No More Excuses for Growing Rich- Poor Gap
Blaming Mao’s chaotic years for the slow pace of reform is wearing thin as the vast majority of Chinese remain poor while their leaders grow more powerful.
Oct 102009
A quick economic rebound, capital inflows and better-than-expected corporate earnings have buoyed the Asian equity markets. Valuations have risen steadily though they remain below the peak levels of the boom years. The surge in markets like India, China, Sri Lanka, Vietnam and Indonesia has raised concerns that the rally might be getting ahead of fundamentals.
Asian currencies will continue to appreciate as global risk appetite buoys the asset markets, the trade balances are cushioned and the U.S. dollar remains weak. But central banks’ aggressive intervention in the foreign exchange market will limit currency gains until exports recover. In 2010, countries like India, Indonesia, Singapore and South Korea might allow currency appreciation to control headline inflation.
The real estate sector, especially housing, has picked up since Q2 2009 in countries like China, Hong Kong, Singapore, Vietnam and South Korea due to attractive prices, favorable borrowing conditions under stimulus measures, and speculative activity fueled by capital inflows and liquidity. However, slow improvement in labor market conditions, any slowdown in risk appetite and government measures to curb speculation will negatively impact the real estate sector and prolong its recovery.
Due to the enormous cost and technology involved, less than a dozen people have had their DNA fully decoded, or “sequenced”, to date.
But IBM has come up with a method that could make this affordable for everyone – DNA sequencing could be more than a million times cheaper using chips with holes just three billionths of a metre wide, it says. Continue reading “IBM chips promise $100 DNA decoding”.
Oct 102009
The Future of Investing
FT writers join major world figures in examining the implications of the credit crunch on our investment system.
Oct 102009
“It was at Rome, on the 15th of October, 1764, as I sat musing amidst the ruins of the Capitol, while the barefooted friars were singing vespers in the Temple of Jupiter, that the idea of writing the decline and fall of the city first started to my mind.”
- Edward Gibbon
Warren Buffett famously says that people do not make money by betting against the US economy. But two years ago we decided to take a chance.
“We are short the United States of America,” we announced from the comfort and safety of our headquarters in London. “Sell its stocks. Sell its bonds. Sell its money. Sell its real estate. Sell the equity. Sell the debt. Sell everything.”
What we saw was an over-stretched empire getting ready to snap. But we were also allowing ourselves to be lazy. Rather than deconstruct the capital structure of the world’s largest economy, we decided to sell the whole damned thing.
All Hell broke loose in September 2008. Since then, US stocks have gone down about a third. Real estate too. Unemployment has doubled. Consumer prices are going down at the fastest rate since the ’50s. And the economy is in the worse recession since WWII.
Meanwhile, Americans’ per capita wealth has fallen from $172,000 in September from $212,000 two years earlier. And the UN reports that the quality of life in America has gone down too…from #5 on its list in 2000, it fell to #13 in 2007. No doubt it is below #20 now.
Buffett has lost billions betting on the US economy while our gold positions are handily up; gold was the most profitable major asset over the last ten years.
So you see, we were right; America was a sell two years ago.
-Bill Bonner
Here we go again:
‘We Need a Pan- European Financial Oversight Authority’
It seems likely that Germany’s central bank, the Bundesbank, will soon become the sole overseer of the country’s financial system in a bid to prevent the mistakes made during the financial crisis. German commentators argue that a pan-European oversight authority would make more sense.
The week in perspective
Markit’s Gavan Nolan wrote this CDS report
A sense of foreboding enveloped the credit markets last week. A plethora of economic indicators – leading and lagging – gave investors cause to question the V-shaped recovery being priced into credit spreads. More…