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China Hike Ir's,india To Follow Suit?

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The current levels of IRs compared to real inflation would require rises of a range of between 5 and 10% depending on where you are in the world to bring real rates into meaningfully positive territory. The current and forecast raises are comically symbolic and meant to look serious while keeping real rates in negative territory.

I think we'll need to see serious corporate margin compression and popular unrest for TPTB to feel they have to raise IRs meaningfully. Clearly, we are not there yet.

Edited by _w_

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Looks like a problem for China & India. They may have to pay higher wages, but we're not going to shell out for it. Margin compression, I think they call it.

suck eggs i say

those manufacturing and service jobs will move to africa

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I don't see the problem. Inflation has been rising in China for the last few months. A few months ago it was right on target at 3% yoy. 3% is the Chinese government target. But then two months ago it went up to 4% yoy, and then last month up to 5%.. overheating. So now the Chinese government is responding by raising the reserve requirement and now raising interest rates.

That is the healthy way a central bank should be responding to what is happening on the ground to keep things steady.

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currently there is a huge money flow towrads Ind/CHN..

not sure how long its sustainable..

I wouldnt be suprised if the smart money has started moving out, its noticeable that despite this supposed money flow in, the Indian, Chinese and Hang Seng are diverging against the western indices (the hang seng in particular which has been a leader this whole 18 month global equity rally, its failure to reach new lows in March 09 (it bottomed in Nov 08) whilst western indices were was a strong diverging confirmation that the 07/08 equities downleg was ending in March 09) , their tops remain the early november highs, these are the potential little clues its good to notice when validiting certain market moves.

tick tock

Edited by Tamara De Lempicka

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Looks like a problem for China & India. They may have to pay higher wages, but we're not going to shell out for it. Margin compression, I think they call it.

I don't think it is just based on price any more though. Tbh the British worker is generally considered a overpaid lazy bum. British workers a lot of the time tend to prove this right in a lot of cases too! Remember grand designs with the prefab german house? Let down by the British worker who thought it was ok to be an hour late.... for some reason British society thinks it is ok to be an hour or so late.

Or the way I've seen builders and contractors on their 5th tea break before 10am.

I met an accountant in Winsor a few weeks ago, and he says his firm outsources tax and most accounts. All the do is audit. He came at me sideways and said it costs them about £250 per tax return and £1000+ for accounts jobs. But they'd rather spend money on overseas workers than to spend them on people here.

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I don't see the problem.

Others see a problem because western CBs are not here to control inflation, they are to encourage and ravage the public with uber inflation, the BoE's inflation target is actually 15-45% which is why everybody thinks the CboC is acting irresponsibily.

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currently there is a huge money flow towrads Ind/CHN..

not sure how long its sustainable..

Ah, the myth of hot money inflows causing inflation in China! :)

It's worth bearing in mind that there isn't a single Yuan in circulation that has not been printed by the Chinese central bank.

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Ah, the myth of hot money inflows causing inflation in China! :)

It's worth bearing in mind that there isn't a single Yuan in circulation that has not been printed by the Chinese central bank.

Inflation in bank deposits I think he is referring to.

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Inflation in bank deposits I think he is referring to.

True, but it's all created in China, by the Chinese, and under tight control of the Chinese central bank.

Still, it's more convenient to use foreigners as scapegoats, particularly in a country that has brainwashed it's young into seeing all foreigners as enemies.

Edited by _w_

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I don't think it is just based on price any more though. Tbh the British worker is generally considered a overpaid lazy bum. British workers a lot of the time tend to prove this right in a lot of cases too! Remember grand designs with the prefab german house? Let down by the British worker who thought it was ok to be an hour late.... for some reason British society thinks it is ok to be an hour or so late.

Or the way I've seen builders and contractors on their 5th tea break before 10am.

I met an accountant in Winsor a few weeks ago, and he says his firm outsources tax and most accounts. All the do is audit. He came at me sideways and said it costs them about £250 per tax return and £1000+ for accounts jobs. But they'd rather spend money on overseas workers than to spend them on people here.

Rather misses the point.

The laziness or otherwise of British workers is a tiny factor in the global economy. This is abour rising costs compressing proft margins particularly if may of ttose profits are generated overseas in economies where wages are static and credit is unavailable even at rock bottom rates. Schiff thinks prices wll stay high due to inventories being squeezed but in the end this means less turnover of goods which is inevitably gping to flow back to producing countries

Edited by realcrookswearsuits

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I don't think it is just based on price any more though. Tbh the British worker is generally considered a overpaid lazy bum. British workers a lot of the time tend to prove this right in a lot of cases too! Remember grand designs with the prefab german house? Let down by the British worker who thought it was ok to be an hour late.... for some reason British society thinks it is ok to be an hour or so late.

Or the way I've seen builders and contractors on their 5th tea break before 10am.

Getting a bit carried away aren't you Ken.

Not my experience at all of people who do real work, as opposed to faffing about indoors.

And if you're on price work, and few are not, why shouldn't you take as many breaks as you damned well like?

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So,China/India begin hiking,pushing up cost of cheap tat.

How do interest rate rises push up costs? Surely the interest rate rises are due to the desire to prevent appreciation of the currency, which is what will push up prices

Hot money leaves western currencies to buy rupees/yuan,or failing that due to capital controls

As you say hot money cannot go into the rupee/yuan due to capital controls

,via commodities,

Sorry, why would the money go to commodities? If interest rates push up costs, then that would lower demand, thus lowering demand (and therefore cost) of commodities as commodity demand is being driven by China for their raw materials for their tat.

thereby hitting said Western nations with a double bitch slap of falling currency/higher commodities.Will said Western govts be able to continue with ZIRP/going japanese, in a world of rising rates? methinks no.

I don't see this, as I believe a faltering China (don't know about India) will actually be neutral or beneficial to the world economy as a whole. Economic growth is created by demand, which China is not supplying. Demand is still created largely by developed countries. China faltering will enable commodity prices to fall over the next few years, easing inflationary pressures.

I must be missing something.

I'd be interested to read your comments on my comments.

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They'll reach a point when they destroy demand which will likely result in rapid commodity price collapse again with the obvious impact on Aus and Canada (double ouch with their own tightening and housing bubbles).

Commodity prices (probably excepting food) can only collapse when this happens, unless the US/West have somehow managed to stimulate growth to compensate, which seems highly unlikely.

Perhaps Schiff missed oil $147 to $35 :rolleyes:

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I think I am right in saying that most of the commodity price rises has been down to demand from China for commodities... but if the now over-heating Chinese exonomy slows down or 'pops' then demand for those commodities will disappear overnight... and their price will subsequently collapse.... unless in the meantime the US/EU is able to create massive demand of its own... which it is not capable of doing yet.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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