Thursday March 26, 2009 - 14:34:54 GMT
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Does Thought-Leadership Equate to Economic Propaganda?
âChina has clearly been moving ahead of the rest of the G- 20 in terms of thought leadership and laying the groundwork for what will be discussed,â said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong.
FX Trading â Does Thought-Leadership Equate to Economic Propaganda?
Referencing the Quotable section above, I wonder what âthought leadershipâ really means. When I hear such a term used to describe any government body my instincts tell me it canât mean anything positive, regardless of its intent. Kind of reminds me of those Newspeak terms popularized by George Orwell in 1984 â doublethink, telescreen, ingsoc, etc.
Anyway, the quotable refers to the most recent comments by Peopleâs Bank of China Governor Zhou. Yes, I know I got on him for his comments on Monday, but he wants the attention so I am going to give it to him ...
Contrary to his counterparts in the West, Zhou is taking the glass-half-full approach. Ok, I understand thereâs no point in being overly pessimistic about an economy (unless youâre trying to make full use of a crisis). But does misleading optimism make any sense either?
The way we look at it, it does when you are China. Yesterday Jack touched on Chinaâs smoldering social volcano yet to erupt (perhaps he didnât describe it the same way.) If this is true, and if China is as vulnerable to the ongoing global economic crisis as we think they are, then itâs going to be a tough road to recovery.
But not to worry: China is China; and China is King of the World. Just ask them. Mr. Zhou today said in an article:
âLeading indicators are pointing to recovery of economic growth,â
[Chinese government] âhas taken prompt, decisive and effective policy measures, demonstrating its superior system advantage when it comes to making vital policy decisions.â
OK, maybe somethingâs been lost in translation, but I find the above statements to be a premature and overly confident, though not surprising. China, more so than any other major world economy, finds itself in a most sensitive position â catering to a volatile and largely inflexible society reliant on economic stability.
Basically, this âthought leadershipâ may be nothing more than that â thoughts leading an empty train to recovery while Chinaâs economy is actually stuck on different train heading the opposite direction. Call it propaganda if youâd like; just donât get blurry-eyed from it if thatâs the case.
And now that US GDP numbers disappoint again â down 6.3% in the fourth quarter â China still canât rely on US consumer demand to help kick-start their economy. Theyâll need to rely on, as Mr. Zhou said, there âsuperior system advantage when it comes to making vital policy decisions.â
The return to savings in the US has arrived; and officials whoâd been clamoring for such a shift should be ecstatic (though they appear quiet.) Yes, the US economy is contracting, but isnât the contraction (in the US and across the world) exhibiting the characteristics that we thought necessary to balance the imbalances only two years ago or so? Why abandon that?
Ultimately, growing savings and declining demand keeps our big picture market themes in play. Obviously the most popular theme among these is a US dollar bull market. The buck has had its rest. Now weâll see what data and the global leaders can add to the mix over the coming days to solidify or weaken this view.
Keep an eye on the February US Personal Income and Outlays report tomorrow. The chances are we get more evidence that the Mr. US is further tightening up his balance sheet. And donât forget to tune-in for Treasury Secretary Timothy Geithnerâs testimony to the House Financial Services Committee that began at 10 am EDT this morning; or do. Which brings me to ...
Cutting off the nose to spite the face.
Iâve never actually used the phrase above in casual conversation â itâs a bit too clichĂ©. But the ongoing drama playing out in Washington has me returning to that line frequently. It appears not to be âthought leadershipâ exuding from the Capital, but rather thoughtless leadership.
Hopefully Iâm not committing a thoughtcrime with these comments, but see what you think after skimming through the following article:
Geithner Seeks Power to Regulate Big U.S. Hedge Funds, Derivative Markets
And hey, if the markets have trouble swallowing this plan, Geithner could always meet Mr. Zhou for a bite to eat and a pleasant discussion on SDRs as a world reserve currency.
John Ross Crooks, III
Black Swan Capital LLC
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