The old childhood game.
I feel like a lot is crumbling about us, and all we can see is pro-India stories.
The invisible Gorilla :)
If China is indeed hiding its true capital outlfows, what does it mean for the world?
WB has often said that macro does not matter - and yet he has shown that he stays cognizant of it.
Move forward but with caution is what Howard Marks has been saying.
If China is indeed unable to control its currency, and there is a capital flight (which is actually happening even today), its usually disaster for an economy that does not have a globally tradeable currency. It has happened in Russia, Argentina, The Asian crisis, India, etc.
You start running out of reserves, means you start running out of reserves until there is a crisis - like how Soros thinks about these things. Reflexivity and effects of effects.
What if someday soon, the world realises that China's actual growth is 3% or that its capital stock has been devalued via weakening currency/ recapping the banks (aka the system) - oddly enough, nothing changes except forecasts and expectations.
Does that mean that tons of capital flows to the US? And may be Japan (which Japan hates oh so deeply)?
How does any of this affect my companies?
Volatility and uncertainty always take a toll. When the global investment and consumption machine stalls (recession) it causes effects.
That said, The world has gone through nutty times, and every few months, for the last 100 years and more there is always something around the corner.
And there are always corrections, and at times longer recessions; but as long as we like chocolate, and cars, and entertainment and pizzas, and air conditioning, the world goes on.
All this said, I wonder if a domestic economy is capable of weathering a global storm much better simply due to its own demand for stuff.
We live in fun times, and here I am - very sure that a correction is around the corner - Nifty 8350 - and yet, I stay invested because my companies are good, still cheap and seemingly resilient.
Forward, the Light Brigade!
I feel like a lot is crumbling about us, and all we can see is pro-India stories.
The invisible Gorilla :)
If China is indeed hiding its true capital outlfows, what does it mean for the world?
WB has often said that macro does not matter - and yet he has shown that he stays cognizant of it.
Move forward but with caution is what Howard Marks has been saying.
If China is indeed unable to control its currency, and there is a capital flight (which is actually happening even today), its usually disaster for an economy that does not have a globally tradeable currency. It has happened in Russia, Argentina, The Asian crisis, India, etc.
You start running out of reserves, means you start running out of reserves until there is a crisis - like how Soros thinks about these things. Reflexivity and effects of effects.
What if someday soon, the world realises that China's actual growth is 3% or that its capital stock has been devalued via weakening currency/ recapping the banks (aka the system) - oddly enough, nothing changes except forecasts and expectations.
Does that mean that tons of capital flows to the US? And may be Japan (which Japan hates oh so deeply)?
How does any of this affect my companies?
Volatility and uncertainty always take a toll. When the global investment and consumption machine stalls (recession) it causes effects.
That said, The world has gone through nutty times, and every few months, for the last 100 years and more there is always something around the corner.
And there are always corrections, and at times longer recessions; but as long as we like chocolate, and cars, and entertainment and pizzas, and air conditioning, the world goes on.
All this said, I wonder if a domestic economy is capable of weathering a global storm much better simply due to its own demand for stuff.
We live in fun times, and here I am - very sure that a correction is around the corner - Nifty 8350 - and yet, I stay invested because my companies are good, still cheap and seemingly resilient.
Forward, the Light Brigade!
