The front door is covered with official pronouncements of "the China Dream" and blustery demands of hegemony, but the back door is choked with members of the financial/political Elite fleeing China and taking their wealth with them.
In my bi-weekly missives I usually discuss a topic germane to financial markets. This time around I’m going to throw you a curve ball and discuss the US housing market. We know the mortgage markets and housing itself were very much the locus of excess in the prior cycle and in very good part responsible for the actual economic and financial market downturn.
Most people — certainly most governments and economists — define inflation as a general rise in prices. But this is wrong. Inflation is an increase in the money supply, of which a rising general price level is just one possible result — and not the most common one.
As usual we are hearing many claims regarding market valuation, mostly that stocks are undervalued based upon future earnings projections. We are also seeing a lot of headlines about stocks being in a bubble. Using twelve-month trailing earnings for the S&P 500 Index, we find that stocks are overvalued, but not in a bubble.
The S&P 500 made another milestone this week by closing over 1800 for the first time. The Dow Jones Industrial Average also hit a milestone by closing over 16,000 to end the week at 16,064.80.
China-based Baidu, one on the largest internet companies in the world, has begun integrating Bitcoins into their network. Reports indicate strong Bitcoin interest in China. BTC, the China-based Bitcoin exchange, amounts to at an estimated 200k Bitcoins a day.
When revolutions start, it's not uncommon for almost nobody to notice. It may take years or even decades before historians can look back, point a finger and say "that's where it really began."
For me, one of the most ironic aspects of the Edward Snowden spy scandal is watching the reaction of foreign governments to it.