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According to the State-owned Assets Supervision and Administration...

According to the State-owned Assets Supervision and Administration Commission (SASAC) more than 2,000 debt-ridden State-owned enterprises (SOEs) will be closed down or go bankrupt in the next four years. Asia Pulse reports the shutdown of these SOEs will leave 3.66 million employees needing reallocation. Enquiring minds might be wondering if there are additional clues in the Shanghai Stock Index. Let's take a look. Am I really supposed to believe that China is ready to float the RMB or even substantially repeg it higher in the face of a collapsing stock market, a certified property bubble, insolvent banks, and hot money pouring hoping to make a quick score? I think not. If China did float and hot money left, what would happen to the RMB with Chinese banks and SOEs in the condition they are in? So far no one has been able to answer that question satisfactorily. My opinion is actually irrelevant but here is one that matters:China will not revalue the yuan when it expands foreign exch...
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I received a phone call today from a professor of an esteemed...

I received a phone call today from a professor of an esteemed university offering to teach a class on Relationship Management right here on this blog. I was initially skeptical, and it took a bit of persuasion on his part, but once I heard a synopsis from a few of the lessons, I agreed the topic was fine. Still, everything here is free, I insisted. Eventually we came to terms and the professor agreed to teach a few lessons at the bargain basement price of zero. Without further ado, here is Professor Hardious Knocks of the prestigious School of Hard Knocks, teaching Relationship Management 101. Each lesson in this series is based on current events. There will be written assignment after each lesson. Class is now in session. Lesson OneGet Your Agreements In Writing.
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I cannot help but laugh at the latest leading index headline: Index...

I cannot help but laugh at the latest leading index headline: Index Suggests U. S. Economic Expansion. BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? A gauge of future economic activity inched up in July, a research group said Monday, indicating economic growth may pick up slightly in coming months despite turmoil in the housing market. The Conference Board's index of leading economic indicators rose 0.4 percent in July, as analysts were expecting. Over the past few months, the rise and fall of the index 'reflects the yo-yo situation in terms of the overall economy,' said Brian Bethune, an economist with Global Insight. July's uptick was driven by the employment market and high consumer expectations, he said. Monday's upbeat report follows the Federal Reserve's decision Friday to cut its key discount rate by a half-percentage point, a dramatic move meant to stabilize financial marke...
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BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow...

BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Treasury Secretary Henry Paulson said the Bush administration will evaluate accounting rules for the off-balance sheet units that large U. S. banks set up to invest in assets including mortgage-backed securities. 'Transparency is important here,' Paulson, 61, said in a speech in Washington. 'We need to ensure yesterday's excesses are not repeated tomorrow.' [Mish translation: 'The very last thing we want is transparency. Damn the WSJ for leaking news of the Super-SIV before we wanted them to. As for yesterday's excesses... Of course we want to prevent them. The market has already done so anyway so there's no longer any money in it. The goal is to create new rules that allow new exploitation. There's plenty of money in that for Goldman (GS), Citigroup (C), Merrill Lynch (MER), and I hate to say it even Bear Stearns (BSC)'...
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Before we get to the questions about Morgan Stanley, here...

Before we get to the questions about Morgan Stanley, here is the background story: Morgan Stanley posts first quarterly loss, and welcomes Chinese investor. BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Morgan Stanley posted its first quarterly loss ever Wednesday after taking an additional $5.7 billion write-down related to subprime mortgages. The investment bank also said it would sell a $5 billion stake to China Investment Corp., a sovereign wealth fund, to shore up its capital. The sale, which would give the Chinese government a stake of about 9.9 percent in one of Wall Street's biggest investment banks, is the latest example of a foreign investor aiding a Western financial firm after the housing meltdown. In taking a major investment from the Chinese sovereign wealth fund, Morgan Stanley is following a model set by Citigroup and UBS, two other financial giants badly damaged by their exposure to s...
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In How Does One Invest For 'Muddle Through'? I talked about...

In How Does One Invest For 'Muddle Through'? I talked about unwinding of the credit bubble. Here is the pertinent section: BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? Assuming we do muddle through, there is still a strong likelihood for a continued asymmetrical unwind of the credit bubble. Implications of that last point are particularly ominous. A carry trade unwind has the potential to affect nearly every equity class. In addition, there are obvious implications on emerging markets and China if US consumer spending is weak. It's a safe bet that several of the companies above will go bankrupt or be taken into receivership. The amount of capital destroyed already has been immense. Many of those charts sport prices all the way back to 1998 or even before. That is some unwind. . In deflation, the value of money rises. Money is hoarded. Furthermore, in economic turmoil in general, gold is sough...
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The Liquidity crunch took another step forward today...

The Liquidity crunch took another step forward today as California Home-Loan Defaults Rise to a Decade High. BEA 4th Quarter GDP 1st Estimate 0.7% Q&A: Why Did GDPNow Rise After Durable Goods? When are Construction Revisions Coming? California mortgage defaults rose to the highest level in a decade in the second quarter as falling home sales and higher interest rates battered the housing market. Homeowners received 53,943 default notices, more than double the 20,909 filed a year ago, DataQuick Information Systems, a La Jolla, California-based provider of real estate data, said today in a statement. Last quarter's default level was the highest since the fourth quarter of 1996, when 54,045 notices were recorded in California. Californians are struggling to repay home loans as mortgage rates jumped to an 11-month high and tighter lending standards limited their ability to refinance. Southern California home sales last month slumped 36 percent to the lowest for a June in 14 years a...
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