Comment by robinsoncrusue
14 hours ago
The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in sight. All in all, there is a lot of doom and gloom out there. But I don't see a viable alternative.
Sure, Mark Carney gave his little speech in Davos. The same Mark Carney, that led Brookfield while its finance arms operating out of US.
But realistically, how is opening up to China more even considered as the alternative? When has any deal with China worked at a strategic advantage for the other side? Is not the whole reason the so called globalization project failed was because players like China did not play by the same rule or did not even have to play by the same rule? What gives they will when you open up the market more to them? All it takes is for them to take your product, copy it and sell it 20x cheaper and flood the market everywhere else.
> When has any deal with China worked at a strategic advantage for the other side?
Australia did well out of the Australian-China free trade agreement and then won the subsequent (Australian-caused) trade war.
Turns out being able to produce iron ore cheaper than anyone else and having plenty of alternate buyers when China bans imports means the iron ore price just goes up, Australian miners make more money and Chinese manufacturers get annoyed at Chinese trade policies.
Wasn't awesome for Australian lobster fishers though.
> The question is there is no other place for money to go.
Whenever I've heard people speculate on the US bond market losing its footing, the suggestion isn't that "Japan will be the new US" (eg) - it's that investor will spread assets across multiple places (US, Japan, EU, etc) to hedge against risk, rather than just the US.
That's not an answer. Japan and the EU can't handle those flows so again there is no other place to go.
Even if it's hopeless, the best strategy when everything is falling is to bet evenly. Whether or not those countries can "handle it" doesn't matter.
You're not betting in winning, you're betting on minimalizing losses. Huge difference in behavior.
1 reply →
For a "little" speech, it is all people seem to talk about; e.g., it was mentioned few times in the comments above. And, yes, one can be on the board of a public company and still make valid and consequential analyses. Hell, one can be a convicted fraudster and at the same time become the president of a superpower. My point, you could belittle Canada, EU, China etc but it is going to solve the US's intractable problems.
I'm not even sure what you're trying to say with the rest of it but this is nonsense. The ECB policy IS German, and has been for 3 decades. All of germany's economy is organized around the existence of the eurozone with Germany controlling a unified monetary policy.
What is a mess about the Eurozone and reckless about the ECB?
https://robinjbrooks.substack.com/p/the-principal-agent-prob...
Able to summarize what you mean vs just a link?
save people a click:
> The incentive structure at the ECB has become distorted and favors high-debt countries [that underperform or are risky]
> What is a mess about the Eurozone and reckless about the ECB?
Without opening the article someone gave has a link I can name a few...
Not respecting the promises to go down hard on countries not respecting a yearly public deficit of more than 3% of their GDP (France is nearly at 6% since two years and going down the drain).
Having a common currency created by ideologues, not economists, and having that common currency shared between countries that do not have the same fiscal policies.
Having a shitload of ultra indebted countries in the eurozone.
Having one of the country of the eurozone, even though the Euro is one of the youngest currency of the world (only 27 years old or so) who already frigging (partially) defaulted on its public debt.
(not I just read TFA)
Ah yup: the ECB heavily manipulating the various countries' public bond rates.
My bet is that the euro shall be one of the shortest lived currency ever. It was made by ideologues and is only loved by ideologues. Economically it makes zero sense to have a common currency between country that have both different fiscal policies and different levels of public debt.
Now of course the ideologues are going to argue that the EU should have a unique fiscal policy (with of course ultra high taxes for everybody, except EU public servants who pay the lowest tax rates in the entire EU btw) and a common public debt.
Not gonna work, komrade.
We have so many problems. So many savaged construction sites that we knew for decades were important. The problem is not, where all this fiat money could go, there are plenty of places. The problem is, where it can go and make a profit. That was a hint to broaden your perspective.
> Liquidity is still in abundance and no other market can capture that liquidity.
I don't know what that means? Market crashes are changes in speculative value, they don't care about counting literal amounts of currency. Selling US securities doesn't require that the resulting "liquidity" move anywhere else, just that the owner prefers to see a cash balance to a stock certificate or whatever.
Basically this point seems like a big "confused money with value" mistake.
Free market, but not like that (china).