Aggregator • MaxedOutMama • ID=77978 |
Here In Trog World It's Cooty Stew - MaxedOutMama Apr 16, 2012, 2:00 pm
It looks like China is devaluing its currency to help the manufacturers. But those in non-trog-world seem to think this is an epic statement of confidence in the Chinese economy. This makes me want to sell GS.
The thing is, never shall trog and non-trog meet. We can't even communicate because the feeble gutturals of the trog beings cannot even be deciphered by Yale professors, whose ears are attuned to the pure tonalities of Mandarin spoken with a Boston accent.
'The government is confident that China will avoid a hard landing, otherwise why would they introduce the possibility of greater foreign-exchange volatility?' said Stephen Roach, a professor at Yale University and former non-executive chairman for Morgan Stanley in Asia.It's an unanswerable question, isn't it?The Swiss central bank is trying to jack its currency down, the Japanese central bank is trying to jack its currency down, heck, everyone's trying to jack their currencies down. Clearly the motive for the Chinese must be different!
Lice-picking lower life forms such as yours truly are occasionally inspired by such brilliance to send Yale professors proposals for a truly sustainable economy based on extensive protein farming of personal parasites, which may explain the occasional red-state screeds you read. They may take me seriously, and truly believe that the traditional GA way to survive economic downturns is to make cooty stew once the squirrel and possum supply begins to wear thin.
Should you have troggy doubts still, China also eased foreign capital controls considerably. They started early this year, and I thought they were trying to offset the effect of trying to edge out foreign carmakers (who gained market share in the domestic auto market against domestic manufacturers last year). But the last move made me think they are trying to keep the local wealthy from moving their money entirely offshore. But that's just trog-grunting, I suppose.
More troggy grunts: China's heavy truck market seemed to reach peak last year, and so far this year appear to be falling YoY. Kenworth in the US is cutting staffing by 10% at the Chillicothe plant. Now being a Yale professor means that you don't have to pay any attention to recipes for braised Palmetto bug appetizers and truck manufacturing stats, but trogs do, and from a trog perspective this means China needs to export more. Chinese passenger vehicles did better in March, but discounting played a role and I'm afraid the domestic models are losing pace faster than the foreign models. Also they are going to have to get production in line with sales soon. I think they are close on passenger vehicles, but I am not so sure about the trucks.
Inflation has been running so high in China that it is difficult to figure out what retail sales figures really mean, but if you look at unit sales figures for cars and then look at the mix, which is shifting toward luxury/larger/high-end, and then look at this graph, one at least gets a feel for why the profit figures took that drop:
China has an export market for both trucks and cars in some of the emerging economies, and I think China will try to push that this year. Chinese industrial production stats are always challenging to parse, but the striking deceleration in electricity certainly implies that something has changed and the volume-measured increases in product output are not that hot for the first quarter. I come up with about 4-5% residual growth impetus, and they can certainly boost that up with some exports and some domestic pumping.
Anyway, my point is that there is a limit as to how much they can push infrastructure/construction, and so they need to expand major product exports. There are obvious advantages to a lower currency.
(Note - much of the ethylene is probably used to make polyethylene, which is used for plastics.)
