. HSBC's China PMI surged to 51.5, its highest since May 2011 and the Shanghai Composite is even shrugging it off as new export orders fell slightly (but of course all that matters is the top-line); and not wanting to burst anyone's bubble but - a majority of survey respondents (nearly 85%) reported no change in the level of outstanding business, employment levels also remained broadly similar in December, with nearly 92% of panelists noting no change to workforce numbers. But apart from that, the drop in inventories (and jump in input prices) apparently was enough to jerk this idiotic barometer of whatever it is to something that purports to show the best manufacturing growth in 19 months. It seems clear that our Chinese 'friends' at the PBoC are telegraphing that we are on our own - there will be no easing from them in this environment - Trade accordingly...
Econophile's take on the 7 most important economic events of 2012 and why they will impact 2013 and beyond. This is not what the MSM will tell you.
How does $45 a barrel oil and $2 a gallon gas sound? Expect $45 oil in the future of this renaissance.
For the fourth year in a row we continue our tradition of summarizing what you, our readers, found to be the most relevant, exciting, and actionable news of the year, determined simply by the number of page views. Those first eager for a brief stroll down memory lane of prior years can do so at their leisure, by going back in time to where the top articles of 2009, 2010 and 2011 are recapped. With that out of the way, here is what readers found to be the most popular posts of the past 365 days..
A broken safety net is no safety net at all.
The IMF’s Il Houng Lee, Murtaza Syed, and Liu Xueyan have published a very interesting and widely noticed study called “Is China Over-Investing and Does it Matter?” In it they argue that there is strong evidence that China is overinvesting significantly. China’s investment rate is so high, that even ignoring the tremendous evidence of misallocated investment, unless we can confidently propose that Beijing has uncovered a secret formula that allows it to identify high quality investment in a way that no other country in history has been able, there is likely to be a systematic tendency to wasted investment. The extent of Chinese overinvestment – even if we assume that it has not already caused significant fragility in the banking system and enormous hidden losses yet to be amortized – requires a very sharp contraction just to get back to a “normal” which, in the past, was anyway associated with difficult economic adjustments. It is hard to imagine how such a sharp contraction in investment will itself not lead to a sharp drop in GDP growth.