Comments on: The elephant in the room (or on Wall Street) http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/ Life, Culture and Politics from BrisVegas Tue, 14 Feb 2012 08:37:31 +0000 hourly 1 http://wordpress.org/?v=3.3 By: Kim http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218128 Kim Wed, 24 Sep 2008 15:09:44 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218128 I think the point is, BBB, that the Chinese want some equity bang for their buck, rather than just propping up the dollar via Treasury Bonds (on which the return is basically zero at the moment). I think the point is, BBB, that the Chinese want some equity bang for their buck, rather than just propping up the dollar via Treasury Bonds (on which the return is basically zero at the moment).

]]> By: Bingo Bango Boingo http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218127 Bingo Bango Boingo Wed, 24 Sep 2008 14:44:08 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218127 Yes that's right, not wholly dependent. But substantially so, which is of course why the Chinese bother to prop up the dollar in the first place. In the longer term, Chinese manufacturing will increasingly service its domestic markets. Presumably then so-called 'excess savings' will be applied internally. So let's hope that the Chinese "dollar exit strategy", whatever it is, can be executed in an orderly fashion. I'm sure it will be. After all, the financial markets are rock solid these days... BBB Yes that’s right, not wholly dependent. But substantially so, which is of course why the Chinese bother to prop up the dollar in the first place. In the longer term, Chinese manufacturing will increasingly service its domestic markets. Presumably then so-called ‘excess savings’ will be applied internally. So let’s hope that the Chinese “dollar exit strategy”, whatever it is, can be executed in an orderly fashion. I’m sure it will be. After all, the financial markets are rock solid these days…

BBB

]]> By: Kim http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218126 Kim Wed, 24 Sep 2008 14:35:10 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218126 Oh to be sure, BBB, I'm simplifying a bit, but it's also wrong to say that China's exports are wholly dependent on the health of the US domestic market. Oh to be sure, BBB, I’m simplifying a bit, but it’s also wrong to say that China’s exports are wholly dependent on the health of the US domestic market.

]]> By: Bingo Bango Boingo http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218125 Bingo Bango Boingo Wed, 24 Sep 2008 14:22:34 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218125 I don't know about 'at the mercy' of Asian sovereign wealth funds, Kim. Let's take the classic example: China. China has been willing to throw its savings at the US government because, as you suggest, it keeps the dollar higher and therefore underwrites vast volumes of Chinese exports. A significant contraction in US demand for Chinese manufactures would be pretty catastrophic for the regime. Sure the Chinese could smash the dollar if they wanted to, but then all that US Treasury paper wouldn't look so good on the balance sheet, would it? So it's a little more symbiotic than you're suggesting. BBB I don’t know about ‘at the mercy’ of Asian sovereign wealth funds, Kim. Let’s take the classic example: China. China has been willing to throw its savings at the US government because, as you suggest, it keeps the dollar higher and therefore underwrites vast volumes of Chinese exports. A significant contraction in US demand for Chinese manufactures would be pretty catastrophic for the regime. Sure the Chinese could smash the dollar if they wanted to, but then all that US Treasury paper wouldn’t look so good on the balance sheet, would it? So it’s a little more symbiotic than you’re suggesting.

BBB

]]> By: Kim http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218124 Kim Wed, 24 Sep 2008 14:09:08 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218124 Jennifer, I think all the stats are somewhat out of date - having said that, it may not be Dubai. Note that what you're attributing to me is not what I wrote but what I'm quoting. There was a bit of a stir in the US earlier this year when Fakeed Zakaria wrote a book about declining US power and the shift to Asia. That's been a continuing theme in America for about two decades - it was one thing Paul Kennedy was raising in the late 80s and it also kinda contributed to doing George H. W. Bush in. The US has been at the mercy of Asian sovereign wealth funds for some time - someone has had to fund the enormous deficits. And prop up the dollar via buying US Treasury bonds. This is the belated fightback. It won't work, for all sorts of reasons... Jennifer, I think all the stats are somewhat out of date – having said that, it may not be Dubai.

Note that what you’re attributing to me is not what I wrote but what I’m quoting.

There was a bit of a stir in the US earlier this year when Fakeed Zakaria wrote a book about declining US power and the shift to Asia. That’s been a continuing theme in America for about two decades – it was one thing Paul Kennedy was raising in the late 80s and it also kinda contributed to doing George H. W. Bush in.

The US has been at the mercy of Asian sovereign wealth funds for some time – someone has had to fund the enormous deficits. And prop up the dollar via buying US Treasury bonds. This is the belated fightback. It won’t work, for all sorts of reasons…

]]> By: Jennifer http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218123 Jennifer Wed, 24 Sep 2008 10:37:01 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218123 I agree with Razor, Dubai isn't ready. If you look at the stats (http://www.world-exchanges.org/WFE/home.asp?menu=395), no stock exchange comes close to the two US exchanges in turnover - Nasdaq and NYSE. London, Euronext and the Deutsche Borse (plus Shanghai and Tokyo) can be mentioned in the same room. While stockmarket turnover is a weak measure of the effectiveness of a financial centre, it's an important one. Not sure why you say "London isn't interested", but London is really the only alternative as a financial centre (as opposed to shareholder of banks). Asia will certainly own more, going forward. And it is clear from the stats that I quote above, that Asia (east asia, not the middle east) is increasingly a real counterweight to Europe. But as a financial centre, the US (and particularly NY) still is miles ahead of everyone else. I agree with Razor, Dubai isn’t ready. If you look at the stats (http://www.world-exchanges.org/WFE/home.asp?menu=395), no stock exchange comes close to the two US exchanges in turnover – Nasdaq and NYSE. London, Euronext and the Deutsche Borse (plus Shanghai and Tokyo) can be mentioned in the same room. While stockmarket turnover is a weak measure of the effectiveness of a financial centre, it’s an important one. Not sure why you say “London isn’t interested”, but London is really the only alternative as a financial centre (as opposed to shareholder of banks).

Asia will certainly own more, going forward. And it is clear from the stats that I quote above, that Asia (east asia, not the middle east) is increasingly a real counterweight to Europe. But as a financial centre, the US (and particularly NY) still is miles ahead of everyone else.

]]> By: onimod http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218122 onimod Wed, 24 Sep 2008 09:42:24 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218122 Carl First, they'd have to think....bzzz; then, they'd have to understand our position in the world...bzzz; and then they'd have to have access to sources to back up their thinking...bzzzz. Geopolitics to an MSM reporter means us vs them, and that's about as complex as you're going to get. Carl
First, they’d have to think….bzzz;
then, they’d have to understand our position in the world…bzzz;
and then they’d have to have access to sources to back up their thinking…bzzzz.

Geopolitics to an MSM reporter means us vs them, and that’s about as complex as you’re going to get.

]]> By: Carl http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218121 Carl Wed, 24 Sep 2008 09:28:50 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218121 <blockquote>Make no mistake, this is just as much about geopolitics as finance.</blockquote> Couldn't agree more, but do you think anyone in our 'free' media dare discuss it?

Make no mistake, this is just as much about geopolitics as finance.

Couldn’t agree more, but do you think anyone in our ‘free’ media dare discuss it?

]]> By: Down and Out of Sài Gòn http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218120 Down and Out of Sài Gòn Wed, 24 Sep 2008 09:17:53 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218120 <a href="http://crookedtimber.org/2008/09/24/the-smartest-guy-in-the-room/" rel="nofollow">John Quiggin say Paulson should be sacked.</a> Sounds good to me. John Quiggin say Paulson should be sacked. Sounds good to me.

]]> By: Ozymandias http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218119 Ozymandias Wed, 24 Sep 2008 08:40:06 +0000 http://larvatusprodeo.net/2008/09/24/the-elephant-in-the-room-or-on-wall-street/#comment-218119 Someone once said the Japanese don't belive WWII really ended -they're still fighting it, but by economic means now. Maybe the Sheiks will adopt a similar logic an make a pre-emptive strike on US military-industrial interests? To what degree are US military contractors quarantined/inocculated against foreign buyouts? Damned interesting times we are codemned to live in! Someone once said the Japanese don’t belive WWII really ended -they’re still fighting it, but by economic means now. Maybe the Sheiks will adopt a similar logic an make a pre-emptive strike on US military-industrial interests? To what degree are US military contractors quarantined/inocculated against foreign buyouts? Damned interesting times we are codemned to live in!

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