Chaos! Capitalism Collapses! Read All About It! Extra! Extra! Written By: Eben Esterhuizen 2007-11-14 18:29:00
On Friday afternoon, May 17, 2002, a butcher named Edwin Lopez was alone in his downtown Los Angeles butchery. He was about to close shop for the weekend when he accidentally locked himself in a walk in freezer. He spent hours yelling and banging on the door, but to no avail. There was no way to open the freezer from the inside, and he quickly realized that he would freeze to death. He had a clipboard, some paper and a pen, and started writing messages to his loved ones as he surrendered to his fate. His letters ended with a final passage: “I can’t write anymore, my fingers are frozen stiff. Tell my darling wife I love her.”
China and the Olympics Hype Written By: Eben Esterhuizen 2008-07-31 02:49:53 Photo: china_puwa, Creative Commons, Flickr
What will China look like after the Olympics? This seems like a dull question that has been asked a million times by mainstream media. But what if we ask another question, one with a more sinister undertone: Is the Chinese government using the Olympics hype to cover up fundamental problems?
China Exporting Inflation: Political Spin or Economic Reality? Written By: Eben Esterhuizen 2008-02-19 23:29:01
It's probably fair to say that the most important diplomatic relationship in the world is between the U.S. and China. Unfortunately, the relationship is souring and could get much worse. "Alas, the U.S. is mostly to blame for this," said Nicholas Kristof in a New York Times column. "There are plenty of legitimate reasons to be angry with China's leaders, but its trade success and exchange rate policy are not among them. The country that is distorting global capital flows and destabilizing the world economy is not China but the U.S." He adds: "American fiscal recklessness is a genuine international problem, while blaming Chinese for making shoes efficiently amounts to a protectionist assault on the global trade system."
Commoditizing the Decoupling Theory Written By: Eben Esterhuizen 2008-03-09 23:59:39
The theory of decoupling suggests that emerging markets have broadened and deepened to the point that they no longer depend on the United States for growth, leaving them insulated from a U.S. recession.
Several analysts have claimed that decoupling is a load of rubbish, while others swear by it. One of the factors complicating the decoupling debate is the lack of agreement on a definition. If we look at the performance of emerging market stocks over recent weeks, it appears decoupling is a fairy tale. But arguing that a falling stock market signals an economic downturn is too simplistic since there are many factors that can lead to selling of stocks. That being said, decoupling is essentially a theory about how commodity prices react to a U.S. recession.
Photo:clry2, Creative Commons, Flickr
Dollar Decline Is A Slower Process than Soros and Esterhuizen Think Written By: David Neubert 2008-02-10 12:02:52 Eben Esterhuizen quotes George Soros saying that the current financial crisis is the culmination of a 60-year super boom of dollar credit expansion . The current financial crises based on over-leverage and excess government spending is part of the long term trend in the decline of the dollar that started in the 1970's. The Pound Sterling did not lose its status as the currency of international payments overnight; the process took nearly 80 years and ended last century. The US dollar is in a similar situation. If anything, the recent dollar drop and all the "sky is falling" pessimism is ahead of itself and the dollar actually has a greater chance of rallying from here against the Euro (1.47 USD/EURO).
I do agree with Mr. Soros that the U.S. will have to have higher interest rates at some point and that's why I'm currently short US long term treasuries.
Eben nicely outlines the risk reward of my higher interest rates bet; a bet that is currently causing me to cough up cash to meet margin calls on my treasury futures. But if I'm right, the reward is much larger than what I lose if I'm wrong.
