Here is what I’m reading today …
Texas Governor Threatens to Secede
Texans are fed up with federal tax policies, and might get so fed up that they decide they want to secede from the union, Gov. Rick Perry told reporters today after he attended an anti-tax tea party rally in Austin.
Sean’s note — I think anyone who writes off the secessionist movement as a bunch of blow-hards and do-nothings needs to wake up and smell the coffee. There is a sizable minority in this country that is furious with the Wall Street bankster bailout (and rightly so — I agree with them). Now, combine those folks with …
- People who will never accept the Democratic party as legitimate heads of government
- Right-wing puppet masters who will fund anything that might hurt Obama
- Paranoid libertarians made even more paranoid by the Obama administration’s embrace of Bush-era Patriot Act-enabled domestic spying (just because you’re paranoid doesn’t mean they’re not out to get you)
- A national TV Network that actively supports secessionist activity and tries to whip up anti-government activity
Sure some of these people are cranks. Others are funding movements to protest things they themselves have been instrumental in bringing about (that one is a must-read). Still others are deliberately misleading and/or inflaming protests to boost ratings. But put them all together, add in the people with real grievances, and I think there’s real potential for our country to come apart at the seams.
I’ll be writing more about this in my new book. Also read …
“In its depth and suddenness,” argues Prof Johnson, “the US economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets.” The similarity is evident: large inflows of foreign capital; torrid credit growth; excessive leverage; bubbles in asset prices, particularly property; and, finally, asset-price collapses and financial catastrophe.
“But,” adds Prof Johnson, “there’s a deeper and more disturbing similarity: elite business interests – financiers, in the case of the US – played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse.” Moreover, “the great wealth that the financial sector created and concentrated gave bankers enormous political weight.”
China’s gross domestic product (GDP) slowed in the first quarter of 2009 to 6.1%
This is the weakest growth since quarterly records began in 1992, but some analysts see signs of a recovery.
Growth was 6.8% in the last quarter of 2008, but the first quarter GDP figure dropped as exports fell 17% in March.
There’s more on the story here. Also, I’m quoted in a Dow Jones Marketwatch story on China and commodities.
Speaking of China …
China Reduced its Dollar Holdings in February
It is a good thing the US trade deficit has come down, because foreign demand for US financial assets — actually foreign demand for US assets other than short-term Treasury bills — has dried up.
Foreign investors bought $68 billion of T-bills in February. Russia alone (likely Russia’s central bank) bought close to $14 billion. Private investors — seemingly Japanese private investors — also bought $23.5b of longer-term Treasury notes. Otherwise, though, foreign investors didn’t buy much of anything. And Americans also didn’t buy many foreign assets.*
After Keith Bradsher’s New York Times article, though, all eyes are on China. In February, China bought Treasuries. $4.64b by my count. It bought $5.61b of bills, while reducing its long-term Treasury holdings by $0.96 billion. But China also reduced its US bank deposits by $17.24 billion.
Consequently, by my count, China’s total US holdings fell by $13 billion. Short-term claims fell by $11.3b, and long-term claims fell by $2b. The data on China’s short-term claims can be found here.
Source: Council on Foreign Relations
IN OTHER NEWS
Eight months into what is rated by many as the most devastating downturn experienced in the Canadian oil and gas sector, signs of a recovery are emerging.
United Airlines to Charge Obese Passengers Extra
The airline says passengers who are too large to fit into a single seat, buckle the seat belt, or unable to put down the armrests, will be forced to buy a second ticket or upgrade to a premium class, where the seats are larger. If a flight is full and an obese passenger is unable to buy another seat, they will be bumped from the flight.
Soybeans Rally to Three-Month High on Lower Output Forecast From Argentina
Soybeans climbed to a three-month high on speculation that declining production in Argentina may boost demand for supplies from the U.S., the world’s largest grower and exporter. Wheat also gained.
Stocks in Emerging Markets Will Rise 39% This Year on Rates, JPMorgan Says
Developing-nation stocks will surge a further 39 percent this year as government spending and interest-rate cuts revive economies from China to the U.S., JPMorgan Chase & Co. said.
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- Thursday — Here’s What I’m Reading (04/23/09)
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{ 1 comment… read it below or add one }
Hi Sean, thanks for your insights about China.
I worked with and in China for my company in the higher education area from 1992 to 2000.
I am struck by what is happening with China the last two years. My sense is that China is maturing at an impressive rate in economic terms and in its market dynamics. What we are seeing as it reacts to world economic depression is a noticeable shift to a much more independent, self serving emphasis on its internal consumption Consumer Market while it drifts away from being a Follower of USA and Euro Common Market policies as a Dependent Supplier. It is achieving an unprecedented degree of independence economically and politically that is characteristic of the most developed countries.
What do you think? It would be informative to read your thoughts, and those of your peers active in Asia regarding this. Thanks again for your analysis and insights, I find them interesting and useful.
Cheers, Jay