Links & Critiques

1. Michael Pettis has a post on why he thinks it unlikely that China will be able to rebalance their consumption. The main flaw is his analogy to Japan's economy. One of the main reasons Japan had trouble rebalancing was that Japan had almost fully converged with other developed economies except there were a lot of micro-inefficiencies in Japanese consumption markets. When houses are built one at a time and the retail market is still dominated by mom and pop stores the cost of consumption is rather high, reducing a household's willingness to consumer versus save on the margin. Growth stopped in Japan more because the convergence process was done and Japan couldn't overtake the rest of the world any more in places it was ahead.  To argue that the readjustment in China is going to have the same effect as it did in Japan, it would have to be assumed that China's economy has reached its steady state and will no longer catch up with the world.

2. Arnold Kling looks at momentum in employment. This is another reason why markets care more about the headline number.

3. Some school districts don't understand bulk discounts. No wonder they are running out of money.

About

I studied Bioengineering at the University of California at San Diego. While there I served as a trustee on the investment committee of the UCSD Student Foundation, a group that manages an endowment to fund scholarships. While in college I applied my interest in finance and economics by working as a summer associate at Clarium Capital Management, working part time my senior year, and joining full time when I graduated in 2006, staying there through August 2010. I am currently working as a portfolio manager at another global macro hedge-fund in the Presidio (And blogging about more directly market related ideas at their restricted blog). I’ve been focusing on quantitative finance, currencies, commodities, the interplay between finance and politics, demography and other long term trends.

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