Asian Decoupling is here and I told you So

[gram]

right,

most of your post seems to be right, apart from the first and last bits.
As for starting from a low base, well Eastern and Central Europe also started from quite a low base but they're having problems now, which suggests that something is wrong with the models that they're following. Most of them have lower GDP per capitas than Malaysia.
I doubt anyone thinks the West is going completely under, it's just going to grow much more slowly with a few crises happening now and then.

[Vulcanl]

why bother,

Indeed....why bother to let the facts get in the way of your own blinkered viewpoint? 

Here is the smoking gun as far as Asian decoupling goes:

China's GDP was + 8.7% in 2009, whilst USA GDP was - 2.4%

Verify this on your own here:

http://www.cnn.com/2010/BUSINESS/01/20/china.GDP.annual/index.html

http://www.marketwatch.com/story/story/print?guid=D6AA169A-7C55-4094-8DDB-70FE7015B9ED


Other Asian EMs saw growth in their GDPs as well. 

Asia can stand on its own without Western demand, full stop. 

You may not like it, but it's the truth and we see evidence of this on a daily basis out here.

I am not the one wearing blinkers here.

[Vulcanl]

Unless and until people in America start working again do not expect demand from the USA to drive World growth.  This is THE number that matters....no other data points even come close

March 31 (Bloomberg) -- Companies in the U.S. unexpectedly cut payrolls in March, according to data from a private report based on payrolls.

The 23,000 decline was the smallest in two years and followed a revised 24,000 drop the prior month, data from ADP Employer Services showed today. Over the previous six months, ADP’s initial figures have overstated the Labor Department’s first estimate of private payroll losses by as little as 2,000 in February to as much as 151,000 in November.

Companies are still hesitant to add workers until they see sustained sales gains and are convinced the economic recovery has taken hold. Economists surveyed by Bloomberg News anticipate the government’s report April 2 will show payrolls increased by 184,000, in part due to temporary hiring by the federal government to conduct the 2010 census and because of better weather compared with February.

“The labor market trend is still up,” said David Milleker, chief economist at Union Investment GmbH in Frankfurt, who was the only economist in a Bloomberg News survey to forecast the ADP figures would show a loss of jobs. “Today’s numbers might have disappointed relative to expectations but indicate not in the least a change in trend. It takes some more time for private sector job creation to return to normal.”

Weather Effects

A March payroll gain in line with the median estimate is “a reasonable kind of number” because ADP’s figures aren’t influenced by weather and don’t include government payrolls which will reflect hiring on temporary workers to conduct the census, Prakken said. ADP includes only private employment and doesn’t take into account hiring by government agencies.

Stock-index futures dropped after the report. The contract on the Standard & Poor’s 500 Index fell 0.4 percent to 1,164.3 at 9:30 a.m. in New York.

“The economic recovery has not been long enough or strong enough along the way yet to produce the kind of rapid employment that people are hoping for,” Joel Prakken, chairman of Macroeconomic Advisers LLC in St. Louis, which produces the figures with ADP, said in a conference call with reporters after the report.

The ADP figures were forecast to show a gain of 40,000 jobs, according to the median estimate of 35 economists surveyed by Bloomberg. Projections ranged from a loss of 20,000 to a 100,000 gain.

March Rebound

Economists including Nigel Gault of IHS Global Insight in Lexington, Massachusetts, say severe winter storms in parts of the country last month likely depressed Labor Department payroll figures, while better weather in March will probably boost to this month’s numbers. Weather has less influence on the ADP report, economists say.

“Today’s figure does not incorporate a weather-related rebound that could be present in this month’s” report from the Labor Department, Prakken said in a statement. “It is reasonable to expect” that the government’s report will be “stronger” than the ADP estimate, he said.

The Labor Department’s report in two days is forecast to show the unemployment rate held at 9.7 percent in March for a third consecutive month, according to the Bloomberg survey median. The jobless rate has dropped since reaching a 26-year high of 10.1 percent in October.

The economy has lost 8.4 million jobs since the recession began in December 2007, the most of any downturn in the post- World War II era. In February, U.S. payrolls shrank by 36,000.

Goods Producers

Today’s ADP report showed a decrease of 51,000 workers in goods-producing industries including manufacturers and construction companies. Service providers added 28,000 workers.

Employment in construction fell by 43,000, while factories lost 9,000 jobs, ADP said.

Companies employing more than 499 workers shrank their workforces by 7,000 jobs. Medium-sized businesses, with 50 to 499 employees, cut 4,000 jobs and small companies decreased payrolls by 12,000, ADP said.

Caterpillar Inc., the world’s largest maker of construction equipment, said last week that it plans to hire 500 workers this year to expand a generator plant in Newberry, South Carolina. “The expansion is likely to take three to four years and could vary based on demand and other factors,” Jim Dugan, a Caterpillar spokesman, said March 17 in an e-mail.

Other companies are still trimming payrolls. J.M. Smucker Co., the maker of jams, Folgers coffee and Jif peanut butter, said last week it is reducing the number of North American manufacturing facilities to 18 from 22. The cuts are estimated to result in a reduction of 700 full-time positions, or 15 percent of the Orrville, Ohio-based company’s workforce.

The ADP report is based on data from about 360,000 businesses with more than 22 million workers on payrolls. ADP began keeping records in January 2001 and started publishing its numbers in 2006.

[Dr. Phil]

why bother,

Indeed....why bother to let the facts get in the way of your own blinkered viewpoint? 

Here is the smoking gun as far as Asian decoupling goes:

China's GDP was + 8.7% in 2009, whilst USA GDP was - 2.4%

Verify this on your own here:

http://www.cnn.com/2010/BUSINESS/01/20/china.GDP.annual/index.html

http://www.marketwatch.com/story/story/print?guid=D6AA169A-7C55-4094-8DDB-70FE7015B9ED


Other Asian EMs saw growth in their GDPs as well. 

Asia can stand on its own without Western demand, full stop. 

You may not like it, but it's the truth and we see evidence of this on a daily basis out here.

I am not the one wearing blinkers here.

China's growth has resulted in wealth creation, improved infrastructure and greatly improved quality of life for many citizens to the extent it may be self-sufficient for the first time since .........abandoning communism? Has it? Or perhaps embracing capitalism? Well, at least we can say China is "playing the game". Or can we? Well we can say this when it allows its currency to be determined by the free market..... but the market is not and is likely never to be totally free. 

Well we can perhaps agree China's wealth is deserved and is accrued due to the open markets and access to US and EU consumers (at the expense of US and EU jobs) and for this reason China can and will never decouple. This is called international trade!

If China were to "decouple" it would be tantamount to isolationism, which is not new to China and has blighted the population for generations.

[PPoster]

Thank you for a more balanced view on the nonense of decoupling of Asia

[Vulcanl]

Doc,

You know full well that decoupling simply means that Asia no longer relies on Western demand for its exports to feed its growth.  You also know that I have stated this many times already. 

The numbers don't lie. 

[communism]

China's growth has resulted in wealth creation, improved infrastructure and greatly improved quality of life for many citizens to the extent it may be self-sufficient for the first time since .........abandoning communism? Has it? Or perhaps embracing capitalism? Well, at least we can say China is "playing the game". Or can we? Well we can say this when it allows its currency to be determined by the free market..... but the market is not and is likely never to be totally free. 

Well we can perhaps agree China's wealth is deserved and is accrued due to the open markets and access to US and EU consumers (at the expense of US and EU jobs) and for this reason China can and will never decouple. This is called international trade!

If China were to "decouple" it would be tantamount to isolationism, which is not new to China and has blighted the population for generations.

What most people don't realize is communism was a grand experiment in China. It truly was a Western idea adopted by radicals because it in and of itself is radical and requires radicalism.

China before communism was at civil war. Most people stop looking in their history books just after learning about the expansion of the British Empire and they look at China in that light.

But what about China before then? China has long had an emperical system in place...and at times they allowed quite a bit of 'trade' and 'commerce' and some would even argue 'capitalism' on an individual basis while still being under the emperial system.

Modern Chinese scholars have looked back into their history books and have found 'golden times' and they are trying to emulate them in this century.

China never has and never will have the intention to become capitalist in the western sense of the word. Just by a sheer nature of it it would require the demise of their current government, which is in all realities yet another emperical ruling party in a long list of emperical ruling parties (try like a few thousand years worth).

"capitalism" is a western word created actually by communists. It came to popularity as a term and a standard as a term mainly during the cold war...

Although prior to that capitalism was most definitely practiced, particularly in the USA. Although prior to the cold war it wasnt nessesarily called 'capitalism'.

What China is doing is NOT nessesarily emulating the west, but rather returning to a previous 'golden era' in China's own history.

Back then and right now neither one is or ever has been purely 'capitalist' because capitalism requires ownership... and the fact that china has been feudal for several thousand years makes it 'quasi capitalist' just by the sheer nature of it.

The long story short if it boils down to this: if it harms the government of china first and foremost in any way shape form or fashion, it ain't gonna be happening irrespective of the real underlying economics of it.

In China the good of the government comes FIRST above any and all citizens. Whereas at least in theory (pre obama) it should work exactly opposite in the west.

China has been a quasi capitalistic society under the hat of a feudal emperial system of government for basically ever. And today ain't no different.

[P.O.D.]

PP, yes I read the book, its called "Animal Farm". 
We don't necessarily have to put a name to it.
Freedom of choice....to barter, buy, sell, trade... to elect speakers, village chiefs, local councillors, state members of a parliament....
I wonder how so few can control so many.

[Vulcanl]

Hah HAH!!!    - Vulcan wins again!!!

The New York Times
April 8, 2010
China Said Close to Announcing Currency Revision
By KEITH BRADSHER
HONG KONG — The Chinese government is very close to announcing a revision of its currency policy in the coming days that will allow greater variation in the value of its currency combined with a small but immediate jump in its value against the dollar, people with knowledge of the consensus emerging in Beijing said on Thursday.

While the possibility remains of a last-minute glitch that could delay an announcement, China’s central bank appears to have prevailed with its arguments within the Chinese leadership for a stronger but more flexible currency, these people said. They insisted on anonymity because of the sensitivity of the issue in Beijing.

The model for the upcoming shift in currency policy is China’s move in 2005, when the leadership allowed the renminbi to jump 2 percent overnight against the dollar and then trade in a wider daily range, but with a trend toward further strengthening against the dollar. For the upcoming announcement, however, China is likely to emphasize that the value of the renminbi can fall as well as rise on any given day, so as to discourage a flood of speculative investment into China betting on rapid further appreciation, they said.

The emerging consensus within the Chinese leadership comes as Treasury Secretary Timothy F. Geithner held meetings on Thursday with senior Hong Kong officials and prepared to fly on Thursday evening to Beijing for a meeting with Vice Premier Wang Qishan.

China’s commerce ministry, which is very close to the country’s exporters, has strenuously and publicly opposed a rise in the value of China’s currency over the past month. But it appears to have lost the struggle in Beijing as other interest groups have argued that China is too dependent on the dollar, that a more flexible currency would make it easier to manage the Chinese economy and that China is becoming increasingly isolated on the world stage because of its steadfast opposition to any appreciation of the renminbi since July, 2008.

An official for the central bank had no immediate comment.

Xia Bin, a member of the monetary policy committee of the Chinese central bank, hinted at the new policy for the currency, known as the yuan or renminbi, in remarks to reporters in Shanghai on Thursday.

“Whether to let the yuan slowly appreciate or let it rise to a tolerable range after careful calculation, I think it is better to have that quick, prompt appreciation,” he said according to Reuters.

Mr. Xia later added that, “At a certain point, when necessary, it is better to have a quick, prompt appreciation in a bid to fend off speculative capital.”

Economists said that the emerging consensus in China reflected a broad assessment by Chinese leaders that inaction on the currency could be as dangerous as holding on to the current value of the currency.

“The Chinese feel the whole sentiment is against them, so they feel they need to show they are globally engaged,” said Frank-Jürgen Richter, the president of Horasis, a Geneva-based company specializing in economic issues in emerging markets.

Even a small increase in the value of the renminbi is likely to be a political bonus for the Obama administration, which has been under heavy pressure from Congressional Democrats to confront China more directly over currency policy.

“Every administration has thought it could get something done by talking to China,” Senator Charles E. Schumer, Democrat of New York, said in a statement on Wednesday. “But years of experience have shown that the Chinese will not be moved by words; they only respond to tough action.”

In a reversal of the usual interaction between Washington and Beijing, however, the Obama administration has been virtually silent for the past month as senior Chinese officials have feuded in public over what to do. The commerce ministry opposed a move to a stronger currency and the central bank favored one.

Premier Wen Jiabao ended up saying at the National People’s Congress that the renminbi would be “basically stable” — a formulation that was widely interpreted at the time as blocking appreciation of the renminbi, but with hindsight now seems to have set the stage for a small rise in its value while reassuring exporters that no large move would occur.

[Vulcanl]

...and for the sake of balance:

Bloomberg.com

China on ‘Treadmill to Hell’ Amid Bubble, Chanos Says (Update1)

Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Shiyin Chen


April 8 (Bloomberg) -- China’s property market is a bubble that may burst by as early as this year, according to hedge fund manager James Chanos.

The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction, said Chanos. The bubble may begin to “run its course” in late-2010 or 2011, he said in an interview on “The Charlie Rose Show” that will air on PBS and Bloomberg TV.

China is “on a treadmill to hell,” said Chanos, who said in January the nation is Dubai times a thousand. “They can’t afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing.”

Property prices in China rose at the fastest pace in almost two years in February even after officials this year re-imposed a tax on homes sold within five years of their purchase to curb speculation and ordered banks to set aside more funds as reserves to cool lending. The boom in China’s real estate has fueled concern that China may face a collapse seen in Dubai that has hurt the ability of some of its companies to repay debt.

Since his January prediction, Chanos, the founder of Kynikos Associates Ltd, has been joined by Gloom, Doom & Boom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s property market.

Chinese state and local governments are among the most leveraged to property-related borrowings and the nation will “ultimately” have to nationalize a lot of the bad loans that will arise from the end of the bubble, Chanos said.

China’s Reserves

China’s foreign currency reserves will be “one asset” that can be used to fund a cleanup of the banking system, he said. The country has accumulated a record $2.4 trillion of reserves, and $889 billion of U.S. government debt, partly a consequence of its exchange-rate policy.

Chanos was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp. The investor said he is short-selling Chinese developers as well as companies supplying building-related materials to the country, without identifying any stocks.

In a short sale, investors bet on declines in securities by borrowing stock to sell on the expectation it can be purchased at a lower price before handing it back.

[err what]

How is yuan reval a vulcan victory, you really are a tosser.

It is a Geithner victory you idiot. Good to see China so independent they do what the us tells them.

[Vulcanl]

"...How is yuan reval a vulcan victory...."

Because I said this would happen way back in Q4 2008 - to much ridicule and insult here, not unlike your post

[Moron]

you may recall that China WAS revaluing its currency during most of 2005-2008..the crisis just slowed the process..grat call

[Vulcanl]

Moron,

"...the crisis just slowed the process...."

Sounds like we are in full agreement, then! 

Where were you 18 months ago?!?!?  I really could have used your help in arguing the decoupling case!

[huh v]

Since when does revaluation equal decoupling?

It is like trying to say temperature equals global warming.

Both temp change and revaluation of currenclies have been going on for centuries. They are neither decoupling nor global warming