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Are the markets simply returning to normal after the Chinese debacle?

Big Al
August 13, 2015

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Numbers came out today regarding employment; consumer debt (as in more as in more prudence; oil prices; and,  retail sales ( if you take out auto sales it really wasn’t an  increase).

Discussion
101 Comments
    cfs
    Aug 13, 2015 13:38 AM

    As I said a couple of days ago, there are extreme shortages of silver in England. You can expect divergences in the behavior between Gold and Silver, because there appears to be a supply of gold still available.
    I do not expect gold to shoot up until there is no physical left for manipulation.

      Aug 13, 2015 13:26 AM

      No available gold may take years even it means available gold to the manipulators. Gold is the main asset of western central bank and they are in bed together.

        cfs
        Aug 13, 2015 13:44 AM

        Not all central bank Governors are as stupid as George Brown, and willing to sell.

      Aug 13, 2015 13:46 AM

      YESTERDAY………….BOB M….said there was a 53 yr . SUPPLY of GOLD. (if, BOB M. is reading I hope I did not misread yesterday info.)………………ootb.

        Aug 13, 2015 13:08 AM

        True but most held in private hands.

          Aug 13, 2015 13:11 AM

          PRIVATE can that be accounted for?

            Aug 13, 2015 13:15 AM

            Not easily but they can do to certain degree liking sucking GLD dry. Very little silver though.

            Aug 13, 2015 13:22 AM

            I agree with you on very little silver………

          Aug 13, 2015 13:05 PM

          Lawrence:

          The point was and is that gold is a unique commodity. It is the only commodity that most of whatever has been produced is still part of supply. People can argue that gold in private hands really isn’t part of supply but it is.

          You could stop shipping gold from every mine in the world today and 100% of them will be shuttered 10 years before supply becomes a problem.

          Anyone suggesting solutions to problems should at least understand the problem before speaking up. I’ve heard a lot of daft ideas in my life but for mines to not sell their gold in the theory that it would affect supply is pretty far out.

            Aug 13, 2015 13:47 PM

            Off course you are right with gold as long as you allow price to rise. When you shut the mines, you have to increase the price to attract private holding to come to the market.

            Aug 13, 2015 13:53 PM

            I am sure if the world does not produce an ounce of gold in 10 years, there will be still plenty of supply. Stopping the production of Other metals will result in shortage and consumer industries have to stop production. It will be true shortage in the sense metal is not available at any price.

            Aug 13, 2015 13:21 PM

            Lawrence:

            Gold will never be in shortage. Everything else might.

            But even the numbers on silver are deceptive. There have been somewhere between 45 and 50 billion ounces of silver mined through history. To believe there is only 1 billion or so ounces of silver is silly. We recycle aluminum, copper, steel and there is no way 98% of all the silver ever mined just disappeared. No one has accurate numbers on silver. The market says silver is not in shortage and the market gets it right a lot more than we do.

            Aug 14, 2015 14:36 AM

            BOB M. …”the theory that it would affect supply is pretty far out” …….you say.
            ANY SUGGESTIONS to the current situation?

            Thanks
            WONDERING MIND/MINES

            Aug 14, 2015 14:49 AM

            FFM: While many people would like to see gold as money, the fact remains that it trades like every other commodity. It got too high in 2011 and since has corrected. Coal, iron, diamonds, silver, corn have all had bigger corrections so manipulation is pretty meaningless.

            It got too low last month and is due at least a strong rally. I think the nay-sayers will all be wrong about gold going to $800 but only time will tell.

            But before anyone suggests withholding supply, they really need to compare yearly production to total supply. It’s delusional to believe that miners withholding their production would affect the price of gold.

            It’s a lot like suggesting that if you disagree with the policies of Obama you should hold your breath until he gives in.

            Aug 14, 2015 14:33 AM

            Bob, just because gold gets expensive and cheap does not mean that it trades like any other commodity, it certainly does not. Commodities are correlated to the economy while gold is the least correlated of all the major asset classes. This is why it is up 60% vs commodities in general and 125% vs oil since the June 2014 low.
            In addition, gold’s (and silver’s) bid/ask spread narrowed substantially in the crash of 2008 while platinum’s jumped from ten fold from $10 to $100 at its worst (really 30 fold since the price had collapsed to just one-third of what it had been).
            Platinum, copper and commodities (GNX) each plunged about 70% from their all-time highs in ’08 while gold fell just half that, also coming from an all-time high. In addition, platinum, copper, and commodities (GNX) finished that year down 39%, 53%, and 43%, respectively while gold managed to beat the U.S. dollar finishing UP 5.5%.
            http://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24GNX&p=D&yr=1&mn=8&dy=0&id=p37250099463

            Aug 14, 2015 14:50 PM

            Thanks for the reply BOB…..

            Aug 14, 2015 14:51 PM

            AND thanks for the thought on $800 gold…………………..

            Aug 14, 2015 14:16 PM

            Mathew:

            Perhaps I could have worded that differently. Gold is a commodity no matter what else people think. When I say it trades like any other commodity, I didn’t mean it tracks anything else, I meant it goes up until the price is way too high and then it goes down until the price is way too low. It goes up and down and is supposed to.

            It’s too low now and is cheap. It will get very expensive one day and at that time should be sold.

            Aug 15, 2015 15:46 AM

            I agree. Real money is indeed a commodity. How can anything that’s gets mined not be a commodity?

            Aug 15, 2015 15:56 AM

            I should also add that from an investors perspective, it really is not a commodity. It only appears to be because of the existence of the Federal Reserve Note which did not come about because of free market forces. All real things seem to act somewhat in unison as confidence in that fraud waxes and wanes.
            Still, and interestingly, gold performs as it always has as if there were no FRN. It zigs when “real” commodities zag.

    Aug 13, 2015 13:47 AM

    Gary, you continuously talk about the Fed intervening in the markets as if the Fed was in the futures market (or stock market) using their assets to buy in order to force a rally. If you do believe that, then why would you trade any market? The Fed can create money at will, so why don’t they just pin crude at $10, gold at $100, and then force the Dow to 25k, 50k 100k. We would all be rich, no inflation, life is great. The idea that they prop markets up means they can do it FOREVER so there would never be a correction or selloff. Totally absurd thinking.

      cfs
      Aug 13, 2015 13:38 AM

      JJ, Look what happened in Japan.
      Estimates are that the central bank of Japan owns up to 30% of that market.

      The reason any Central Bank cannot print infinite money is that it does not have zero “real cost”.
      If the bank prints too much, the currency becomes worth less and less, until it becomes worthless.
      The Yen has dropped 30% in the last couple of years, making life more costly for the average Japanese person.

        Aug 13, 2015 13:45 AM

        Japan, like the Swiss CB have the authority and transparency, we KNOW they are buying stocks. Our CB CANNOT buy futures nor stocks. IF they are doing this secretly then they can print as much money secretly as they won’t. You can’t have it both ways, either the fed balance sheet is true and we they are NOT intervening in the markets are it’s a lie, then who cares what they put on the balance sheet.

          cfs
          Aug 13, 2015 13:56 AM

          JJ, You are wrong. The Fed owns shares.

            cfs
            Aug 13, 2015 13:00 AM

            To be more precise:
            JJ, The Fed does not print money, the treasury does. The Fed buys treasuries. The treasury Department has been buying shares since the 1980s.
            So the shares are technically on the Treasuries’ books, funded via the Fed buying treasuries, with money created out of thin air.

            Aug 13, 2015 13:05 AM

            CFS, you have absolutely no idea what you are talking about. Conspiracy nonsense. If this were the case, why would markets EVER go down. I was on the floor trading in 87, where was the ‘magic’ of the Fed/Treasure. It’s a weak argument – makrts like gold go down because the fed is selling and the spooos go up cuase the fed is buying. LOL, then why ever both trading anything?? why waste your time.

            cfs
            Aug 13, 2015 13:29 AM

            JJ,
            The specific department within the Treasury Department that does Futures and sharing buying. is called ” The President’s Working Group on Financial Markets”.
            I suggest you Google that, and then apologize to me.

            cfs
            Aug 13, 2015 13:31 AM

            Sharing was auto-corrected from Shares.

            Dumb computer!

            Aug 13, 2015 13:39 AM

            the PPT, LOL, please you’d have better luck finding bigfoot.

            Use logic for 1 min. If they could magincally do all this buying without ever a leak or a footprint, then they are GOOD and if they are that good, why ever stop. They could do this forever, because every trade they make is profitable giving them more money to do more trades and never even have to print..wow, so cool. Wow, so illogical and completely fantasmagicorical. Oh wait, have to run, I just saw a unicorn!

            Aug 13, 2015 13:42 AM

            And why even bother with gold, no one cares about it. Why not keep crude at $10 to help consumers and the economy, or corn and wheat low. And how did they ever let gold get away from them from $300 to $1,900, alseep at the wheel? How did the flash crash happen, the 2008 meltdown? If the PPT could do anything they surely would of stepped up. The Fed manipulates interest rates, period. Yes that is a problem, but they aren’t trading spoos and metals.

          Aug 13, 2015 13:54 AM

          That’s exactly what they are doing, but at one point the Fed has to stop printing or we get hyperinflation. The thinking is that since money printing didn’t have the desired affect, Fed will have to raise price of gold, like in 1933.

      Aug 13, 2015 13:56 AM

      Not speaking for Gary but you must feel the Fed can do so with impunity…..as you said forever. I for one definitely believe there is a limit to any and all their actions and when reached………..TSHTF. Maybe that’s old fashioned but that’s where I’m at. We’ll see, as yesterday’s tomorrow is today!

      Aug 13, 2015 13:31 AM

      Google “stock market circuit breakers”.

        Aug 13, 2015 13:56 AM

        Jason – that is a very interesting topic when a giant correction is looming in the general markets. I’m going to post a section of this article because we are very likely going to see these “Circuit Breakers” used in the next 2 months:
        ________________________________________________________________________

        “In response to the market breaks in October 1987 and October 1989, the New York Stock Exchange instituted circuit breakers to reduce volatility and promote investor confidence. By implementing a pause in trading, investors are given time to assimilate incoming information and the ability to make informed choices during periods of high market volatility. In 2012, in connection with its approval of the Regulation NMS Plan to Address Extraordinary Market Volatility, commonly referred to as the Limit Up – Limit Down Plan, the SEC approved amendments to Rule 80B (Trading Halts Due to Extraordinary Market Volatility) that revise the halt provisions and circuit-breaker levels. Amended Rule 80B is operative during the pilot period of the Limit Up – Limit Down Plan.

        Rule 80B
        Effective April 8, 2013, amended Rule 80B will be in effect. Amended Rule 80B replaces:

        the DJIA with the S&P 500 as the benchmark index for measuring a market decline;
        the quarterly calendar recalculation of Rule 80B triggers with daily recalculations; and the 10%, 20%, and 30% market decline percentages with 7%, 13%, and 20% market decline percentages.

        Amended Rule 80B also modifies:

        the length of the trading halts associated with each market decline level; and
        the times when a trading halt may be triggered.

        Specifically, the circuit-breaker halt for a Level 1 (7%) or Level 2 (13%) decline occurring after 9:30 a.m. Eastern and up to and including 3:25 p.m. Eastern, or in the case of an early scheduled close, 12:25 p.m. Eastern, would result in a trading halt in all stocks for 15 minutes. If the market declined by 20%, triggering a Level 3 circuit-breaker, at any time, trading would be halted for the remainder of the day.

        A Level 1 or Level 2 halt can only occur once per trading day. For example, if a Level 1 Market Decline was to occur and trading was halted, following the reopening of trading, the NYSE would not halt the market again unless a Level 2 Market Decline was to occur. Likewise, following the reopening of trading after a Level 2 Market Decline, the NYSE would not halt trading again unless a Level 3 Market Decline were to occur, at which point, trading in all stocks would be halted until the primary market opens the next trading day.

        https://www.nyse.com/markets/nyse/market-model

          Aug 13, 2015 13:06 PM

          This is precisely why I think over the next 2 months that volatility will rear its head and that UVXY will be a nice hedge to that chaos.

      Aug 13, 2015 13:47 AM

      What the heck are you talking about?

        Aug 13, 2015 13:56 AM

        Not you Jason, I mean John Johnson.

      Aug 13, 2015 13:14 AM

      They can push stocks to infinity but they can not suppress the price of physical goods like crude and PM under which they have physical goods to deliver against delivery requests.

      Their action of creating money is exactly what pushes everything up not down, including goods and assets. As they build up derivatives to control the price, it also make the eventual failure that much more violent.

    cfs
    Aug 13, 2015 13:47 AM

    Some biotech and pharma still going up…..e.g. CAPN today.
    High dividend stocks still doing well!

    cfs
    Aug 13, 2015 13:52 AM

    In currencies, Canada, India, Mexico, Brazil all going down faster than China against the US dollar.

    Aug 13, 2015 13:57 AM

    Detour up 33% since the July lows.

    Aug 13, 2015 13:05 AM

    Was Allied Nevada Chapter 11 An Inside Job?

    In Docket # 819…Brian Tuttle lays out the play by play…. was the whole drama planned out going into gold’s lows

    Well worth the read and then some.

    Click on link Motion to Appoint Examiner Docket 819 link below…save to desktop or download in adobe pdf…A reasonable person could conclude by reading this motion, that it may have been an inside job by management and various players.

    https://cases.primeclerk.com/AlliedNevadaGold/Home-DocketInfo

      cfs
      Aug 13, 2015 13:26 AM

      Looks like a not infrequent example of crooked management swindling shareholders, with management and bankers keeping the mine and giving shareholders the shaft.
      It has happened before and will happen again.

      Aug 13, 2015 13:45 AM

      It was a prepackaged bankruptcy.

        Aug 13, 2015 13:21 AM

        They wrote down a billion dollars in a six month period. That was definately prepackaged. Bank Of New York Mellon dumped 10.3 million shares just before Q3 2014 earnings announcement.

        The charts included in the motion for examiner are going to be hard for the judge to bless. They didn’t announce they were in default of a currency swap in Dec 2014, while they issued new shares in a January offering. It doesn’t get anymore blatant.

          Aug 13, 2015 13:45 PM

          I’m not trying to change your mind if you believe this is a case of management malfeasance. If you really want me to address the issues that you raise then leave an email because I have no desire to get into a back and forth here

            Aug 13, 2015 13:52 PM

            Steve there is no reason to go back and forth. Bottom line… it may have been prepackaged, but there was quite a bit of Fraud. Misleading SEC filings, you name it with that management team. The docket pretty much tells the story.

            My point was, just because something is prepackaged, doesn’t make it legit. Time will tell with this one. It definately doesn’t pass the smell test.

            Aug 13, 2015 13:47 PM

            There is no need change anyone’s mind. The facts speak for themselves.
            The case of management malfeasance is overwhelming and this will be proven in the court.
            Bob Gagalis, ex-CFO of Enterasys thought he could get away with fraud too until his own CEO sold him out… He is still in Berlin Federal serving his 11.5 years sentence.

            Aug 14, 2015 14:32 AM

            With 7 different accusations in this docket alone as well as other past attempts to claw back advisor, lender and attorney fees, it is clear that Mr. Tuttle is running everything up the flagpole and is hoping something sticks. I’m curious to know which accusation you believe is valid and speaks for itself? For the record, if there was fraud committed then I hope a successful class action is brought against Allied and the shareholders get what they deserve. I just don’t understand how anyone can already have formed an opinion when we don’t even have the facts.

    Aug 13, 2015 13:06 AM

    South Africa’s Platinum Miners Start Over
    BY ALEXANDRA WEXLER, AUGUST 13 2015

    http://www.bdlive.co.za/business/mining/2015/08/13/sas-platinum-miners-start-over

      Aug 13, 2015 13:45 AM

      Here’s a related article on the frustration between mining management and the political posturing in South Africa. Sounds like major change is coming and they are teetering on the brink of survival:
      __________________________________________________________

      Mining chiefs talk straight — finally
      AUGUST 11 2015

      http://www.bdlive.co.za/opinion/editorials/2015/08/11/editorial-mining-chiefs-talk-straight–finally

        Aug 13, 2015 13:59 AM

        Last post on the subject of Gold and PGM mining in South Africa. This is a pretty good article that condenses down some of Sibanye Gold CEO Neal Froneman’s statements about the friction and challenges facing mining companies in SA:
        _________________________________________________

        Froneman speaks out on miners’ frustration
        BY ALLAN SECCOMBE, 07 AUGUST 2015

        http://www.bdlive.co.za/business/mining/2015/08/07/froneman-speaks-out-on-miners-frustration

      Aug 14, 2015 14:53 PM

      THANKS FOR THE PLATINUM REPORT…………………….PLAT IN UM THERE CLAWS

        Aug 15, 2015 15:51 AM

        The PGMs should get a nice shake-up soon where the industry reorganizes itself. With all the big mines in South Africa in dead-lock debates with unions, the new plans to introduce robotic mining in shallow pits, the new mine that Platinum Group Metals is developing, the failure of North American Palladium, the challenges Stillwater mining has had reaching an agreement with its union workers but their increase in recycling, and the up an coming deposits for Polymet and Wellgreen Platinum that are being developed. Lots of change coming to Platinum and Palladium over the next 6 months to 1 year. Should be a fairly exciting time to start building positions in my opinion.

    Aug 13, 2015 13:17 AM

    Thanks Gary……..good points………………………..

    Aug 13, 2015 13:20 AM

    Cory…. confidence is now broken by the Greeks………

      Aug 13, 2015 13:24 AM

      I think the Russian with the Cyprus issue on the banks was the second, and Sweden was the first.

        Aug 13, 2015 13:35 AM

        correction……………ICELAND……….

          Aug 13, 2015 13:46 AM

          Yeah, remember the Iceland debacle……

    cfs
    Aug 13, 2015 13:27 AM

    Sweden? Do you mean Iceland?

      Aug 13, 2015 13:33 AM

      Ok……I think you are correct……….I was going from memory….

        Aug 13, 2015 13:34 AM

        thanks for the correction………appreciate………………….the Ice Claw

        cfs
        Aug 13, 2015 13:53 AM

        Although Iceland did the right thing and not bail out the bankers (Greece ought to learn from that) anyone invested in Icelandic bonds took a haircut. Since I made the error in investing in a international bond fund, that was stupid enough to invest in Icelandic bonds, I too took a haircut of several thousand dollars. The management of the bond fund, of course, did not invest in their own product, so I have learned the lesson of watching management holdings and insider trading.

        This actually relates to Canadian banking and brokerages. Many of them use warrants issued with company funding to buy shares cheaply after deliberately short selling (including illegal naked short selling) after having funded a new company offering. That is why I HATE warrants being given out at a funding.

          Aug 13, 2015 13:01 AM

          Great points about the use of warrants to buy shares on the cheap CFS. It’s a fairly common occurrence.

    Aug 13, 2015 13:42 AM

    I think we are close to bottoming in oil partyl because everyone is so bearish on oil… but maiinly because the oil resource companies I keep an eye on are going up as oil goes down.

    I think the same as Gary in that inflation is coming down the line and coming sooner and stronger than people think.

      Aug 13, 2015 13:00 AM

      What kinds of companies are you watching Bob?

    Aug 13, 2015 13:46 AM

    Today’s small correction in miners isn’t out of the ordinary. We’ve had a run and many of the individual stocks left a gap yesterday that was bothersome but today most are getting somewhat filled. Better from this lower level than from a higher one. Question is what happens tomorrow or Monday. I look for a modest weakness tomorrow to continue and Monday to be positive again. JMO

      Aug 13, 2015 13:22 AM

      I agree, with next week testing the 1030-1050 range

      SNIP>
      I look for a modest weakness tomorrow to continue and Monday to be positive again.

        Aug 13, 2015 13:23 AM

        Shoot, I meant 1130-1150. I’ve been reading too many of Shad’s posts.

          Aug 13, 2015 13:03 PM

          Funny Brian. It’s confusing because the downside targets are $1033-$1044 and the upside support levels to test first are 1131, and 1150. 🙂

          I think this was the post you were referring to:
          _____________________________________________________

          On August 12, 2015 at 1:51 pm,
          Shad says:

          Good thoughts in this thread. I tend to agree that this is just a counter-trend rally, and that there will still be one last wash-out phase down later in the year. I’m not convinced $1076 or $1072 depending on which platform you are using was the final low for Gold, and I believe technically that we need to retrace at least to that $1044-$1033 zone, or possibly $993 (prior peak from Feb 20th, 2009).

          The sentiment has been pretty bearish, companies have started to go bankrupt, and Mergers & Acquisitions are increasing, but we never got that final cleansing wash of despair, where even the most hardened bugs throw their hands up in the air and check out. We are getting much closer to that point though, and a good bull trap rally will be required to get the energy needed for the fall to the downside.
          I’m playing this Wave 4 up, but am prepared it may pause near $1131, $1150, $1180, 1200, and $1225. If any of those resistance levels gets tested 3 times, then I’m back on the sidelines.

    Aug 13, 2015 13:50 AM

    BobUK
    then rising interest rates

      Aug 13, 2015 13:51 AM

      Yep, and they will rise faster than people expect becauuse inflation will get crazy. Should finally crash the crazy UK housing bubble.

        Aug 13, 2015 13:04 AM

        I agree. A lot of people seem to think that high or rising inflation will give a good outcome for housing and therefore real estate will benefit. Certainly if you listen to any of the realtors who are still busy pushing overpriced housing in Canada. But what they always forget is that inflation is a tax on disposable income and it makes most people feel poorer. Housing will fall if inflation and interest rates start to rise when assets are already heavily inflated.

      cfs
      Aug 13, 2015 13:52 AM

      I don’t know if the Fed can do more than a token rise or two, without collapsing the economy.

    Aug 13, 2015 13:50 AM

    Another point on oil. FWIW, gas this morning is $2.63……not as low as it reached at the last low in oil, when locally here it touched $$2.30 ish for a couple days. In the meantime, though, state gas tax climbed about $.07. So, there must be no oversupply problems yet and/or this drop in oil isn’t expected to stay at these lower levels. JMO

      Aug 13, 2015 13:06 AM

      $2.99 here……..they are blaming it on the REFINERS……..

    Aug 13, 2015 13:06 AM

    Gary- you sure about no recession…?? Cant we have inflation AND recession together.
    You know much more than I…
    Thank you
    Zero Hedge august 13
    Even The Fed Admits Recession Looms: Q3 GDP Forecast Slashed To Just 0.7%
    Submitted by Tyler Durden on 08/13/2015 – 12:07
    Just as we warned earlier – and Goldman subsequently confirmed – the Q2 “stack’em-high” surge in inventories (which has juiced hype hope that America is back, baby!) has consequences. The Atlanta Fed just released its latest forecast for Q3 GDP growth, lowering it to just 0.7%, citing an inventory drag of -2.2 percentage points. The Fed estimate is now 75% below the street’s consensus!!

    Tom
    Aug 13, 2015 13:40 AM

    S&P back to new highs by labor day? Anyone out there in that camp? Oil and stocks to climb? Seems to me everyone is bearish on stocks.

    Aug 13, 2015 13:41 AM

    I doubt higher oil until next Spring.

    Aug 13, 2015 13:22 AM

    It is mostly part time jobs . Hundreds of jobs but all part time. Lose one of these no unemployment claims.

      Aug 13, 2015 13:26 AM

      great point…………….

      cfs
      Aug 13, 2015 13:54 AM

      the reduction of full-time jobs was a direct consequence of Obamacare.
      You don’t have to pay part-timers health benefits.

        Aug 13, 2015 13:43 PM

        Yup!

    CFS
    Aug 13, 2015 13:55 AM

    That’s what happens when ideology over-rules commonsense.

    Aug 13, 2015 13:07 PM

    Hi Lawrence
    I mention numerous times that China is not the pillar of strength people think…
    https://soundcloud.com/cknw/chinese-dollar-the-global-market-business-comment-aug-11?in=cknw/sets/campbells-comment

      Aug 13, 2015 13:44 PM

      We have different prospectives. You and a lot of westerners hope China will collapse and I don’t. I saw China started from poor third world socialist country just 25 years ago to a manufacturer centre of the world. Who would believe that China could have made it so far? It had less than one percent of world economy and now is some thing like 15%. My monthly income was 60 yuans in late 80s and now any new grad would make several thousands. It is great achievement. The fact China has a lot of industry capability which build the world largest transportation system and the highest railway to the top of the world and it build 4 thousand kilometer pipeline in less than one year. You can see most products are made in china. If you go to china, you would be amazed by a lot of things which could not be exported. The impact of China on the world is undeniable. China is the largest manufacturer and top trading nation. So if it is not pillar of strength, you definition has some problem. If China goes down, canadian economy will suffer dearly. It proves China is a formidable force in world economy. So be careful what you are wishing for. The currency devaluation comes after all of the rest exporting nations have devalued with a lot more. You really can not blame it. It holds quite long. China has big population so it can not afford to lose export share. Hope you have an open mind. China never harms your interest so you have no reason to hate it.

    Aug 13, 2015 13:26 PM

    Lawrence:

    No country in history has undergone the massive changes as China has in the last 30 years. I’ve been a number of times and been awed. China will own the 21st Century just as the US owned the 20th, the English owned the 19th and the French owned the 18th, the Dutch the 17th and the Spanish the 16th. Everyone gets a century and it’s your turn.

    That’s not to suggest I think the actions regarding the stock market in the last couple of weeks makes sense. No government can stop the tide.

      Aug 14, 2015 14:28 AM

      Artificial Intelligence used in Industrial manufacturing is a game changer, new plants require very few workers and the ones that have employment are highly skilled. I can’t see China taking over the next century they just have too much of one commodity that will be detrimental, where will they find jobs for the citizenry. China is also quick to jump on this technology and in fact is promoting it. You can’t stop the future but it also means they will have huge social problems. They will no longer be manufacturer’s for the rest of The World. North American is also applying this technology although the jobs won’t be there the manufacturing will be. Humans are the first species that we know of to design their own demise. DT

        Aug 14, 2015 14:54 AM

        DT:

        You think China is going to have social problems, just wait until the food stamps run out. It is beyond question the US is bankrupt. When the drones find out their plastic money cards are not getting reloaded, there will be a social problem or two.

        Through history, countries have had the two edged sword of being the reserve currency for an average of 84 years. The US has had it for 85.

        If the Chinese government would stop meddling in economics, the economy would rebound in 18 months. You have to go to China to see it to understand it.

      Aug 14, 2015 14:23 AM

      Thanks for the fair comments.China never had a great system. When everyone were in a backward imperial system, China could enjoy relative prosperity in a series of long periods. It dominated east Asia and expanded into an empire enclosed by geographic barriers. However once the west started free market capitalism, the limitation in Chinese system started to show. The idea of large unified land has resulted in a culture with many power hungry dictators, everything they care is power. Emperors had done everything to nail people down to the farmland with rigid rules and refused to change to more liberal form of economy. Since Mao died in mid-70s, the country started to think about why it could not reach the level of the west civilization and tried to liberalize economy and abandoned neo feudalism system. This achieved a much better result. But one party still a major flaw in the system. It is politics which is the biggest barrier for progress. This slow down is caused exactly with same reason like the last one in 1991-1994. It is both political tightness. Last time was deng’s unti western poison and antidemocracy movement. This time is anticorruption initiative. Like my classmates have said, officials don’t dare to commit corruption any more and at same time they don’t dare to work due to fear of being punished. China has a long way to go before it can have a mature and power balanced system.

    Aug 14, 2015 14:14 AM

    Bob, I have not gone to China but I have worked in Industrial manufacturing at many plants, the changes being brought about by Artificial Intelligence are truly amazing and you can’t imagine what a difference the last ten years has brought. One of the causes of The Great Depression in the 1930’s was brought about by over production and over capacity caused by America’s electrification and the use of the three phase induction motor in manufacturing. Everyday now we see changes regularly that are almost equal to that one event. What made China great was smart cheap labor and now we all have smart cheap machines that are truly revolutionary. This is going to wreak havoc. DT

      Aug 14, 2015 14:41 AM

      Good comments. AI was a natural progress from automation, electronics and high tech. I failed in last century and now it becomes leading edge. As I can see, instead of resisting QI China actually embraces it. Parents are pushing kids to study in this area and the strong manufacturing and electronic industry provides a good base for AI development. Productivity does not destroy economy, it enrich people. Keynesians have put it backward. People still need design robotics, program it, operate it and control it. There will be a lot of jobs. Off course these jobs are higher quality they need better education. People have to adapt. AI does not harm one particular country such as China, it will harm countries which resist it. Unfortunately, I see the resistance may come more from democratic countries with voter’s fear. This is not good since I believe in democracy.

        Aug 14, 2015 14:42 AM

        Sorry for typo, It I failed in last century not I failed in last century

    Aug 14, 2015 14:35 AM

    DT:
    There is a book titled “The Birth of Plenty” that you should read. It talks about how wealth is created and basically when a country makes the transition from an agrarian society to a consumer society, great wealth is created. China has made that transition faster than any country in history.

    Your points are valid and well taken but AI and robots are going to change the entire world. Most young people today work at one time or another for a fast food place. In a couple of years, robots will be taking your order and making your Big Mac. We need to be discussing that today instead of mumbling about conspiracies and manipulation and nuclear weapons programs that don’t exist.

    Providing employment is going to be a real issue for everyone as you say. But China is not alone in that issue.

      Aug 14, 2015 14:45 AM

      What most people here don’t realize is the extent of the change made now by artificial intelligence, Lawrence seems to think that humans will be in charge of this new age but I’m afraid we don’t have the brain capacity or ability to change quickly enough. Replacements for much of the latest industrial machinery is now designed by the latest computers with hardly any human input and like the burger flippers it won’t be long before all this designing is produced by other machines.

        Aug 14, 2015 14:50 AM

        The real weakness of AI is in several areas. It lacks the learning capability even it is getting better. It is also lacks of self-conscience so robots will not fight for the wellbeing of robots. It will work to the benefits of their designers. In the future, it is likely to have some bad robots designed by evil people but there will be a lot of people who work to eliminate these bad robots just like anti-virus in computer system. It is likely the robotic security and human safety will become a growing industry. I wouldn’t worry about robots replacing human. One thing we need to worry about is not letting one particular group of intelligent human to design robotic system which controls the world. The danger is that we go back to cast system with a few top people control a system of robots. These robots control the general public. However, I don’t think any government will allow private citizens to do this. It is most likely the governments which do it. Even we get there, it is more or less like the imperial system.

    Aug 14, 2015 14:21 PM

    I’m not a big fan of Jim Rogers, he has taken a lot of credit for work others did but he made a brilliant comment a few years ago.

    “Make your children learn Chinese, if you don’t, they will be doing their laundry.”

      Aug 15, 2015 15:52 AM

      Bob M. – funny and true quote from Jim Rogers.