At least our day-to-day economic indicators go up and down
entirely based on rumors and expectations. Yesterday an Australian mining
giant, BHP Billiton noted that Chinese orders for iron ore were weakening. Hysteria
whipped across the world immediately. The value of the Australian dollar fell.
Why? I’m told that the Australian dollar is an early indicator of the Chinese
economy’s future performance. Notice the circularity here. It’s not that the
Chinese economy has tanked; no. It’s
expected to tank; and when it does,
the Australian dollar will
(presumably) reflect that; therefore sell that damned Australian dollar now, before it has time to signal that
China is starting to tank. Wow! The New Zealand and Canadian dollars also
immediately lost value—these countries being big traders with China. Crude oil also
slipped in price—after all it is China’s
demand that keeps the price up. Commodity futures prices dropped as well.
Tuesday, March 20, 2012
Foresight in Hindsight
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