Wednesday, January 14, 2009
hot money fleeing china
exports), China's foreign exchange reserves are not even close to keeping pace.Readers may recall that a massive amount of money flowed into China, a good bit of it disguised (FDI was one of the suspect categories) because RMB appreciation looked to be a one-way trade. Given China's currency controls, there were limited options for playing that point of view from overseas, hence the funds influx.But now that China has quietly gone back to a hard peg to the dollar, the dreams of a quick profit have been dashed, and the hot money is making an exit. Per Brad Setser (part of a longer and useful post, hat tip reader Michael). The reserve requirement mention comes about because the PBoC requires banks to hold some of their reserves in dollars, which means that the true FX reserves are greater than the official reserves:
The trade surplus should have produced a $115 billion increase in China’s foreign assets. FDI inflows and interest income should combine to produce another $30-40 billion. The fall in the reserve requirement should have added another $50-55 billion (if not more) to China’s reserves. Sum it up and China’s reserves would have increased by about $200 billion in the absence of hot money flows. Instead they went up by about $50 billion. That implies that money is now flowing out of China as fast as it flowed in during the first part of 2008.And in December, the outflows were absolutely bruta....$70 billion plus in monthly hot only outflows … That’s huge. Annualized, it is well in excess of 10% of China’s GDP. Probably above 15% …
The trade surplus should have produced a $115 billion increase in China’s foreign assets. FDI inflows and interest income should combine to produce another $30-40 billion. The fall in the reserve requirement should have added another $50-55 billion (if not more) to China’s reserves. Sum it up and China’s reserves would have increased by about $200 billion in the absence of hot money flows. Instead they went up by about $50 billion. That implies that money is now flowing out of China as fast as it flowed in during the first part of 2008.And in December, the outflows were absolutely bruta....$70 billion plus in monthly hot only outflows … That’s huge. Annualized, it is well in excess of 10% of China’s GDP. Probably above 15% …
Asia-Europe Shipping Rates Drop to Zero
http://www.nakedcapitalism.com/2009/01/asia-europe-shipping-rates-drop-to-zero.html
This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant....The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant....The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
美媒研究中国模式: 欧美羡慕中国的国家干预能力
http://www.6park.com/news/messages/10774.html金融海啸冲击全球，美英等国先后将银行业和汽车业国有化，但中国却能独善其身。西方国家过去对中国的国家干预能力嗤之以鼻，但在危机下却效法中国，证明了中国的做法是生存之道。最新一期的美国《新闻周刊》便刊登题为“中国何以运转乾坤”的专题文章，详述中国的“指令性资本主义经济”如何有效运转，使之成为当今的金融海啸下，唯一能录得显着增长的主要经济体 www.6park.com
文章称，中国之所以能于全球经济乱局中鹤立鸡群，是因为她是唯一打破经济学教科书常规的国家。中国并没有完全放任市场经济，政府会于适当时候插手市场，重点的行业仍由政府主导，而银行业的重要职位都由政府官员出任，他们会听从国家指示，选择合适的贷款和投资对象。 www.6park.com
事实上，中国经济没有像其它5大经济体一样迅速减速，其主要原因在于中国具备自由派经济学家通常嗤之以鼻的国家干预能力，如在金融业中，中国限制外商投资，也不全盘引进外国的创新而复杂的投资工具，终能避开这次严重的金融海啸。 www.6park.com
中国看来最能抵御这场最严重的全球衰退，其指令性资本主义为何能奏效，这个问题更具时代意义。经济学家一直对这个问题感兴趣，他们往往把国家功能看得一无是处，而市场是灵丹妙药，而如今欧美也在向国家干预靠拢。 www.6park.com
文章称，中国官员面对危机时，可以像西方政府一样采用传统的市场手段，但也会加入干预，是指令式资本主义的后盾。比如去年初楼市过热，中国下令银行缩减房贷，接着当住房销售下滑时，他们又推出刺激楼市措施。同时，他们也会发布在西方被视为不当“干预”的指令，比如早前当局要求国有企业通过在国内外收购新资产，“积极扩大”在经济中的作用。 www.6park.com
中国的国家干预曾被视为不成熟经济的坏习惯，现在却获西方国家奉为圭臬，视之为稳定的堡垒。里昂证券经济师罗斯曼说：“大部分的资本密集型行业由政府控制，我因此对中国的前景感到乐观。”美国摩根士丹利亚洲区主席罗奇表示：“在经济困难时期，中国的指令控制型体制的确比其它的市场体系更有效。”
文章称，中国之所以能于全球经济乱局中鹤立鸡群，是因为她是唯一打破经济学教科书常规的国家。中国并没有完全放任市场经济，政府会于适当时候插手市场，重点的行业仍由政府主导，而银行业的重要职位都由政府官员出任，他们会听从国家指示，选择合适的贷款和投资对象。 www.6park.com
事实上，中国经济没有像其它5大经济体一样迅速减速，其主要原因在于中国具备自由派经济学家通常嗤之以鼻的国家干预能力，如在金融业中，中国限制外商投资，也不全盘引进外国的创新而复杂的投资工具，终能避开这次严重的金融海啸。 www.6park.com
中国看来最能抵御这场最严重的全球衰退，其指令性资本主义为何能奏效，这个问题更具时代意义。经济学家一直对这个问题感兴趣，他们往往把国家功能看得一无是处，而市场是灵丹妙药，而如今欧美也在向国家干预靠拢。 www.6park.com
文章称，中国官员面对危机时，可以像西方政府一样采用传统的市场手段，但也会加入干预，是指令式资本主义的后盾。比如去年初楼市过热，中国下令银行缩减房贷，接着当住房销售下滑时，他们又推出刺激楼市措施。同时，他们也会发布在西方被视为不当“干预”的指令，比如早前当局要求国有企业通过在国内外收购新资产，“积极扩大”在经济中的作用。 www.6park.com
中国的国家干预曾被视为不成熟经济的坏习惯，现在却获西方国家奉为圭臬，视之为稳定的堡垒。里昂证券经济师罗斯曼说：“大部分的资本密集型行业由政府控制，我因此对中国的前景感到乐观。”美国摩根士丹利亚洲区主席罗奇表示：“在经济困难时期，中国的指令控制型体制的确比其它的市场体系更有效。”
German Growth Slumped in 2008 as Recession Set In (Update2)
http://www.bloomberg.com/apps/news?pid=20601068&sid=an4RvXneBiUs&refer=economy
Companies are scaling back production and cutting jobs as global economic expansion slows and demand for German exports wanes. Bundesbank President Axel Weber last week indicated the economy may contract more this year than the bank’s 0.8 percent forecast. A decline of more than 0.9 percent would be Germany’s worst performance since records began after World War II.
“There is just no sign of the economic decline bottoming out,” said Kenneth Broux, an economist at Lloyds TSB Group Plc. in London, who expects the German economy to shrink 2.1 percent this year. “The first and second quarter will be awful. If we are very lucky, we may see a slight stabilization in the third or the fourth quarter.”
The European Central Bank has cut its key interest rate by a total of 175 basis points to 2.5 percent since early October as Europe’s economic slump deepened. Investors bet it will lower borrowing costs again tomorrow by at least 50 points, Eonia forward contracts indicate, even as some policy makers signal they’d rather wait.
Companies are scaling back production and cutting jobs as global economic expansion slows and demand for German exports wanes. Bundesbank President Axel Weber last week indicated the economy may contract more this year than the bank’s 0.8 percent forecast. A decline of more than 0.9 percent would be Germany’s worst performance since records began after World War II.
“There is just no sign of the economic decline bottoming out,” said Kenneth Broux, an economist at Lloyds TSB Group Plc. in London, who expects the German economy to shrink 2.1 percent this year. “The first and second quarter will be awful. If we are very lucky, we may see a slight stabilization in the third or the fourth quarter.”
The European Central Bank has cut its key interest rate by a total of 175 basis points to 2.5 percent since early October as Europe’s economic slump deepened. Investors bet it will lower borrowing costs again tomorrow by at least 50 points, Eonia forward contracts indicate, even as some policy makers signal they’d rather wait.
Citi gives control of brokerage to Morgan Stanley
http://biz.yahoo.com/ap/090114/citigroup.html
The deal, which will give Citigroup $2.7 billion in badly needed cash as it gives up control of Smith Barney, comes as the company still struggles in the aftermath of the mortgage and credit crisis. There is speculation that CEO Vikram Pandit, who for months supported Citigroup as a "universal bank," will be taking further steps to simplify and streamline the company
"I think within 12 months, Citigroup no longer exists," said William Smith at Smith Asset Management, who owns Citigroup shares. He has been calling for a breakup of Citigroup for years, and believes the government will force that fate in piecemeal fashion over the coming year.
The idea behind the supermarket is that the average person can do all his saving, borrowing and investing with one company. Citigroup had it all, the retail and business banking operations, the investment banking business, the brokerage, even Travelers insurance. Whether that one company does it better than a number of specialized companies does, though, has been the big question facing shareholders since the deregulation of the banking industry in the 1990s. And Citi's announcement Tuesday further undermines the idea that one company can handle such diverse businesses at once
The deal, which will give Citigroup $2.7 billion in badly needed cash as it gives up control of Smith Barney, comes as the company still struggles in the aftermath of the mortgage and credit crisis. There is speculation that CEO Vikram Pandit, who for months supported Citigroup as a "universal bank," will be taking further steps to simplify and streamline the company
"I think within 12 months, Citigroup no longer exists," said William Smith at Smith Asset Management, who owns Citigroup shares. He has been calling for a breakup of Citigroup for years, and believes the government will force that fate in piecemeal fashion over the coming year.
The idea behind the supermarket is that the average person can do all his saving, borrowing and investing with one company. Citigroup had it all, the retail and business banking operations, the investment banking business, the brokerage, even Travelers insurance. Whether that one company does it better than a number of specialized companies does, though, has been the big question facing shareholders since the deregulation of the banking industry in the 1990s. And Citi's announcement Tuesday further undermines the idea that one company can handle such diverse businesses at once
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