The change in mood among market participants from July to August is palpable. It can be seen throughout the globe, but let’s stick to the US for now. The uncertainty factor is again in play on growing concern about a double-dip recession. Corporate investment was supposed to keep things humming, leading the charge even though employment is soft, but corporations aren’t stepping up to the plate. Who can blame them!
A friend wrote to me the other day and sent a link to an article on Bloomberg.com wherein the IMF former chief economist argues the Fed should hike interest rates. My friend wrote:
My question to you is, what can Central banks do to prevent another bubble; can they really increase rates when there is so little demand for credit?
A friend of ours forwarded on this chart from The Economist last week:
Our response: we think stocks are cheap relative to bond yields, but that doesn’t mean stocks can’t collapse. Super low yields say a lot about growth prospects ... and all the capital investment not made goes to bottom line.
Feedback Loops: Central to a full understanding of dissipative systems, and especially those in symbiotic relationships, is the concept of system feedback (Stear, 1987). Complex systems with feedback loops that allow for self-renewal are called autopoietic structures. One example of a simple, self-organizing system is a whirlpool. Another example is the red spot on the planet Jupiter. Other systems, such as the human body, can be extremely complex (Briggs and Peat, 1989).
Was it last week (I don’t know, the weeks are running together these days) when China announced it would allow the yuan to move more flexibly with the market?
Speculation that China’s currency will actually rise, since China’s yuan announcement, has waned. But China is back on the wires telling us they’ll maintain their announced currency policy and be sure that the yuan is stable while they also keep monetary policy nice and loose.
