Jim’s Mailbox

Posted at 9:09 AM (CST) by & filed under Jim's Mailbox.

Hi Jim,

I found this article interesting and thought you might as well. As the Renminbi continues to appreciate as they divest from foreign currency holdings in favour of assets, in particular resource based assets, we are bound to see these consumption levels rise even more. It is the natural cycle of things; China will go from exporting the majority of their production to consuming much of their own production, to one day importing much of their consumption. In my view we have certainly seen a long trend of transition between the first and second phase of this cycle since 2005. The Western World has been on the inverse trend, but the transition is not comfortable, smooth, nor quick.

Kind Regards,
CIGA Dustin

Dear Dustin,

I have commented on the huge purchases of raw materials by China all over the developing world. These have all been dollar deals.

I believe all these purchases are hedges against their holding of US treasury instruments as dollar deals.


Chinese shoppers are thriving
By Jun Zhang and Tian Zhu

With Chinese economic growth slowing, and that of the global economy sluggish, calls for Beijing to boost domestic consumption are increasing.

It is now taken as a matter of fact that the Chinese consume too little and save too much and, as a result, the country has had to rely on investment and exports for the phenomenal growth of the past few decades. Indeed, according to official statistics, consumption makes up only 48 per cent of its gross domestic product. This is much lower not only than the worldwide rate of 80 per cent, but also than China’s own level 20 years ago of about 60 per cent. According to the popular view, its reluctant consumers have contributed to the global imbalance, and Beijing must therefore help to stimulate consumption and make China’s own growth sustainable.

However, the belief that China’s consumption is too low is a myth based on a flawed theory and a superficial reading of official data.

First, it assumes demand drives growth. Demand may determine current or short-term growth when an economy is operating at less than full capacity. But in fact long-term growth depends on capacity to produce – which in turn depends on investment in and accumulation of physical and human capital, and on the speed of technological progress.

Low consumption means high savings levels, which makes high investment possible without heavy borrowing from overseas. Indeed, these are among the most important factors behind China’s rapid growth. From 1990 to 2010, GDP grew at an average of almost 10.5 per cent a year, while consumption grew at 8.6 per cent (both adjusted for inflation) – no laughing matter when the world average was less than 3 per cent. It may sound paradoxical, but China’s relatively low consumption rate is one reason the growth in the rate of its consumption has been so high.



How many of the 14 characteristics of fascism can you find that do not exist in the USA?  I suggest none.

CIGA Gerald

Fourteen Defining Characteristics Of Fascism
By Dr. Lawrence Britt
Source Free Inquiry.co

Dr. Lawrence Britt has examined the fascist regimes of Hitler (Germany), Mussolini (Italy), Franco (Spain), Suharto (Indonesia) and several Latin American regimes. Britt found 14 defining characteristics common to each:

1. Powerful and Continuing Nationalism – Fascist regimes tend to make constant use of patriotic mottos, slogans, symbols, songs, and other paraphernalia. Flags are seen everywhere, as are flag symbols on clothing and in public displays.

2. Disdain for the Recognition of Human Rights – Because of fear of enemies and the need for security, the people in fascist regimes are persuaded that human rights can be ignored in certain cases because of "need." The people tend to look the other way or even approve of torture, summary executions, assassinations, long incarcerations of prisoners, etc.

3. Identification of Enemies/Scapegoats as a Unifying Cause – The people are rallied into a unifying patriotic frenzy over the need to eliminate a perceived common threat or foe: racial , ethnic or religious minorities; liberals; communists; socialists, terrorists, etc.

4. Supremacy of the Military – Even when there are widespread

domestic problems, the military is given a disproportionate amount of government funding, and the domestic agenda is neglected. Soldiers and military service are glamorized.



Dear Jim,

As we all know, Russia is evil – pure evil. Recently a leading French government official, responding to Depardieu’s defection, said she knew of many people she would like to "send to Russia". But the pinnacle of distrust and scathing for Russia is reserved for the UK. Nowhere else, even in American, is Russia so vilified. The BBC, the FT and other publications write endless articles that equate Putin’s Russia with unmitigated corruption and evil. The British public view Russians as depraved, though rich, villains. So why, now, has the BBC decided to humanize the "evil Russia" with this?


The British may be about to embark in the most incredible "let’s kiss and make-up" adventure vis-a-vis Russia in their history. Why? Could they be concerned that the delivery of endless vitriol is no longer in their interests?


Dear Anon,

GB knows that Euroland is headed towards the BRIC nations as part of a strategy towards the ascendancy of the Euro versus the US dollar to the reserve currency of choice versus the dollar, a reserve currency by default. This strategy can now be seen as you review the percentage of fiat currency versus gold, marked to the market that the Euro represents.

The British pound does not want to be a lesser citizen of the new economic power currency.


1.33370 +0.00550 (+0.41%)
2013-01-17 09:38:44, 0 min delay



Follow Currency Flows (The Money)

The renminbi moved from 20th spot in the rankings of the world’s most-used currencies to 14th in August, ahead of the Danish kroner but behind the Russian ruble.

The No. 1 position is held by the euro,

with the U.S. dollar at No. 2.

#3. Jap- Yen

#4. British Pound

#5. Swiss Franc

Canada’s loonie ranks sixth.

Source: more


Rising Food Symptom Of Greater Economic Problem

Soaring food prices are but a symptom of a greater economic problem. Economic deterioration drives revolutions, not rising food prices.

The green circles illustrate when at least the short-term cycle (CRBSPOTC1) falls below one sigma during secular bull phases (chart); deeper corrections will pull the intermediate cycle below one sigma. These corrections within the up trend are buying opportunities.

Chart:  Spot Commodity Prices:  CRB Spot Index (1947 – Present);
16-Raw Industrial Spot Price (1935-1947);
Great Britain Wholesale Price of All Commodities (1885-1935) and Cycle Z Scores (CRBSPOTC1&CRBSPOTC2) 

Headline:  Food prices may be catalyst for 2013 revolutions

LONDON (MarketWatch) — What is the trigger for a revolution? Sometimes it a brutal act of repression. Sometimes it a lost war, or a natural catastrophe, that exposes the failings of a regime.

But more often than not, it is soaring food prices.

The easiest prediction to make for 2013 is that everything we eat will once again rise sharply in price. So where will the revolutions start this year? Keep an eye on Algeria and Greece — and if you want to feel very nervous, Russia and China. And if you are smart, keep your money out of those countries as well.

Source: more