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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 2338
Posted: Feb 22, 2010 5:00
Comments: 2338
Forum Topic:
USD
Discuss USD
explains very well why austerity makes it all worse. C is consumption....won't go up that much
on austerity ...G is government spending...won't go up... I is investment..who's gonna invest in austerity...ah, Net exports is key, it is exports-imports so let imports approach 0 then net exports go up. Yeah. There is only one thing that helps: workload must be withdrawn from eastern europe even from Asia, and brought to the PIGS. There is no other choice. Productivity.
But of course Germany and France balk at that. So they have to pay , the difference in productivity becomes then smaller arithmetically. But Schauble can hardly count up to 3 so arithmetcis... not quite his strengths.
http://www.johnmauldin.com/frontlinethoughts/back-to-the-basics
This week's letter from JM touches upon europe but focuses mainly upon US debt and thoroughly explains GDP = C + I + G + Net Exports, explaining all the ramifications of playing with this fundamental equation. This is somehing he has written about many times before leading up to the financial crisis. This week puts everything into current context. Recommended reading !
http://www.usdebtclock.org/
As for China local debt I'm sure you are right the official # will be understated.
Liu Jiayi, the country's top auditor, said in a report to the National People's Congress that local governments had an overall debt of 10.7 trillion yuan ($1.65 trillion) by the end of 2010, and some were at risk of defaulting on payments.
The scale, amounting to more than one-quarter of China's GDP in 2010, which stood at 39.8 trillion yuan, raised concerns that local government debt could destabilize the financial system of the world's second largest economy if it is not managed properly.
Although some analysts argued that concern over local government debt was unnecessary as long as the country maintained its rapid economic growth, some international investors have lowered their outlook on China's long-term local-currency rating.
Leading rating agency Moody's said on Tuesday that China's local government debt could be even larger than the official number, which may set off loan defaults.
Since China reportedly bought Jap sov bonds I come back to the idea of going long USDJPY
@78 that level was not hit yet.
http://www.johnmauldin.com/outsidethebox/china-security-memo-looking-into-reverse-mergers-on-wall-street