"Analysis: China currency move nails hard landing risk coffin"

(I found this headline difficult to parse, but the article's first paragraph is clearer -- see below.)

[URL]http://news.yahoo.com/analysis-china-currency-move-nails-hard-landing-risk-023928876.html[/URL]

[quote] China's weekend reform of its currency regime nails shut the coffin on the last remains of doubt about whether the world's second biggest economy has successfully steered a course past a hard economic landing.

Investors were questioning whether the worst sequential slowdown in China's economy since the 2008-09 global financial crisis could enter a sixth quarter after data on Friday revealed the weakest three months of annual growth in three years and a run rate below the official 7.5 percent 2012 target.

Shifting the yuan trading rules is about the strongest signal Beijing could give that growth downside has diminished and potential pitfalls are manageable. Few reforms are as replete with risk as tinkering with the currency because faith in its soundness directly correlates to economic stability.

"For everybody who thought China was heading for a hard landing, it's over. This move says they are comfortable with the direction the economy is moving in," Paul Markowski, president of New York-based MES Advisers and a long-time investment adviser to China's monetary authorities, told Reuters.

International investors are certainly in need of something to calm concerns about the health of the global economy after asset markets worldwide were rattled on Friday by a combination of below-par Chinese growth data and renewed fears of contagion risks in the debt-plagued euro zone.

Timing, politics and diplomacy are all in focus after Saturday's milestone step towards turning the yuan into a global currency that doubled the size of its trading band against the dollar to 1 percent.

But the economics of the move, predicted by a Reuters poll four weeks ago, are the most crucial for the 200 million or so jobs in China's vast factory sector that analysts estimate directly depend on foreign trade.

COMFORTABLE CONFIDENCE

Reform says Beijing is comfortable with the yuan's value and that exporters have sufficient strength to cope with the government relaxing its grip. As the financial crisis deepened in 2008, China squeezed tightly on the yuan to shield the economy as international trade ground to a halt.

It implies confidence that rebounding March indicators in the first-quarter GDP data - such as a jump in steel production, vehicle output, machinery and cement production and a recovery in sales of household electronic appliances - suggest that the floor in economic activity has broad foundations.

So does a huge bounce in new bank lending in March - 25 percent ahead of economists' forecasts at 1.01 trillion yuan - that signals monetary easing since the autumn, creating an estimated 800 billion yuan of new credit, is being put to work.

. . .[/quote]

[QUOTE=ewmayer;296472]Quibble: "Persistent" implies continuity, lack of variation - last time I checked Spain's unemployment rate was climbing fast. And the Spanish pols are blabbing about raising taxes, which would only accelerate the economic implosion.[/QUOTE]Re-quibble: to me it implies only that it has existed for a time considered to be significantly long in context and is expected to continue to exist for a significantly long time in the future.

Example: the lack of good sanitation is a persistent condition for much of the world's population. In my view, that statement is true despite both the absolute number of such people and their fraction of the global population varying enormously over the last two centuries. The former has increased greatly, due to rising global population, and the latter falling because of the recognition of the economic and health advantages of good sanitation and the economic growth which has made widespread provision feasible.

Ewmayer, re timing.

Massive intervention has already taken place attempting to stabilize the Spanish economy. It has not been publicized, but do some delving around and you will see that indirect lending to banks to purchase Spanish bonds and other similar measures have been occurring for nearly a year.

I will prognosticate that Spain will be a slow moving train wreck. It will take at least 3 years to reach the point where radical decisions have to be made. Meantime, increasingly heroic measures will be required to stabilize the rest of the Euroconomy.

DarJones

Dar, I think you are being highly optimistic re. the slow-moving-ness of the Spanish train wreck. But we will know soon (or late) enough.

In the US, federal tx returns are normally due every April 15th - this year, with the 15th falling on a Sunday and yesterday being some federal-holiday-or-another, means today is the due date. Which makes this historically-based guest post on ZeroHedge timely:

[url=http://www.zerohedge.com/news/guest-post-all-transactions-be-conducted-presence-tax-collector]Guest Post: "All Transactions To Be Conducted In The Presence Of A Tax Collector"[/url]
[quote]In the terminal collapse of the Roman Empire, there was perhaps no greater burden to the average citizen than the extreme taxes they were forced to pay. The tax 'reforms' of Emperor Diocletian in the 3rd century were so rigid and unwavering that many people were driven to starvation and bankruptcy. The state went so far as to chase around widows and children to collect taxes owed. By the 4th century, the Roman economy and tax structure were so dismal that many farmers abandoned their lands in order to receive public entitlements. At this point, the imperial government was spending the majority of the funds it collected on either the military or public entitlements. For a time, according to historian Joseph Tainter, "those who lived off the treasury were more numerous than those paying into it." Sound familiar? [/quote]
Obama out today bashing "evil oil speculators" while studiously avoiding looking at his own team of currency-debasers while doing so ... In other news, a note to any holders of everyone's favorite Hedge-Fund/HFT "musical bagholder chairs" plaything, AAPL, yesterday and today's bipolar insanity is your signal to plan your exit strategy without delay.

[QUOTE=cheesehead;292943]Since we're in a mystery economic theater here, let's puncture one of the conservatives' favorite voodoo economics mysteries/fantasies:

"The imaginary connection between tax rates and GDP"

[URL]http://news.yahoo.com/blogs/signal/does-28-top-marginal-tax-rate-mean-175706337.html;_ylt=ApGoIY2qHX.JiDN5umgAVzvDeOd_;_ylu=X3oDMTFrdTZucXNsBG1pdANCbG9nIEluZGV4IGJ5IEJsb2cEcG9zAzEzBHNlYwNNZWRpYUJsb2dJbmRleFRlbXA-;_ylg=X3oDMTFvcGs0cnBnBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANibG9nBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3[/URL]

[/QUOTE]Attached is the graph I wanted to include, now that I've remembered that [IMG] is disabled, and attachments are the way to go.

(Note how well "incentivizing the rich" has made the nation's GDP zoom -- NOT!)

More evidence that the Spanish economic [i]Descarrilamiento[/i] is proceeding quite rapidly - Mish summarizes the same Reuters piece I saw in my daily Reuters news roundup:

[url=http://globaleconomicanalysis.blogspot.com/2012/04/hopeless-situation-in-spain-new-wave-of.html]Hopeless Situation in Spain: New Wave of Defaults as Home Prices Crash; Bad Loans Highest Since Oct '94[/url]
[quote]o Non-performing loans rise to 8.2 pct of portfolios
o House prices fall 7.2 pct in Q1
o Defaults to keep rising on back of budget cuts
[/quote]
In a parallel piece, [url=http://www.bloomberg.com/news/2012-04-17/spain-s-surging-bad-loans-cast-new-doubts-on-bank-cleanup-plan.html]Bloomberg reports[/url] that non-performing loans as a proportion of total lending have jumped to over 8 percent, from less than 1 percent in 2007

And in the least surprising headline of the day, we have this non-economic finding from the University of Chicago:

[url=http://links.reuters.com/r/4DNB4/BHBUZ/AMC8J7/LDDA8/ZGJF1G/YT/h?a=http://links.reuters.com/r/4DNB4/BHBUZ/AMC8J7/LDDA8/16F3M5/YT/h]Belief in God grows as mortality nears, survey says[/url]: [i]CHICAGO (Reuters) - Belief in God is highest among older people and increases with age, perhaps due to the growing realization that death is coming closer, University of Chicago researchers said on Wednesday.[/i]

Putting aside for now the question of "someone spent money to 'investigate' this?", I would posit that a generalization with decidedly economic implications is: When things get desperate, belief in magical fixes and assorted delusional thinking tend to rise.

IMF passing roud the begging bowl
 

[url]http://www.bbc.co.uk/news/business-17790831[/url]

See if you can find the elephants not in the room.

[QUOTE=xilman;296941][url]http://www.bbc.co.uk/news/business-17790831[/url]

See if you can find the elephants not in the room.[/QUOTE]

Godzilla took his place.

"Eet ees creeteecal to increase zee firepowair of zee bailout monees available to help keep pretending zee hopelessly insolvent banks and governments are not beyond zee rescuing!"

-- Christine Lagarde, a.k.a. Mrs Pepe Lepew

------------

Belated Friday Humor - at least of the kind not mocking pompous global-finance-o-crats - is the following mock-obituary from Thursday`s Chicago Tribune:

[url=http://www.chicagotribune.com/news/local/ct-talk-huppke-obit-facts-20120419,0,809470.story]Facts, 360 B.C.-A.D. 2012[/url]: [i]In memoriam: After years of health problems, Facts has finally died.[/i]

Former Iceland PM guilty on 1 charge, no jail time
 

[url=http://rt.com/business/news/iceland-debt-banking-crisis-haarde-imf-766/]Former Iceland PM Haarde found guilty of charge related to 2008 crisis[/url]: [i]A special court in Iceland has found former Prime Minister Geir Haarde guilty of one charge related to the nation's 2008 banking crisis. He is the first government leader to face criminal prosecution because of the global financial crisis. The court cleared him of four other charges, saying Haarde will face no punishment, AP reports. Haarde led the government from 2006 to 2009.[/i]

Meanwhile, in the lost continent east of Iceland, despite today`s market and economic-data reality check, self-delusion continues to thrive amongst the 'leadership', as this [url=]batch of newsticker headlines[/url] about a certain top official at the ECB who shall remain unnamed (by us, not by the headlines) shows:

[quote][b]*NOYER SAYS STEPS TO EXIT EURO CRISIS BEGINNING TO BEAR FRUIT

*NOYER: BANK FUNDING, MONEY MARKET CONDITIONS ARE MUCH BETTER

*NOYER: RECENT EXCEPTIONAL STEPS LET BANKS, GOV'TS STRENGTHEN[/b][/quote]

And while we're on the topic of reality checks, here is one for the U.S. - long and sobering but quite worthwhile - very little of which will be mentioned by either of the major-party candidates in the run-up to November's presidential election.

[url=http://www.zerohedge.com/news/guest-post-epic-fail-part-one]Epic Fail, Part 1[/url]

[QUOTE=ewmayer;297121][url=http://rt.com/business/news/iceland-debt-banking-crisis-haarde-imf-766/]Former Iceland PM Haarde found guilty of charge related to 2008 crisis[/url]: [i]A special court in Iceland has found former Prime Minister Geir Haarde guilty of one charge related to the nation's 2008 banking crisis. He is the first government leader to face criminal prosecution because of the global financial crisis. The court cleared him of four other charges, saying Haarde will face no punishment, AP reports. Haarde led the government from 2006 to 2009.[/i]

Meanwhile, in the lost continent east of Iceland, despite today`s market and economic-data reality check, self-delusion continues to thrive amongst the 'leadership', as this [url=]batch of newsticker headlines[/url] about a certain top official at the ECB who shall remain unnamed (by us, not by the headlines) shows:



And while we're on the topic of reality checks, here is one for the U.S. - long and sobering but quite worthwhile - very little of which will be mentioned by either of the major-party candidates in the run-up to November's presidential election.

[url=http://www.zerohedge.com/news/guest-post-epic-fail-part-one]Epic Fail, Part 1[/url][/QUOTE]

BOHICA