Turtle’s Egg; Stability Creates Instability; President Hu Warns Party Could Collapse, China Bulls Oblivious

November 9, 2012


"Power tends to corrupt, and absolute power corrupts absolutely." ~ John Dalberg-Acton

“If you owe your bank a hundred pounds, you have a problem. But if you owe a million, the bank has a problem.” ~ John Maynard Keynes

“turtle’s egg”: pejorative for the Chinese Communist party ~ FT

On the significance of truthiness and metaphors ~ historysquared 

‘If countries repay their foreign debts only so they can borrow more, then international borrowing is a Ponzi scheme’ ~ Reinhart and Rogoff (2009) 

Rogoff has intentionally avoided making forecasts, except in ’09: EU –multiple defaults; China – hard landing; U.S – sky high taxes ~ WSJ

Academic Research Destroys Strategies, says $study of 82 strategies published in papers ~ The Chronicle 

Behavioral economist Dan Ariely ~ RT

“One of the best investments in the U.S. is lobbying”

@danariely’s research is great, but I fear underlying the research is a message lobbying for the parental state, as if people in government are not prone even more dangerous behavioral bias’ and worse, with enough power to escape without punishment. I hope it’s not true.

Study going back to 1792 showed stock market (Bernanke?) assured Obama victory. GDP and unemployment found irrelevant ~ LA Times


Inside the Secret World of the Data Crunchers Who Helped Obama Win ~ TIMEPolitics

Good article, but why no mention of Bernanke?

Is the US too big to fail? ~ Reinhart and Reinhart (2010) ~ Vox

  • "foreign resentment with a US-dominated arrangement grows over time," history shows
  • Reinhart and Reinhart close with an ominous “"When US officials move to the next stage of the crisis….. "

Over fifty percent of U.S. debt is foreign held, says Marty Feldstein on Bloomberg

Rogoff and Reinhart find external debt greater than 35% is risky, but unsure if apples to apples comparison 

Maturities are quite short as well, exposing the U.S. to rollover risk


“NYC Issues Odd-Even Gas Sales as Shortages Persist. GC: NYC can’t cope w/ Sandy; imagine if a major terror strike” ~ @geraldcelente

Investors See Obama Win Fueling Refinancing: Mortgages – SFGate


The Asian Credit Bubble – the Next Blowup ~ historysquared


German export collapse will make officials more receptive to monetizing European debt

Reuters’ site has foreign indices and interactive graphics; here Socgen ~ Reuters



#China, "It’s the best ‘this time is different’ story" ~ Rogoff (2009)

“One of the #China’s favorite mantras is that it values stability above all else"

Brings to mind Nasim Taleb’s Black Swan of Cairo , noting how Egypt is an example of volatility compression that erupts suddenly, while some volatility Italian political regimes portends long term stability ~ Foreign Affairs

China poised to break longest unbroken rule by an authoritarian politcal party, held by the Soviet Union at 69 years ~ FT

What China Learned from the Soviet Union’s Fall – The Diplomat

It sounds like they learned the wrong lessons.

Discussion over Chinese Communist Party Convenes the 18th Party Congress ~ Center for Strategic and International Studies

President Hu warns corruption could be “fatal to the Party, and even cause the collapse of the Party and the fall of the state." #china

One may conclude that #China bulls either disagree with President Hu statement or China bulls believe the Party will seize assets, and imprison friends, family members, and the former officials that gave them their power

China: The Emperor Wears no Clothes ~ historysquared

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