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薄被双规，周也不妙，BD进京！有大动作，——军车如林，长安街不断管制。每个路口还有多名便衣，有的路口还拉了铁栅栏
Bo has been detained and interrogated, is also not good, the BD to Beijing! Big movements - military vehicles, such as Lin, Chang An Avenue, continue to control. Each intersection there are more than plain-clothes, and some intersection pull the iron fenceScreen shot in case it is deleted. Reporters have also "tweeted" the same story, but they used Bo Xilai's full name, so their posts were deleted.
Major leftist websites Utopia, at wyzxsx.com, Redchinacn.com, Maoflag.net and others have been inaccessible for several days. They were apparently taken offline after Wen criticised conservatives last week.It may shock outside observers to see the left being censored, but such is the new China. Mao is history and this leadership transition may mark the boldest step forward since the late 1970s, and at least the early 1990s in terms of economic reform.
These sites had been rallying behind Bo and his so-called Chongqing model of development – a combination of equal growth, conservative ideological control and a ruthless crackdown on organised crime with little regard to due process.
Political science professor Mao Shoulong of Renmin University said the targeting of leftist academics was borne out of Beijing's need for ''a unified ideology'' ahead of the 18th party congress in autumn. ''It's also a way of showing support for the new Chongqing leadership [and avoiding] any further instability there,'' he said.
China cannot delay tough economic reforms, Vice-Premier Li Keqiang said yesterday.Click the Li Keqiang tag to see previous articles. He has been pushing for major tax reform and policies aimed at creating a large middle class.
His remarks underscored the top leadership's push for market-based change after the sacking last week of Chongqing party boss Bo Xilai , who pushed for a bigger state role in the economy.
"China has reached a crucial period in changing its economic model and [change] cannot be delayed. Reforms have entered a tough stage," Li said, echoing comments made by Wen last week.Other liberals are also looking to take on new leadership roles in the coming year. One of those was Bo Xilai's biggest critic, Guangdong party secretary Wang Yang. He is briefly profiled along with other rising leaders in the SCMP article, Glimpse of those waiting in the wings.
"We will make policies more targeted, flexible and forward-looking to maintain relatively fast economic growth and keep price levels basically stable," Li said in a speech at an economic policy conference attended by top Chinese officials, the head of the International Monetary Fund and dozens of foreign business leaders.
He said Beijing would "deepen reforms on taxes, the financial sector, prices and income distribution and seek breakthroughs in key areas to let market forces play a bigger role in resource allocation".
Wang is also a media icon for the new generation of leaders. His liberal and transparent approach in quelling social unrest such as village land disputes or factory strikes is a sharp contrast to conservative officials, who tend to react to unrest with violence or suppression.The coming years will be critical for Chinese development. Besides dealing with the bad debts in the banking system, negative social mood and an economic model well past its expiration date, the Chinese also must contend with demographic changes. In 2011, Nicolas Eberstadt covered the demographic situation in China in The demographic risks to China’s long-term economic outlook
Wang has stepped up his push for a smarter, leaner form of government in what is being seen as an attempt to bolster his support among the liberal camp.
"We must hasten the development of small government and a great society," Wang told a provincial social development meeting.
The industry's tale of woe has been punctuated by financial reports from companies such as publicly listed Guangzhou Iron and Steel Enterprises Group, which said it lost 689 million yuan last year and nearly 98 million yuan in 2010.Steelmakers are responding by branching out of the steel industry:
Even the state-owned sector is struggling to make money. The country's largest steelworks Baosteel Group Corp., for example, said 2011 profits slid 21 percent year-on-year to 18.7 billion yuan.
And Shagang Group, a private steelmaker in Jiangsu Province, said last year's revenues fell 30 percent from 2010 to 207 billion yuan.
"No matter how we control costs, we can't stop the profit margin from declining," a Shagang manager told Caixin. "We've adjusted the product mix, expanded new product development and market expansion.
"Sales revenues increased, but profits slid anyway," he said. "This points to a problem: The entire industry has reached an operational state marked by high production capacity, high costs, and low economic benefit."
Large and medium-sized steel companies owned by the state have a hard time suspending or reducing production even when they're not making money because shutting down blast furnaces is costly and they are obligated to maintain employment levels, Liu said.Or pig farming. Thanks to cheap capital, state owned steel makers can venture into other business areas, but what about private firms? Lucky for the listed firms, the stock market in China is not fully developed yet, otherwise their stocks would be hammered after they announced business ventures with no relation to their core business or expertise. Finally, if overcapacity in steel is a problem, what are the odds that they will create overcapacity in the sectors they enter? The economically healthy course is for weak firms to enter the steel market, not to have weak firms expand into natural gas, real estate and pig farming.
"Money-losing companies drag down average profit margins, and steel prices are pushed down when more products from money-losing companies are put to market, making it difficult for industry profits to rise," he said.
Some have opted to expand into energy ventures. On February 22, for example, Wuhan Iron and Steel Group (Wugang) in Hubei Province and China Resources Steel Trade Co. Ltd. formed a 50-50 joint venture natural gas business.
"The gas company will become a new profit point for the company," a Wugang executive said. "We initially expect annual profit contributions of around 700 million yuan."
New figures reveal the true cost of the country's 'investor emigration'It started as wealthy Chinese wanting to get a foreign passport, but now it's being dubbed "investor emigration."
The scale of the exodus of wealth from China caused by investor immigration is much larger than previous estimated, according to China Daily's interviews with emigration agents and experts.
Last month, Legal Evening News, a Beijing metropolis daily, said 10 billion yuan ($1.57 billion) has found its way abroad annually since 2009.
Adding in the money invested to secure permanent residency, which China Daily estimates to be 21.49 billion yuan, and the estimation that the three countries account for 80 percent of the emigrant population, the total wealth exodus could reach at least 39.75 billion yuan a year.￥40 billion is $6 billion and change at current exchange rates. That's not a huge amount of capital in the scheme of things, but it's also not small. This number needs to be considered in light of prevailing conditions: China remains a popular investment destination, while the exodus from China is slow and steady. What happens to the numbers if China's economy weakens significantly and the wealthy worry than the renminbi will rapidly depreciate?
"We are going to protect the constitution, which is our security for the future," Mr. Orban said Thursday, to applause. He said Hungary doesn't need the "unsolicited assistance of foreigners wanting to guide our hands."In previous posts I've covered the radical steps taken by the Hungarian government since it has turned sharply right. There are some undemocratic elements to the government, but at this point, one cannot say the EU has any grounds to accuse the nation of being undemocratic. With puppet governments installed in Greece and Italy and anti-democratic policies standard fare, where democracy is always derisively described as "populism," it is hard sometimes to see where the extremism starts in Hungary.
Mr. Orban's speech offered no detailed, direct comments on the points of contention between Budapest and Brussels. But he did allude to central bank independence, which the EU and IMF have said must be insured before they will start talks on a precautionary loan Hungary wants.
"An independent national bank is not one that is independent from its nation," Mr. Orban said. "An independent national bank is one which protects the national economy from foreign interests."
His exit greatly boosts the prospects of his perceived arch rival, Guangdong party chief Wang Yang , and Vice-Premier Zhang Dejiang , who replaced Bo while retaining his current position.Bo Xilai was ambitious as well, as I discussed in previous posts. Furthermore, he was not popular with citizens who feared a turning back of the clock in China, exactly the area criticized by Wen Jiabao when he discusses the Cultural Revolution in his comments to the press. On that score, there's already a big winner from Bo Xilai's exit: Chongqing television. Inquiring minds are reading 重庆卫视一年来首次出现商业广告 (Chongqing Satellite TV broadcasts first commercial in over a year). Below is the BBC's summary.
Dr Kerry Brown, a senior fellow with the London-based Chatham House, said: "Wang Yang has come out of this a real winner." However, analysts say that Bo, who comes from a privileged political family, may not fall further and may still keep his position in the party's 25-member Politburo until the 18th party congress.
Bo's downfall also spelled the end to the once-hyped "Chongqing model" and signalled a major setback for the conservative forces within the party, for whom Bo was regarded as a poster boy, according to analysts. Two major leftist websites on the mainland were apparently blocked yesterday following Bo's removal.
...o has earned notoriety for his crusade against organised crime. But his programme was widely criticised by intellectuals for allegedly riding roughshod over the rule of law. His controversial red-song-singing campaign and his ultra-orthodox championing of hardcore socialist ideology, such as the pursuit of common prosperity, also drew critics.
Guangzhou's 21st Century Business Herald reports that local broadcaster Chongqing Satellite Television has transmitted its first commercial in a year right after the evening news bulletin that reported Mr Bo's sacking.The original Chinese article says the station derived 45% of its revenue from commercials, average worker salaries fell 10% during the ban and job postings declined 40%. The station was supported with government subsidies.
The channel was re-branded by the government as a "red channel" one year ago to promote ideologies originating from the Chinese communist revolution, the paper says, with commercials cancelled and leftist "red song" shows being added to the broadcasts.
Earlier today, we suggested that in the aftermath of the Greg "Muppets" Smith NYT OpEd, contrary to assumptions by Jim Cramer, a bevy of potential whistleblowers would step up to tell their tale of fraud and corruption across all walks of life - from Wall Street to, far more importantly, Washington, consequences be damned. This was paralleled by an alleged JPM whisteblower describing to the CFTC the firm's supposedly illegal activities in the precious metals space, which while we initially dismissed, we now admit there may be more to the story (stay tuned), even though we still have our doubts. What we are 100% certain of, however, is that yet another whistleblower has stepped up, this time one already known to the general public, and one that Zero Hedge covered just over a month ago: we refer to the case of former CBO worker, Lan T. Pham, who, as the WSJ described in early February, "alleges she was terminated [by the CBO] after 2½ months for sharing pessimistic outlooks for the banking and housing sectors in 2010" and who "alleges supervisors stifled opinions that contradicted economic fixes endorsed by some on Wall Street, including research from a Morgan Stanley economist who served as a CBO adviser. As part of the review, Sen. Grassley's staff is examining whether Wall Street firms or others exert influence that compromises the office's independence."In alluded to post, ZeroHedge had this to say about whistleblowers, see As Whistleblowing Becomes The Most Profitable Financial 'Industry', Many More 'Greg Smiths' Are Coming
Minutes ago on CNBC, Jim Cramer announced that Greg Smith will never get a job on Wall Street again as "one never goes to the press. Ever." Naturally, the assumption is that the secrets of Wall Street's dirty clothing are supposed to stay inside the family, or else one may wake up with a horsehead in their bed. There is one small problem with that. Now that compensations on Wall Street have plunged, and terminations are set for the biggest spike since the Lehman collapse, the opportunity cost to defect from the club has also collapsed. And if anything, Greg Smith's NYT OpEd has shown that it is not only ok to go to the press, but is in fact cool. So what happens next? Well, as the following Reuters article reports, 'whistleblowing' over corrupt and criminal practices on Wall Street is suddenly becoming the next growth industry.It's not just Wall Street and the U.S. government that are deluged with whistleblowers, Google has them too, see 'Google is now just an ad company': Departing exec's Goldman Sachs-style rant about how search giant is now obsessed with harvesting people's private information
Whittaker says that CEO Larry Page, who took over the company from Eric Schmidt, had a focus on 'beating' Facebook in advertising - which led the company to shift its focus from established products such as Google Mail onto its controversial social network Google Plus and other 'social' products built for advertising.Multiple factors are in play as social mood declines. At the most basic level, people are unhappy. This makes them more likely to become angry at policies they disagree with, whether or not they talk about them. Negative social mood leads to a weak economy, which means companies cannot deliver as much pay and bonuses to workers and in the worst cases, they fire workers Both situations reduce the cost of speaking out. Finally, society is more welcoming of whistleblowers because they want to see governments, companies and people fall. The mood is negative and dirt sells much more quickly than during rising and positive social mood. So in a case such as Google, where the complaint is a change in corporate culture and focus, during rising social mood popular opinion may turn on the whistelblower and congratulate Google for being more profitable. Today, although there's no alleged wrongdoing, concerns over privacy and government investigations into Google raise the stakes that this type of rant could metastasize into something more.
'Google could still put ads in front of more people than Facebook, but Facebook knows so much more about those people. Google took it personally. Larry Page himself assumed command to right this wrong,' says Whittaker.
The American Federal Trade Commission expanded its probe into Google to look at Google's Plus network earlier this year, as part of an investigation into anti-competitive practices.
'The old Google made a fortune on ads because they had good content. It was like TV used to be: make the best show and you get the most ad revenue from commercials. The new Google seems more focused on the commercials themselves,' says Whittaker.
Around 200 troops who had gathered in a tent at Camp Leatherneck were told "something had come to light" and asked abruptly to file outside and lay down their automatic rifles and 9mm pistols. "Somebody got itchy, that's all I've got to say. Somebody got itchy – we just adjust," said the sergeant who was told to clear the hall of weapons.
Major General Mark Gurganus later said he gave the order because Afghan troops attending the talk were unarmed and he wanted the policy to be consistent for all. "You've got one of the most important people in the world in the room," he told the New York Times, insisting that the decision was unrelated to Sunday's killings. "This is not a big deal."
However, US troops often remain armed even when their Afghan colleagues have been asked to lay down their weapons and the incident is believed to be the first time they were stripped of guns during an address by their own secretary of defence.
The Transformers movies celebrate American imperial muscle. As teenagers grow more diverse, their longings for order have grown more militaristic, more authoritarian. The attitude of today’s youth toward 1960s liberals is more or less: “Your revolution is over, Mr. Lebowski. Condolences. The bums lost.” They are impressed instead by extremely well-organized institutions such as SEAL Team Six and Michael Bay movie sets.
Audacious Epigone decided to test that hypothesis by looking at whites (male and female) age 18-29 over time in the General Social Survey. Here's what he came up with:
The following table shows the percentages of whites (as previously defined) aged 18-29 who expressed "a great deal of confidence" in the US military, again by half decade:
Period Confident Late 70s 35.3% Early 80s 29.1% Late 80s 37.6% Early 90s 50.8% Late 90s 42.9% Early 00s 54.6% Late 00s 57.0%
So, the low point in the post-Vietnam era was in the early 1980s, perhaps in reaction to the failure of the Iranian hostage rescue attempt in 1980. Then there was a peak following the successful Kuwait War of early 1991, then a drift downward. Not surprisingly, after 9/11, there was a boost. But, then, no drift downward in the Late 00s, but instead a new peak. So, that might be evidence for a long-term trend as I hypothesized rather than just reaction to events.
The incidence of HIV/Aids among intravenous drug users in central Athens soared by 1,250% in the first 10 months of 2011 compared with the same period the previous year, according to the head of Médecins sans Frontières Greece, while malaria is becoming endemic in the south for the first time since the rule of the colonels.The article blames hospital budget cuts, which may be a factor aiding in the large jump in cases.
"We are also seeing transmission between mother and child for the first time in Greece," she said. "This is something we are used to seeing in sub-Saharan Africa, not Europe. There has also been a sharp increase in cases of tuberculosis in the immigrant population, cases of Nile fever – leading to 35 deaths in 2010 – and the reappearance of endemic malaria in several parts of Greece, notably the south."This is a text book case of socionomic theory being proven correct.
According to Papadopoulos, such sharp increases in communicable diseases are indicative of a system nearing breakdown. "The simple fact of the reappearance of malaria, with 100-odd cases in southern Greece last year and 20 to 30 more elsewhere, shows barriers to healthcare access have risen," she said. "Malaria is treatable, it shouldn't spread if the system is working."
The increase in the yuan has been slow, steady and managed, lulling many investors into a false sense of security. Outside of the vocal China bear crowd, which tends to overlap heavily with deflationist and/or followers of the Austrian school, the overwhelming consensus assumes yuan appreciation.Being a bear on Chinese currency appreciation was a lonely position for a long-time. I do not believe there were many bears actually shorting the yuan, with government directed appreciation behind it, but from a trading perspective, an 8% drop in the yuan would erase all of the gains since the yuan started appreciating again in 2010. I expect that is well within the range of possibilities because as I also wrote,
I don't expect yuan depreciation will be slight because it will happen when hot money flows out of the renminbi and economic indicators, most importantly the trade surplus, reverse. It seems like every time there is a bubble, there are people explaining how it will be limited, the impact will be concentrated in housing/stocks/Greece and so on, and this is almost always wrong.When major economic trends start reversing, it doesn't necessarily lead to volatility, but when central banks are printing trillions of dollars, those trends form the foundation of many economic and financial models, and most people assume those trends will continue, you have the recipe for a violent readjustment.
The yuan will be under increasing downward pressure in 2012, and the increase in yuan holdings for foreign exchange purchases and the investment growth rate will both decline by more than half, a senior researcher close to the authorities said on Wednesday.Currencies don't fluctuate their trend, they tend to have very long trends and fluctuate around them. Therefore, we're either going to see "messier" yuan appreciation or an end to the appreciation in the yuan. Since a multi-year decline in the yuan seems unlikely at this point, the odds favor a messy appreciation, with growing (but still small) odds of a catastrophic plunge in the value of the renminbi.
Liu Yuhui, director of the financial laboratory at the Institute of Finance & Banking at the Chinese Academy of Social Sciences, a prominent central government think tank, said he had obtained these forecasts from the central bank.
Regarding external conditions, he said although yuan holdings in January had increased, the growth for each month will decline to somewhere below 150 billion yuan ($23.7 billion) in 2012, in contrast with 250 billion to 300 billion yuan in the past five years.Read that sentence a few times. There's a vocal chorus of people who assume that anytime China (or anyone for that matter) sells U.S. dollars, it is bad for the greenback and signals an end to the U.S. dollar's status as reserve currency. This is muddled thinking however, since it very much matters whether one sells from a position of strength or weakness. Thailand, Malaysia, South Korea and Argentina before them spent their foreign reserves trying to defend their currencies and no one thought that was bearish for the U.S. dollar, in fact it was extremely bullish. China's situation is different today. The most likely reason for them to support the currency is political—they want to avoid a trade war with the United States and Europe—but should the economy weaken or another global financial crisis erupt, they may be forced to defend the currency. Either way, the renminbi is much weaker today than it is popularly perceived to be and at risk, in the event of a "surprise" contagion, of a swift decline.
For 2012, the total increase in yuan holdings will shrink to 1.5 trillion yuan, compared with an average of 3 trillion yuan in the past five years.
Banks' holdings for purchasing foreign exchange, an indicator of capital flows, fell for the first time in four years in October by 25 billion yuan. Holdings declined again in November by 28 billion yuan, and again in December by an even larger 100 billion yuan. In January, however, holdings rose nearly 141 billion yuan.
The domestic situation was also changing, he said, as the past pattern of fiscal expansion will not continue.
"In that respect, the change will be reflected in a dive in the investment growth rate, which will drop to about 12 percent - the level when (former premier) Zhu Rongji led the cabinet - from about 23 percent in recent years," Liu said.
Judging by figures for new yuan loans by banks, which have been running below expectations, the tendency was very clear, he said.
Despite these trends and changes, he said, the yuan might not depreciate this year. The central bank will use its dollar holdings to support the currency if necessary, he said.
Social mood in China is negative and even political leaders are not immune from it. From a socionomics standpoint, this story also makes sense. The leaders are itching for a fight, or rather have less tolerance for their enemies and more of a willingness to fight by other methods. Many leaders and officials in China do things that are illegal such as taking bribes. These transgressions are overlooked as long as one is competent/successful/useful. If they become a problem, they are arrested and prosecuted for their crimes. High level corruption looks bad in the press, but it achieves the objective.The Wang Lijun scandal may well be the method used to knock out a political enemy, Bo Xilai, smoothing the way for the pro-business princelings and liberal reformers to assume greater control of the party. Here's the latest news, starting with Wen Jiabao's attack on Maoism and warning of another Cultural Revolution.
“New problems that have cropped up in Chinese society will not be fundamentally resolved and such a historical tragedy as the Cultural Revolution may happen again,” the premier added, in remarks that were broadcast live on national television. “The mistake of the Cultural Revolution and impact of feudalism are yet to be fully eliminated.”
Mr Wen, who will step down from the party’s powerful politburo standing committee later this year, directed his aim at rivals including Bo Xilai.
"The current party committee and government of Chongqing must seriously reflect upon and learn lessons from the Wang Lijun incident," Wen said in a raised tone while waving a pen in his hand.Wen made these comments yesterday and the follow on results were swift:
His comments marked a rare departure from past practice in mainland politics. He is the only member of the highest-level Politburo Standing Committee to speak out about the scandal involving Wang, Bo's former right-hand man, who took refuge in the US consulate in Chengdu , Sichuan , on February 6.
Speaking at his last annual press conference as premier, Wen said that an investigation into Wang's case ordered by the central government had made progress, and that the case would be handled strictly in accordance with the law.
"We will give the people the results of the investigation and the handling [of the case], so that it can withstand the test of law and history," he said. The question to Wen about the scandal was raised at the end of the three-hour press event, broadcast live on television, radio and the internet. Although he appeared prepared for the sensitive nature of the issue, he presented a stern look and covered his mouth with his hand when the question was raised.
..."Given the fact that it is such a sensitive issue happening at such a sensitive moment, Wen must have spoken on behalf of the entire leadership," Zhu said. Professor Yuan Weishi , a historian at Guangzhou's Sun Yat-sen University, also noted that it would be unimaginable for Wen, known for his prudence and political tact, to make random comments without seeking consensus within the leadership.
Wen also used his last annual press conference to attack the resurgence of Maoist leftists, in a move widely interpreted by analysts as targeting Bo's ultra-conservative "red culture campaign" over the past four years in Chongqing. In response to a separate question, he specifically mentioned a historical document, the "Resolution on Certain Questions in the History of Our Party", which was adopted in 1981 and is best known for a rare admission that Mao Zedong should be held responsible for the tragedy of the Cultural Revolution.
In a major shakeup in the Chinese Communist Party’s top ranks, Bo Xilai, the charismatic but controversial official known for promoting a “red revival” campaign, has been fired as party chief in Chongqing, Xinhua news reported Thursday.Bo Xilai is a populist politician who was angling for greater power. (When his anti-triad policies were criticized as abusing the law, he went before law students at a university and asked them, with television cameras rolling, if they supported his policies. They said yes and Bo said this showed the people support his policies.) This may be the story of one man's ambition coming to an end, but it likely has greater political significance.
Bo is being replaced by a vice premier, Zhang Dejiang, who will also take Bo’s position on the local Chongqing Party Communist branch and its standing committee, Xinhua said.
The report made no mention of whether Bo also lost his position on the Party central committee and Politburo in Beijing.
Unlike most Chinese leaders who prefer to avoid public attention, Bo had built a loyal following and attracted media coverage in his south-central Chinese mega-city. He cultivated a modern-day personality cult among China’s so-called “new Leftists,” who supported his push for a more equitable wealth distribution and his campaign for Mao-era pageantry, including organizing mass events to sing patriotic songs.Increasingly negative social mood will lead to fallout and wider implications for the scandal and firing.
“This is certainly very bad news for Bo Xilai, and we’ll hear more in the coming days or weeks,” said Cheng Li, a China scholar and expert on China’s elite politics with the Brookings Institution in Washington. He called the timing of the news “quite remarkable” and said, “There’s a possibility the investigation against him has already started.”
“It’s still the beginning,” Li said. “Potentially, it could lead to a domino effect — what direction, we still do not know.”
"The supervision of government expenditure is not satisfactory," Luo said. "The budget report does not give sufficient coverage to social security, and it especially does not support public livelihood projects. That's why I voted No."Expect more dissent and more confrontations between party leaders as the October leadership succession draws near. Property prices remain weak (Wen Jiabao causes a major sell-off in property shares yesterday when he said prices are still have a long way to fall), the stock market is weak and the yuan itself is now under pressure.
Another deputy, Zong Qinghou, also the chairman of the mainland food giant Hangzhou Wahaha Group, said he rejected the budget report because it did not suggest tax concession measures to redistribute wealth.
Other deputies said that, even though they voted in favour of the report, they were concerned with the high level of debt plaguing local governments.
"I think we need to give local governments more autonomy in using their money," said deputy Pan Yixin.
The budget report said national revenue for this year is expected to reach 11.63 trillion yuan (HK$14.2 trillion), of which 5.86 trillion yuan belongs to the central government.
Local administration officials have long complained that even though the central government holds such a large amount of income, most public services are paid for by local governments.
He Keng, vice-chairman of the NPC's Finance and Economic Committee, expects more `No' votes next year if reforms of the financial have not been implemented.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.Goldman Sachs PR Nightmare: The Reckoning and Goldman Sachs and Social Mood previously covered the social mood aspects of Goldman Sachs' troubles. If the firm had hired a socionomic consultant, they would have been given the advice to disappear and hunker down, avoid all press, good or bad, don't stick out because society will be looking for nails to hammer. The Chinese also have no love for GS, as covered in Goldman Sachs derivatives fraud.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
. Oil shot up during the last revaluation because China was building petroleum reserves and energy was a big investment theme. What do Chinese want to buy today? Yes, they still need oil and natural resources, but to my mind, what's more popular (besides real estate, which should also appreciate) is gold.
China will intensify reforms of its currency regime and allow the yuan to float more freely, Premier Wen Jiabao said on Wednesday at the end of an annual parliament session punctuated by signs of a slowing economy.China's reform pace was a bit slow, but rushing currency reform can lead to crisis. However, the country should have moved more quickly to appreciate the renminbi so that the past four years could have been used to rebalance the economy. Instead, the export sector is too large and bad debts stalk the banking system. Once China opens the door to a more freely floating yuan, it can't put the genie back in the bottle. They could retreat in the face of unwanted volatility, but slamming the door on a rising yuan would stir political trouble in the U.S., while cutting off a rapid drop in the yuan would signal to markets that a major crisis is afoot.
"In the Hong Kong market, NDFs (non-deliverable forwards) have started to fluctuate both ways. This tells us the yuan is possibly near a balanced level," Wen told a news conference on the last day of the 2012 National People's Congress meeting.
"We will step-up exchange rate reforms, especially in increasing two-way fluctuations," the 69-year-old Wen said at his last annual post-parliament news conference.
