Monday Montage

I got home very late due to some inexplicable traffic problems so I apologise for the short linkfest type of post.

Monday Montage
When you are out of time just rip off the best posts on the Internet!

-The early earnings results are, surprise, coming in better than expected. Expectations have been taken down huge as of late, so no real surprise to this writer. I think some were maybe expecting some misses to come this go around, but I do not think that is going to happen.

-Kid Dynamite has several observation on the new individual "circuit breakers" in place for the market. Well worth a look for coverage you just will not get in the mainstream media.

-The Golden Truth muses on developments in the Vietnam gold markets.

-Love them or hate them, you have to admit Zero Hedge writes the funniest post titles in the financial blogosphere:
Entire Market Rally Engineered On Volume Fumes

SEC Chief Information Officer Finds God, Quits Regulator To Become Deacon

The next two are the must reads for the day.

-Pragmatic Capitalism has an item titled:
The FED Is Fractured
The whole thing is really worth your time. Just one small snippet:

The bank bailout and the gross ballooning of the Fed’s balance sheet has done practically nothing for Main Street. If that isn’t clear by now then people need to pull their heads out of the sand. Despite this, we continue to hang on every word out of this powerless Federal Reserve. We are all waiting for Ben Bernanke to save us from economic downturn. Why?

Indeed.

-Jesse's Cafe has another winning offering up today concerning a Chinese ratings agency downgrading US debt. Now this is not like a real downgrade, but as Jesse writes:

Governments like China do not take actions like this randomly, and their quasi-state organizations do not march to the beat of their own drummer. It will be interesting to watch this develop, and calculate the strategy, to figure out the next steps.

It has long been a central theme here at EconomicDisconnect that China learned from the Soviet Union collapse and in now way will repeat that process. I posted about this WAY back in October 2007, so I will include myself in my own montage post:

Revenge of the Communists
It is generally accepted that the USA won the Cold War with the Soviet Union, not through live combat, but through an ever escalating arms (Not those ARMS!) race that eventually bankrupted the old Soviet system. I do not want to debate the particulars of that story. I want to focus instead on what could be happening in a macro geopolitical sense.

Suppose you were a communist country, and saw what happened to the old Soviet Union. Perhaps you would learn that isolation from foreign trade really hurt them, and a weak economy meant ultimately they were doomed. Say you instead become a massive creditor to the United States. Your country, with terrible environmental rules, no worker rights, a police state that cracks down on dissent, and dirt cheap labor can manufacture every widget needed by the USA. Your economy is booming, and what's even better, you hold a silly (upwards of 2 Trillion?) dollars of US debt. Even sweeter, the US is totally dependant on your country continuing to buy their debt. So far so good.

Now the dollar is tanking badly. The US consumer has spent himself silly buying homes that moved in price like the old dot com stocks. The party is now ending, and massive financial losses are sure to come. The US is in a bad spot with huge budget deficits, massive entitlement programs, and facing a probable bank bailout on a historic scale.

By now you know the country is China. Faced with this tantalizing junction in history, what would be your next course of action?

There is more in the old link.

Have a good night.