tag:blogger.com,1999:blog-7478408299955066555.post855773679452952510..comments2024-02-21T05:08:31.128-05:00Comments on Deep Throat: The new phone book's here!.....the new phone book's here!Deep Throathttp://www.blogger.com/profile/02712515268051858186noreply@blogger.comBlogger38125tag:blogger.com,1999:blog-7478408299955066555.post-92184862854701419952018-08-16T11:12:39.924-04:002018-08-16T11:12:39.924-04:00Thanks for the post -- am a little late to the par...Thanks for the post -- am a little late to the party (or maybe not quite?) but enjoying your content.<br /><br />There's a basic mechanism I don't quite understand & an explanation would be appreciated: how is the PBOC limiting inflation onshore? If I understand the boomerang graphic correctly, the offshore market supply of RMB is tightly controlled causing its overvaluation relative to other currencies; meanwhile, onshore, RMB needs to be created to pay mainland exporters (the bottom right part of the graphic). Why hasn't this increasing supply of onshore RMB generated meaningful inflation? Simply because the PBOC 'says so' about vis a vis its exchange rate? Jeff C.noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-4032190764544938382018-08-15T20:29:57.948-04:002018-08-15T20:29:57.948-04:001) You are confusing asset prices with currency p...1) You are confusing asset prices with currency prices.<br /><br />2) You have mis-defined GDP as value add.<br /><br />3) Sanity check should your conclusion that Chinese manufacturing should be 3 times as competitive as they are now.<br /><br />Let me assure you that as one of those smartass Chinamen who collected all those academic awards... we are just as incompetent pulling off a conspiracy as intricate as what you describe as the brainiacs in the current Whitehouse... or maybe I'm just trying to throw you off the because Sun Tzu, kung-fu, ancient Chinese secret, fortune cookie... Laban Yunoreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-84484051916957380952018-05-28T19:45:53.925-04:002018-05-28T19:45:53.925-04:00It seems Chinese bankers are getting depressed bec...It seems Chinese bankers are getting depressed because their banks have too much debt. <br />https://abcnews.go.com/International/wireStory/head-major-chinese-bank-found-dead-apparent-suicide-55483099Unknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-3321331571882047182018-05-28T14:30:26.778-04:002018-05-28T14:30:26.778-04:00FYI
https://www.bloomberg.com/news/articles/2018-...FYI<br /><br />https://www.bloomberg.com/news/articles/2018-05-27/china-energy-misses-dollar-bond-payment-triggering-cross-defaultUnknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-70696641393512118522018-04-27T00:29:38.685-04:002018-04-27T00:29:38.685-04:00"there would presumably be room for Chinese p..."there would presumably be room for Chinese producers to raise prices and consequently, real income. e.g. Think post WWII Japan." As a Chinese supplier to the western world, I wouldn't count on that. Post WWII Japan could also be known as "pre Wal Mart days". There is very little chance Chinese suppliers could recoup profit nowadays as western retailers/wholesalers know their profit structures down to a tee. In addition such an environment would bring about a fresh round of cut throat competition which Chinese suppliers are drawn to like a bug to light!Anonymoushttps://www.blogger.com/profile/15660010280618720770noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-67133892622270828962018-04-26T00:13:04.634-04:002018-04-26T00:13:04.634-04:00"A reset, moving toward a depreciated RMB val..."A reset, moving toward a depreciated RMB value in the 18:1 range would be more in line with what a floating RMB might look like in relation to China's money supply and burgeoning debt levels."<br />Where do you derive this? Could you explain this estimate a bit more?<br />Thanks.Unknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-73862688473630106822018-04-25T16:05:43.361-04:002018-04-25T16:05:43.361-04:002008, try a decade before, with Financial deregula...2008, try a decade before, with Financial deregulation, in US, and negotiation, capitulation on the part of admitting non-market economies to WTO. Something that occurred, during the era highly influenced by the Newt Gingrich, Neo-Libertarian, Hayekian 1990's.<br /><br />That is why 2007-2008 occurred. <br />Twin towers, of deficits (budget and current account) going vertical; essentially the use of the American financial system by global business community and HNW.<br /><br />All occurring... thereafter, the mere impact, of the elements of the system and the new interactions evolving of new influences in the dynamic self-organizing complex adaptive system.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-81752736904204979142018-04-25T15:40:05.721-04:002018-04-25T15:40:05.721-04:00Yes, prior to the Alibaba USPS signing deal this w...Yes, prior to the Alibaba USPS signing deal this was a concern, but afterwards, just ridiculous.<br /><br />If you use Ebay, they often state that they are resident in California or New York, then it takes a significant amount of time for it to arrive; and/or often arrives in cheap white/grey plastic bags. <br /><br />I have taken to buying as much used goods these last 10 years since the GFC as possible. <br /><br />Or buying at Goodwill.<br />Funnily, even have taken to dying my old t-shirts rather than buying new. Speak with your pocketbook.<br /><br />I am so glad people like Deepthroat are starting to publish what is necessary. Anyone see Setser's new post...<br /><br /> Asia's Central Banks and Sovereign Funds Are Back<br /><br />https://www.cfr.org/blog/asias-central-banks-and-sovereign-funds-are-back<br /><br />It makes me wonder how so many, can be so clueless...that either the system is built on Neo-Colonial premises, or that the US requires foreign financing of its economy. <br /><br />British India, a market for British manufactures.<br />French West Africa, so on, and so forth.<br /><br />Seems the US is being used at present for such.<br />And all around the dialogue, nothing but ignorance and the opposite of what is imagined.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-51137665048962131322018-04-25T00:22:26.981-04:002018-04-25T00:22:26.981-04:00Top-shelf post, DT, excellent work.
The West ma...Top-shelf post, DT, excellent work. <br /><br />The West made a deal with the devil in 2008 when we advanced the idea that China would provide the new demand to carry the world economy, willfully looking the other way so that we could spin the plates just a little longer. We bought some time, and some of us got paid. And, yes, it will come apart, with blazing speed once we are finally there.<br /><br />IMO the wicked-steep <b>slope</b> on these recent declines hints at what is lurking. Now imagine a sell-off like what we have seen lasting for a <i>month</i>, or for <i>three months</i>. I have.<br /><br />I have <a href="http://2.bp.blogspot.com/-pj1_kA4csuY/UTgupWpsrWI/AAAAAAAADMQ/eXBBAPQBjbM/s1600/DSCN3093.jpg" rel="nofollow">Weimar framed in my living room</a>. Unfortunately, the largest bill I could manage is the 500MM DM. No <i>Millarden</i> in the Haus.<br />christiangustafsonhttps://www.blogger.com/profile/07216348353801614419noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-12970638830792738842018-04-24T23:56:35.305-04:002018-04-24T23:56:35.305-04:00Do you know how the M3 of Japan looked like prior ...Do you know how the M3 of Japan looked like prior to 1989? That might give a clue.Unknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-30004536465707754792018-04-24T23:36:56.734-04:002018-04-24T23:36:56.734-04:00But there is still the fact that the currency is n...But there is still the fact that the currency is non-convertible. That puts us into uncharted waters when that fact changes.Unknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-15812430747008905952018-04-24T21:10:44.120-04:002018-04-24T21:10:44.120-04:00OK, there you lost me a bit. The point of using cr...OK, there you lost me a bit. The point of using credit to increase the money supply rather than just printing money was to avoid inflation. If a Weimar-style inflation were to happen, the effects would be felt as soon as the printing started. <br /><br />What you are describing sounds more like 1989 Japan rather than post-war Japan. Lots of zombie companies with loans that may never be repaid, slowly deflating asset bubbles in real-estate and common stocks, and a never-ending recession.Unknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-16336621131737031972018-04-24T19:48:20.309-04:002018-04-24T19:48:20.309-04:00Excellent comment!..this is far from "tangent...Excellent comment!..this is far from "tangential". Although neither Amazon nor Walmart discuss 3rd party GMV in their filings, they discuss "percent increases" and other ambiguous metrics. (I wonder how they get away with that?? Wouldn't Investors want to know how much merchandise actually flows through these "ecosystems"??) <br /><br />Analyst guesses range from US$200B to US$400B for the TPGMV of both companies combined. And yes, the USPS gives a de facto competitive/cost advantage to Amazon.com and Walmart.com 3rd Party Sellers. Moreover, when you add in the "no sales tax" impact on top of the exchange rate subsidy....it's a wonder any brick & mortar retailer can compete at all. <br /><br />As an aside...based solely on your comment....did someone slip you a draft of my next post?....LOL <br /><br />All the best!<br /><br />DTDeep Throathttps://www.blogger.com/profile/02712515268051858186noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-80652596759620669642018-04-24T19:04:01.139-04:002018-04-24T19:04:01.139-04:00Exactly.....by my reckoning, correct on all counts...Exactly.....by my reckoning, correct on all counts. <br /><br />If the RMB were truly floating the result would be inflationary in China, think Weimar-esque wheelbarrows of RMB to buy a dish of noodles.....and deflationary here. When the exchange rate resets, the hard work of the Chinese people would be worth even less in Dollar/Euro terms. On the other hand.....there would presumably be room for Chinese producers to raise prices and consequently, real income. e.g. Think post WWII Japan.<br /><br />As an aside, one of my readers sent me this link re: The "Vancouver Model".<br /><br />https://globalnews.ca/news/4149818/vancouver-cautionary-tale-money-laundering-drugs/<br /><br />I'm trying to get a copy of Professor Langdale's Report. The report apparently describes similar mechanisms to what I discuss, but adds a more salacious criminal element to the activities... ...as described by David Eby, the B.C. Attorney General. <br /><br />I'm most interested in the scope and estimates to the level of funding involved. It's yet another illustration of the "Boomerang" phenomenon I described above.Deep Throathttps://www.blogger.com/profile/02712515268051858186noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-15180004756243960382018-04-24T18:30:35.077-04:002018-04-24T18:30:35.077-04:00An interesting, though tangential to your current ...An interesting, though tangential to your current blog, aspect of the invasion of U.S. markets by Chinese commerce is that Chinese merchants (and various other countries) can send products directly to U.S. household addresses at substantially lower cost than domestic merchants can. This is subsidized by none other than the USPS. If Trump, for example, really wanted to slam Jeff Bezos (who frequently complains about the USPS, incidentally) he would move to abolish this subsidy (assuming the dysfunctional could be that well informed). See the Forbes article: https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-usps-epacket-gives-postal-subsidies-to-chinese-e-commerce-merchants-to-ship-to-the-usa-cheap/#1fa7888e40caAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-56445946877445504102018-04-24T18:22:23.301-04:002018-04-24T18:22:23.301-04:00Hi, great post, I am still trying to wrap my head ...Hi, great post, I am still trying to wrap my head around it.<br /><br />Isn’t this trick of expanding RMB credit rather than allowing the exchange rate to fluctuate known as sterilization? I have heard that term used in the pre-financial crisis days to describe how China kept its currency from appreciating. What you are pointing out here is that it does not just keep it from appreciating, it keeps it from depreciating as well, and in fact shields it from any kind of price discovery.<br /><br />Question: If the RMB is indeed 3x overvalued, does that mean that, when the dust settles, that the already-cheap goods imported from China on sale at Walmart and on Amazon will be three times cheaper than they are today? That would be astounding and sounds very deflationary.Unknownhttps://www.blogger.com/profile/06159059399866680726noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-80665648857808319982018-04-18T07:20:15.278-04:002018-04-18T07:20:15.278-04:00Keep up the good work. We appreciate it, wider au...Keep up the good work. We appreciate it, wider audiences do require the talking points, abbreviated summaries, and I appreciate them as well. Is difficult to flow stream of conscious, try to integrate humor and humility and express the gravity of the issues you discuss, all in the same breath. Frankly, I think you do a good job at all of these. But in the same notion, i belief that this is very important work, and understand if others have hit you for organization of narrative issues. But really, astounding....<br /><br />I suspect that Adair's discussion of Direct Monetary Finance, and how it is needed, will be felt eventually, and directly. Frankly, without the continued bad news that we see on the global front (China particularly), and before Trumps, talk up the market to stupid levels, as if the bulls needed a reason to charge the average schlub even more for their quarterly contribution, I suspect by latest 2021-23, if not before we would have started to deal with declining equities, of mandatory drawdowns, against a critical mass of Baby Boom 401kers. So as relates to Adair's perspectives I suspect we might need go route of direct monetary finance to consumers. To this, I hope it is geared, in US to service industries, to support, wages, revenues, tax takes, consumption to gdp dynamics, and to avoid leakage through trade channels, at least for a few cycles before it leaks out in new flat screen purchases (increasing velocity). Such, might even draw some flows out of ridiculous asset valuations more productively.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-29058871422856467372018-04-17T10:55:28.007-04:002018-04-17T10:55:28.007-04:00Thanks Rob...."small cogs" are an incred...Thanks Rob...."small cogs" are an incredibly important in any complex machinery.....they either make it hum...or they can shut it down.....<br /><br />Thanks for the kind words!<br /><br />DTDeep Throathttps://www.blogger.com/profile/02712515268051858186noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-25712847652381745092018-04-17T02:15:18.796-04:002018-04-17T02:15:18.796-04:00Yeah my perspective is from being fairly close, ge...Yeah my perspective is from being fairly close, geographically and functionally, to the "action". Just a small cog in the machine.<br /><br />Thanks for sharing your work! I know I'm not the only one in this town and this industry that waits with baited breath for every update of your blog. :)RobK :noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-35309536482031372512018-04-16T08:38:23.575-04:002018-04-16T08:38:23.575-04:00The short answer is.....it's brilliant.
I d...The short answer is.....it's brilliant. <br /><br />I discuss similar concepts in an albeit less academic/professional, but yet (hopefully) entertaining format in my post:<br /><br />https://deep-throat-ipo.blogspot.com/2016/08/the-theory-of-financial-relativity.html <br /><br />The flaw in the slaw, that we both describe, albeit getting there using differnet paths, is the inherent limitation and bias preventing the world's Central Banks from rowing the boat in the same direction. <br /><br />In Turner's model, as I recall, he advocates that the world doesn't necesssarily need loose money to grow (I agree) and there are various Central Bank tools available to limit credit/money supply growth. The debate lies in which tools to use. We are in agreement. <br /><br />What I see is that, in the world today, there will always be a Central Banker (or two) out there that, in the interest of their own nation(s) will exercise their soverign right to march to a different drummer.<br /><br />Weimar Republic? Post WWII Hungary? PBOC? Who knows.... <br /><br />Thanks for reading my work....Deep Throathttps://www.blogger.com/profile/02712515268051858186noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-55643398325621561142018-04-16T08:03:53.457-04:002018-04-16T08:03:53.457-04:00Outstanding!....what do you do for a living & ...Outstanding!....what do you do for a living & where do you do it? I suspect, from the nature of your commentary, that you have more "boots on the ground" experience than a Cleveland Insurance Agent.....LOL<br /><br />No need to respond if you choose not to. It's none of my business. Just curious as to the genesis of your perspective. <br /><br />Thank you for reading my work!<br /><br />Deep Throathttps://www.blogger.com/profile/02712515268051858186noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-26892786792193800552018-04-16T04:21:10.873-04:002018-04-16T04:21:10.873-04:00Excellent article, and I'll probably have to r...Excellent article, and I'll probably have to read it a few more times to fully digest it, so apologies if what follows misses the mark.<br /><br />It occurs to me that CNH is only significant in the whole picture inasmuch as regulation on cross-border RMB flows are more permissive than they are in USD or other currencies, and I'm not sure that they are in reality. BOCI has a quasi monopoly on them in HK, but even they cannot do as they please - any kind of outbound flow (whether writing a loan or settling a trade invoice) is heavily scrutinised these days, and RMB is no exception. PBOC controls the supply of CNH very tightly, as you note, but this is in my opinion more to do with window-dressing, to prevent CNH wandering off to a more market-based level. <br /><br />The whole devaluation of 2015 was most probably nothing of the sort: it was an extremely cack-handed debacle of an attempt to rid themselves of the pesky basis that had set up between the daily fix, USDCNY and USDCNH (pesky only to those overly-obsessed with optics over reality). Without warning, they moved the daily fix up, in USD terms, to where USDCNY had been trading at the weaker end of the permitted daily band, and towards USDCNH. The result was, predictably, that the markets saw a near 2% devaluation and USDCNY fled for the weakest end of the new daily band, and USDCNH went absolutely ham. PBOC came in hard, and started sucking the liquidity out of the CNH market in order to make life harder for "malicious shorters" of the currency. Overnight rates quickly hit double digits, and I think the highest implied overnight rate I saw in the market that day was north of 90% before liquidity vanished altogether. It was painful; ask me how I know. <br /><br />But I digress - the point is, the pool of CNH sharply reversed course and has steadily declined ever since that day, as you note. The PBOC hasn't stopped intervening, and in the general panic of the capital flight that inevitably ensued, it and SAFE cracked down hard, as we know, on all cross-border (out)flows - and continue to do so. I don't know that those flows being RMB as they jump the border as in your Apple/Foxconn example makes much of a difference to the overall picture. <br /><br />If CNH has been significant, it's only that it was from day one a construct (like so many other schemes, like Stock Connect or that CNY Oil Futures nonsense) to try and pretend that the capital account was being opened and that China was committed to a market-based determination of its exchange rate. The single most important thing in getting away with the Grand Scam has been, as you note, to get central bankers looking the other way as the capital account remained as closed as ever. CNH has only been a part of that whole charade - it helped fool the IMF and others, but then they were willing to be fooled anyway.<br /><br />I think in terms of the USD Boomerang you describe, very often it's that the Foxconns of your example will these days want to settle as little of the contract in RMB as they possibly can (and let's not forget that Foxconn itself is ultimately a foreign-controlled company). They do need to pay wages, rents and the like, but they will for preference take payment of the contract in USD (or HKD, or whatever), outside of China, where it will remain. (And the kickbacks will almost certainly be more welcome in an offshore account). This has always been a feature of exports from China, but I would be willing to bet it is more significant now, as getting money out is harder than ever. I'd also be willing to bet that companies that can do so will for preference borrow RMB onshore to pay their workers rather than convert the proceeds of an export contract into RMB at any point.<br /><br />None of my rambles really run counter to any of your points, other than that I would play down the significance of the existence of CNH as anything other than yet another exercise in obsessive CCP window-dressing, which is something that only really works when they audience has already drunk the Kool-Aid anyway.<br />RobK :noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-15718576230749087652018-04-15T02:08:41.294-04:002018-04-15T02:08:41.294-04:00What do you think of Adair Turners work on Direct ...What do you think of Adair Turners work on Direct Monetary Finance? In relation to the events you see rolling out of this.<br />"Between Debt and the Devil"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-36175354244684862132018-04-14T23:13:23.141-04:002018-04-14T23:13:23.141-04:00Ooopppss.....sorry, you are correct....my bad. Th...Ooopppss.....sorry, you are correct....my bad. Thanks for reading my work so closely!Deep Throathttps://www.blogger.com/profile/02712515268051858186noreply@blogger.comtag:blogger.com,1999:blog-7478408299955066555.post-13275074436157664932018-04-14T15:05:37.005-04:002018-04-14T15:05:37.005-04:00it's not "Wiemar" but "Weimar&q...it's not "Wiemar" but "Weimar"Anonymousnoreply@blogger.com