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By: Bubble Trouble in Little China « The Emergent Fool

Bubble Trouble in Little China « The Emergent Fool — Tue, 27 Oct 2009 22:06:12 +0000

[...] He’s only batting 50/50 or so… or not. Be careful in calculating the batting average as # right / # of total predictions. Sornette addresses this issue in chapter 9 of his book. Calculating probability of predictions in a time series is bit more complicate than that and I will not pretend to understand them (I pulled out of math into finance after taking probability). Scan a few pages using Google – the results are much more meaningful than 50/50. China. A bounce in a secular bear market has a more limited possibility of bullish events. There will not be the same exuberance flowing through the globe in larger and larger waves raising additional capital from dumber and/or more momentum driven investors. However even within the confines of a secular bear, Chinese government can theoretically infuse even more capital/credit/leverage into the system and thus blow the predictive value of the Log Periodic Power Law (LPPL) parameters (related to meta-prices). Although such infusion is more likely, if stocks start breaking to lower lows as opposed to pulling back from the recent highs (it seems like they’re determined to continue pumping money into this thing through 10/1 at least). [...]

By: Jeff

Jeff — Sun, 06 Sep 2009 02:21:20 +0000

Matt:

If your goal is to merely maintain (not increase) output, then the necessary consequence of efficiency investment is less cost per unit. My point is that the last thing policy makers want in China is to displace workers. Therefore, their policy decisions should logically include consideration of the job loss of a particular action. That is one reason why you continue to have human parking meters.

So, the premise that such industrial investment in China is purely for efficiency rather than increased output does not sound to me like it is consistent with employment maintenance. Perhaps you are right, but then I think the investment decision makers are either a)blind to, or b)they are ignoring the consequence, or c)they buy into the progressive notion that displaced workers can be redeployed into other productive capacities. I doubt they believe option c.

As to cheating, have you ever parked here? You pay one price if you want a receipt (fa piao) and you pay a lower price if you don’t need the receipt (in essence the attendant pockets the cash).

Cedric, you hit on the issue. There is little transparency as to where the stimulus money is going.

By: Useful Links | Daily Stock Analysis

Useful Links | Daily Stock Analysis — Sat, 05 Sep 2009 17:20:35 +0000

[...] Terrific China watchers blog. Banned in Beijing… as they say.http://mpettis.com/2009/09/the-shanghai-market-calls-the-tune/ [...]

By: MoneyIllusionist

MoneyIllusionist — Sat, 05 Sep 2009 16:55:10 +0000

I have to say this is the best explanation i ever heard about market speculation:

Needless to say this begs the question about when exactly should you, as an investor, get out of the market? The day before? But if everyone knows that, then shouldn’t you get out two days before, or maybe three, since everyone has presumably figured that one out too?

haha!

By: Judy Yeo

Judy Yeo — Sat, 05 Sep 2009 12:52:51 +0000

The real question is who and when – who being which political leader and when being the time when true courage manifests itself -I do not see any government or political leader having the right anatomical parts to halt the stimulus packages or at least to reduce the side effects. Not even Sarkozy, who’s been so eager to claim credit, would like to be the leader of the band. If the pullback on stimulus packages is inevitable wouldn’t it be a government sponsored double dip recession?

hmm…

By: Impact Of US Jobles ‘Recovery’… | Understanding The Stock Market

Sat, 05 Sep 2009 08:32:10 +0000

[...] was reading Professor Pettit’s blog and I found his comments on his latest posting, The Shanghai market calls the tune, rather enlightening for me.Here are some of the interesting passages from his [...]

By: Readings: Google Domestic Trends, Health Care, etc. | Always Stocks

Readings: Google Domestic Trends, Health Care, etc. | Always Stocks — Sat, 05 Sep 2009 00:19:28 +0000

[...] The Shanghai market calls the tune (Pettis) [...]

By: Readings: Google Domestic Trends, Health Care, etc. | Venture Capital Bloggers Network

Fri, 04 Sep 2009 22:17:10 +0000

[...] The Shanghai market calls the tune (Pettis) [...]

By: TheTradingReport » Blog Archive » Readings: Google Domestic Trends, Health Care, etc.

Fri, 04 Sep 2009 20:40:01 +0000

[...] The Shanghai market calls the tune (Pettis) [...]

By: chan-lee james

chan-lee james — Fri, 04 Sep 2009 19:24:23 +0000

Professor Pettis:
Coming back to your earlier post on China-US bilateral trade surplus, this week’s Economist has an interesting article on China’s “incredibly shrinking trade surplus”.

The Economic Brief article tries to explain the big gap between China’s (smaller) declared trade surplus compared to those of its trading partners.
Differences between exports fob vs imorts cif and tran shipments via Hong Kong (and subsequent 25% mark ups) account for the half the discrepancy between China’s and other countries figures. The rest is apparently due to capital flows reflecdting under invoicing of exports, tax dodges and FDI round tripping to obtain tax breaks. They cite earlier US studies on this issue.

The authors argue that because China is rebounding faster than other countries, the dynamics have shifted from under to over invoicing exports (betting on a RMB appreciation?) — and hence that the recent drop in China’s trade surplus is for real.
This may provide a glimmer of optimism to your worries over global imbalances. regards James