Good morning

The headlines:

  1. China’s manufacturing contraction enters its seventh month. Link: The Chinese Contraction – stimulative? It’s only going to be stimulative if the Chinese Government relaxes its stranglehold on monetary policy. But more to the point – I wonder how much of ongoing production is still engaged in the stock-piling of inventories. Production without buyers gives a false impression of success. One that is short-lived.
  2. The EU powers-that-still-be-and-or-that-newly-be have been clashing over bonds. Link: And calling for Greece to continue cutting. According to the Luxembourg PM Jean-Claude Junker Juncker, “We had a not unheated discussion on Euro bonds”. It seems that joint-borrowing “didn’t find much support, particularly in the German-speaking area but found a certain enthusiasm in the French-speaking area.” This guy is hilarious with the political correctness. But I agree with the “German-speaking area” – joint borrowing would allow the deficit-ridden countries to benefit from the better-credit-quality (and hence lower rates) of the German-speakers. And the German-speakers will suffer from the no-credit-quality (and hence pay higher rates) of the French-and-other-speakers.
  3. The Facebook IPO suing has started. Link: And it looks like they’re going after everybank! The investors are claiming that they were “misled” by Morgan Stanley, Goldman Sachs, JP Morgan Chase and all the other underwriters, and the Facebook guys. Because, um, they didn’t disclose lower revenue growth predictions based on lower advertising revenues owing to the increased use of mobile devices. On the other hand, Facebook PUBLICLY ANNOUNCED THIS BEFORE THE IPO, YOU IDIOTS. The case is Brian Roffe Profit Sharing Plan v Facebook, 12-04081. The name says it all.
  4. Hong Kong is short-selling. Link: a lot. The ratio of short-selling to shares traded reached 1 to 7 yesterday – the highest level since 1999. It seems that there are a lot of people betting on the markets crashing. The Greek E(uro)xit crisis chaos is ravaging the world.
  5. The rush to gold is giving the miners mercury-poisoning. Link: 15 million exposed (but I think that’s just a dramatic tagline). But did you know that the easiest (and cheapest) way for miners to refine gold is to mix it with mercury? I didn’t know that – mostly because mixing gold with mercury sounds less like refining and more like compounding-the-problem*. But it’s apparently the case. So mercury-poisoning – it’s an issue**. Around 15 million small-scale miners in Latin-America, Africa and Asia use the mercury-refining method. In theory, the first world has banned the import of mercury-refined gold. In practice, this restriction is worked around. And now that the financial world is in crisis, the demand for gold is increasing. The Greek story is literally making people sick.
  6. China is a black box of misinformation. Link: that’s racist – not all boxes are black. Statistics – insert data here for desired results.
  7. Estonia has achieved growth through austerity. Link: Greece should pay attention. Estonia implemented austerity last year and grew faster than any other Eurozone state. Fact. As the Estonian president (rather gloatingly) points out: “You can achieve growth through austerity. Estonia has done that. Growth policy – that doesn’t make sense to me.” Estonia’s average salary is 10% lower than the minimum wage in Greece, and Greeks can retire 10 years earlier than Estonians on pensions that are four times as large. Observation: the evidence seems empirical. On the other hand – statistics.

That’s all for now.

Have a good day.

*gold is one of the only substances that mercury will bond to – so the stone containing gold gets crushed into grit, the grit gets stirred into a water and mercury mix, the mercury bonds with the gold and repels everything else, and then the mercury and gold amalgam gets baked in a furnace until the mercury evaporates.

**interestingly, the phrase “mad as a hatter” comes from the psychotic effects of mercury poisoning – as experienced by 18th Century european hatters who used mercury to process pelts, got poisoned, and were subsequently, well, mad.