If you really want to understand how China views the U.S. credit crisis and our real estate bubble, read this Asian Times article. Here is a quick except. "China's economic problem is the inverse of America's: China has achieved fast rates of growth at the expense of huge disparities between the prosperous coast and the backward interior, as well as excessive dependence on foreign markets. China's policy response to the economic crisis is far more radical than Washington's. Rather than attempting to patch up the situation and restore the status quo ante, China plans to spend nearly a fifth of its gross domestic product on an internal stimulus focused on infrastructure in its interior. Severe execution risk attends the Chinese proposal, and markets remain to be convinced"

If you really want to understand how China views the U.S. credit crisis and our real estate bubble, read this Asian Times article. Here is a quick except. "China's economic problem is the inverse of America's: China has achieved fast rates of growth at the expense of huge disparities between the prosperous coast and the backward interior, as well as excessive dependence on foreign markets. China's policy response to the economic crisis is far more radical than Washington's. Rather than attempting to patch up the situation and restore the status quo ante, China plans to spend nearly a fifth of its gross domestic product on an internal stimulus focused on infrastructure in its interior. Severe execution risk attends the Chinese proposal, and markets remain to be convinced"

Paulson reworks financial bailout: New targets for investment… even you can apply! Markets plummet… Bill Bonner on when stocks will be cheap enough to buy. OECD predicts global recession… Germany admits contraction has already begun. Wall Street CEOs forecast “rapid,” “deep” U.S. recession. Joel Bowman on a peculiar hissing sound emitting from the Middle East.

For an erudite debate over the Paulson doctrine, we turn to our friends at The Onion this morning:

The Money Hole.

It’s not any more complicated than that, is it?

Indeed, Paulson and company announced a TARP switcheroo yesterday. Now the Treasury’s Troubled Asset Recovery Program (TARP) is suffering a serious case of the STD “mission creep.”

Instead of purchasing troubled assets from banks, the Treasury,

...

Fear of depression is sweeping the nation. Millions of Americans are consumed with anxiety, abandoning their old shop-till-they-drop habits, slashing their spending, trying desperately to pinch pennies for the coming hard times. Thousands of bankers are snapping shut their coffers, tightening their lending standards, hunkering down in anticipation of a massive economic downturn. Sophisticated investors also see the handwriting on the wall. They’re pulling out of hedge funds, selling their mutual funds, rushing their money to the safety of Treasury bills. Even the established media, often late to see the dangers, is beginning to speak out more loudly … CNN Money: “The rapid deterioration of labor markets points to a sharp decline in hours worked and output in the fourth quarter. This is likely to lead to a decline ...

Stanley Fischer, Governor of the Bank of Israel, spoke yesterday on the stability of the Israeli banking system. Fischer, along with many other public figures has gone out of his way to keep telling the public that the local banking system is sound. While scaring the public about bank failures is irresponsible, don’t Israelis deserve to be told the truth about what is going on? How about a little honesty from our leaders.

If everything is so rosy, then why does the BOI have a plan to stream money to the local banks in the event of a credit freeze? Is this prudent planning, or cause for worry?

As reported in Globes, Fischer spoke about how disciplined the local Israeli banks have been. “In addition, Israel’s banks had no sub-prime exposure. “Israel’s banks said ‘No’ to this paper,” said Fischer.”

Really? That’s not how I remember it. Bank in March Bank Hapoalim

...

It’s a popular notion when the financial winds are blowing unfavorably: Money is being printed uncontrollably … inflation is the only option … fiat currencies are doomed. The thing is, if you’re buying into this idea, you’re mostly perpetuating a misconception. Actually, inflation isn’t as simple and certain as it’s cracked up to be. Until the global economy recently got tossed on its rear end, prices were rising in most every part of the world. The focus, of course, was on the cost of energy, food and various other raw materials. Central banks in a position to stand firm on monetary policy did so at all costs. Inflation was the real threat. But did that idea get turned around in the blink of an eye or what? Prices for natural resources have ...

Key News• The rate at which banks lend dollars to each other fell on Monday as dealers reported U.S. banks starting to lend rather than simply hoard cash, a sign central banks are gaining traction in their quest to unclog frozen money markets. (Reuters) US Economic Events (WSJ):10:00a.m. Sep Conference Board Leading Indicators: Previous: -0.5%.

Quotable “Paper money is faith-based, says Grant’s.  Then how much more so is credit, which is the promise to pay paper money?”

Jim Grant

FX Trading – Can you say Asian Financial Crisis Redo?

Interesting!  It seems the chances for another Asian-style financial crisis lingers and is rising (we are already seeing it in S. Korea; chart below).  This is surprising since it appeared the entire region was well position to whether a downturn in the major economies—at least the view before the downturn morphed into an all out assault on all the ties that seem

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Financial NewsJason Corcoran in Moscow 13 October 2008 Many holdings are up for saleOligarchs on opposing sides of the cash crisis are set to trigger a boom in merger and acquisition activity in Russia and the Commonwealth of Independent States.Cash-tight tycoons are being forced to sell holdings to meet pending margin calls while their rouble-wealthy counterparts are sizing up distressed assets affected by the liquidity crunch.Oligarch Oleg Deripaska had to sell a stake in Canadian auto parts maker Magna to meet a $1bn (€734m) margin call while Ukrainian billionaire Kostyantin Zhevago was forced to sell a large stake in Swiss-based ore miner Ferrexpo worth $180 in order to meet a margin call by JP Morgan.Analysts are predicting Deripaska, who has $28bn, may have to divest further holdings in his Basic Element investment vehicle to shore up his finances….

Bailout package is voted down! Biggest one day point drop for the DOW! Dollar rallies hard... Carry trades unwind... Again! And Now... Today's Pfennig!

Much of the world is facing enormous financial crisis, but Russia’s economy is facing a tumultuous storm. Signs of Russia’s economy plunging can be seen in the falling stock market, which has plummeted by 60% since May 19th, at a loss of $900 billion. Many economists feel that this falling stock market is likely to result in Russia’s economy taking a turn from growth to a sudden drop off in the near future.

According to Anders Aslund, the decline of Russia’s economy can be seen in a few major acts carried out by Putin.

One, Prime Minister Putin attacked the owner of Mechel for tax evasion and price gouging on July 42, 2008, which caused Mechel shares to lose half their value, which in turn, had a very large impact on Russia’s economy.

On August 8, Putin attacked Georgia, which has not done anything for the reputation of Russian leaders as being unpredictable …