세계경제 트렌드와 MARKET CRASH 2015

Aug 6, 2014

한국에서 어떻게 미국 ETF를 투자하나?








한국에 살며 DIY로 미국 ETF 투자하기!


치솟는 온도 뿐 아니라 몸을 끈끈하게 만드는 습도가 온 한반도를 강타하고 있습니다.


요즈음 저는 여러 질문들을 받고 있습니다. 가장 흔한 질문 중 하나는, '닉의 투자보고서, 헤리덴트의 경제 예측등을 통해 경제가 어떻게 흐르고 있는지는 잘 보고 있다. 심지어는 이제 미국 ETF 어디에 투자해야 되는지도 알겠다. 결심도 섰고, 리스크 캐피탈도 마련했다. 하지만 한국에서 이것을 어떻게 할 수 있는지 잘 모르겠다' 는 것입니다.

 이번 포스트에서는 한국에 살며, 미국 ETF에 직접 투자하는 방법에 대해 중점적으로 설명하도록 하겠습니다.

여러 해외 투자 방법이 있겠지만, 드로잉대디가 (단지 수수료가 가장 싸다는 이유로) 이용하고 있는 '리딩투자증권'을 통한 방법을 소개하도록 하겠습니다.


방법은 간단합니다.

1. 우리은행, 국민은행, 하나은행중 하나에 가서 은행의 달러계좌를 개설하고 이와 연결된 리딩투자증권 계좌를 오픈한다.

- 우리은행 창구에 가서 리딩투자증권 계좌를 하나 열고 싶어요. 하면 계좌를 하나 열어줍니다. 창구 직원이 이 계좌를 어디에다 연결시키고 싶나요? 하면, 기존에 가지고 있는 우리은행 계좌에다 연결시켜도 되고, 새로운 은행계좌를 만드셔도 됩니다. 물론 당연히 아시겠지만, 이렇게 계좌를 만드는 데 드는 비용은 모두 무료입니다. 가끔 은행 계좌를 만들 때, 한화 계좌를 열어야 하나요 달러 계좌를 열어야 하나요? 라는 질문을 듣는데, 답은 '둘 다 됩니다' 입니다. 저는 편의상 달러계좌를 만들었습니다. 그리고 가지고 있는 투자할 돈을 인출해 달러로 환전해서 개설한 달러 계좌에 넣습니다.


2. 컴퓨터에 프로그램 깔기, 계좌이체.

- 이렇게 리딩투자증권 계좌와 연결된 우리은행 계좌를 만드셨으면, 컴퓨터로 갑니다. 단, 맥이나 스마트폰에서는 리딩투자증권 업무가 어려우니 반드시 윈도우 기반 피씨로 가야 합니다. 피씨 브라우져에서 www.leading.co.kr/를 치고 리딩투자증권 홈페이지로 들어갑니다.거기서 해외투자용 프로그램을 다운 받으셔서 깔고, 은행 업무가 끝나기 전인 오후 3시 전까지개설한 은행달러계좌에서 리딩증권 계좌로 이체를 해 놓습니다. (어려운 분들은 리딩투자증권의 콜센터를 이요하시면, 원격으로 도와줍니다.)

3. 예약거래와 직접거래 그리고 콜거래

-ETF를 사는 데에는 두 가지 방법이 있습니다. 미국 장이 시작하는 시간에 맞춰 거래예약을 걸어 놓는 방법과, 우리나라 시간으로는 저녁 11:30분 미국 장 개장 시간에 직접 프로그램에 들어가 거래하는 방법입니다. 단 예약을 걸어 놓는 방법은 중간에 주식 프로그램을 종료하게 되면 자동으로 거래 예약도 종료되니 주의하셔야 합니다.
 전화로 주문을 하는 콜거래도 있으나, 이는 수수료가 비싸므로 추천하지 않습니다. 가능하면 직접 프로그램으로 주문해 보는 것에 또 DIY 투자의 의의가 있겠죠?


현재 맥으로 포스팅을 올리다 보니 스크린 캡춰 사진이 얼마 없네요. 이번 포스트는 publish 후 계속 업데이트해 나가도록 하겠습니다.

드로잉 대디 올림.











드로잉 대디의 생각: 왜 미국 ETF에 DIY로 투자해야 하는가?




왜 드로잉대디는 미국 ETF 에 직접 투자하는 것을 추천하나!

우선 지금까지 닉의 투자보고서를 통해 몇 번 추천된 미국 ETF는 FAZ, ERX, RUSS 등이 있습니다. 이 ETF 들은 모두 엄청난 레버리지 (3배) 를 가지고 있으니, 도박을 하려는 사람이 아니면, 반드시 자신이 '잃어도 큰 영향이 없는' 리스크 캐피탈을 가지고 투자해야 합니다. 저는 어떻게 투자하고 있을까요? 개인적으로는 제 멘토의 조언에 따라 제가 보유한 '유동 가능한 현금'의 20%를 리스크 캐피탈로  설정하여 따로 통장을 만들었습니다. 따라서 혹 투자금이 제로가 되어도 저와 제 가족의 삶에 흔들림이 없도록 하였습니다.

 하지만 적은 금액을 투자한다고 수익 또한 적을까요? FAZ 와 같은 인버스 ETF는 2008년도와 같은 미 금융위기가 온다면, 현재가 대비 1000배가 넘는 수익을 기대 할 수도 있습니다.(그리고 굉장히 신빙성 있는 큰 확률로 저는 개인적으로 이 금융위기가 반드시 찾아온다고 믿고 있습니다.) 즉 경제 예측에 대한 타이밍이 잘 맞다면, 내 200만원의 투자가 2억이 되어 돌아올 수도 있는 가능성이 있습니다. 물론 200만원이 2만원이 될 수도 있습니다. 하지만 이것은 도박과는 전혀 다릅니다. 왜냐구요?

1. 도박은 대부분 결과가 대단히 짧은 정해진 기간에 나오게 됩니다. 따라서 자금이 바닥 날 때까지 끝장을 보게 됩니다. 저는 도박을 하면서 제한된 자금의 원칙을 지켜 게임하는 사람들을 거의 본 적이 없습니다. 시스템 제공자가 결국 돈을 벌게 만들어져 있는 구조이기 때문이죠.
2. 도박은 결과에 대한 논리적 예측을 하기가 거의 불가능합니다. 복권이나 경마가 그 좋은 예입니다.

하지만 제가 설명하는 레버리지 ETF 투자는 다음의 몇 가지 포인트를 보면 이와 다르게 사용될 수 있다는 것을 알 수 있습니다.

1. 투자원칙: '리스크 캐피탈' 이라는 투자자금의 원칙을 만들어 범위를 정한 후 투자할 수 있습니다. 이는 개인 자산 중 크지 않은 부분이라 혹 ETF 가격이 급락해도 삶에 큰 영향을 주지 않습니다. 또한 해외 ETF 의 특성상, 수수료와 세금으로 인해 일명 '샀다 팔았다'를 자주 하기가 어렵기 때문에 장기 투자는 단지(손가락을 자름)의 노력이 없어도 쉬운 일입니다.

2. 세계경제에 대한 눈: 단순 투자가 아닌 국제 경제 흐름에 대한 공부 또한 하게 됩니다. 뉴스도 분석적으로 보게 되고, 국내 뉴스 뿐 아니라 해외 뉴스도 보게 됩니다. 주식 뉴스뿐 아니라 지정학적 뉴스도 보게 됩니다. 원유, 금, 은 등 현물에 대한 시각도 생깁니다. 중국, 인도, 러시아 경제에 대한 안목이 생깁니다. 경제학 역사에 대해 공부하게 됩니다. 관련 서적들을 읽게 됩니다. 또 자신만의 냉철한 판단 시각, 즉 '믿음'을 갖게 됩니다.

3. 예측을 통한 기다림과 재정 계획: 정확한 장기적 예측안을 가지고 투자하게 되면, 예측하게 될 이벤트가 벌어질 때까지 기다릴 줄 알게 됩니다. 일희 일비하는 도박이나 주식 투자와는 다르지요. 실제로 저는 동일한 ETF 에 3년간 투자했고 또 아직 기다리고 있습니다. 장기로 투자하니 저의 장기 재정 계획을 세우게 됩니다. 매달 발생하는 수익의 일부를 원칙적으로 떼어 투자 통장에 넣게 됩니다. 또 가족을 고려한 인생의 재정 계획을 수립하고, 나의 인생에 필요한 자금이 얼마인지도 구체적 액수를 알게 되었습니다. 1000억이나 1조가 아닌 무엇을 위한 얼마 가 생기는 것이지요. 그 동안 세계 경제를 보는 눈도 분명해 지는 것은 당연합니다. 보이지 않는 것이 보이게 됬다고 할까요..

 저는 1929년과 같은, 2008년과 같은 금융 대공황이 반드시 다시 도래한다고 믿고 있습니다. 혹 이에 영향을 미친 우리 경기가 급락하여 저에게 피해가 온다고 하더라도, 저는 이 리스크캐피탈 투자로 인해 더욱 풍요로운 삶을 유지할 수 있을 것입니다. 이것이 제 멘토가 조언해 준 단순하고 강력한 전략입니다.

한국에도 ETF 가 있습니다. KODEX 레버리지 ETF, KODEX 인버스 ETF 등이 그것이지요. 네이버에 조회해 보시면 어떤 것인지 잘 나와 있습니다. 그런데, 이런 한국 ETF는 문제가 있습니다.

1. 유동성의 문제: 이것이 가장 큰 문제인데, 아직 많은 수의 한국 ETF들은 유동성이 많이 부족합니다. 즉 주식처럼 쉽게 사고 팔 수 있는 점은 같지만, 결정적인 순간에 가격이 높을 때 판매가 되지 않는 문제가 발생할 여지가 있는 것입니다. 즉 안정성의 문제인 것이죠. 이점이 미국 ETF에 대한 투자를 권하는 이유입니다.

2. 정보의 문제: 한국의 ETF는 예측이 미국 ETF보다 어렵습니다. 물론 이것은 개인적인 관점입니다. 보통 ETF는 코스피나 러셀1000 등 지수에 연동되어 있기 때문에 지수의 등락에 따라 포지션이 결정 됩니다. 저는 한국의 지수들 보다는 해외 지수들에 대한 경제 예측 정보들이 훨씬 많다고 생각됩니다. 따라서 개인적으로 해외 지수의 예측이 더 쉽기에 미국 ETF를 선호합니다.

3. 종류의 문제: 한국은 ETF 도입의 역사가 짧아 종류가 얼마 되지 않습니다. 비교할 수 없는 다양한 선택지가 있는 미국 ETF가 더 끌릴 수 밖에 없는 이유이죠.

하지만 해외 직접투자에는 양도소득세 20%가 과세가 됩니다. 수익이 났을 때만 수익의 20%를 국세청에 납부해야 하는 것입니다. 하지만 손실이 있을 때는 세금은 내지 않습니다. 20%가 크다고 생각할 지 모르지만 몇 가지 측면에서는 양도소득세를 납부하는 것이 더욱 깔끔할 경우도 있습니다. 이 부분은 추후에 따로 포스팅 하도록 하겠습니다.

이상 미국 ETF 직접 투자해야 하는 이유에 대한 드로잉 대디의 포스팅이었습니다.

드로잉대디 올림

존 말딘 보고서(2014.8.2): 변화 혹은 붕괴

Thoughts from the Frontline
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Transformation or Bust
By John Mauldin | Aug 02, 2014
China continues to be front and center on my list of concerns, even moreso than the latest Federal Reserve press release or fluctuation in the Dow (although you should pay attention). I believe China is the single biggest risk to world economic equilibrium, even larger than Japan or Europe. This week my young associate Worth Wray provides us with a keenly insightful essay on what is currently happening in China. I will admit to not having written about China very much in the past five years, primarily because, prior to Worth’s coming to work with me I really had no secure understanding of what was happening there. I know some readers may be surprised, but I really don’t like to write about things I have no understanding of. Worth has helped me focus. (It helps that he studied Mandarin and lived in China for a while, and is obsessed with China.)
Worth has been working directly with me for over one year now. I have had the privilege of working with a number of impressive (lately mostly younger) people over the years, but Worth brings something extra to the table. He is one of the best young macroeconomic minds I have been with in years. He constantly challenges me to step up my game. And so without further ado, let me give you Worth’s thinking regarding our latest discussions on China.

Transformation or Bust, China Version
The People’s Republic of China is running up against its debt capacity; and its consumption-repressing, credit-fueled, investment-heavy growth model is nearly exhausted. History suggests that China’s “miracle” could dissipate into a long period of painfully slow growth or terminate abruptly with a banking crisis and sudden collapse. That said, China’s modern economic transformation has defied historical precedents for decades. However unlikely, China could surprise us again. Miracles will happen in the Age of Transformation.
What happens next depends largely on the economic wisdom and political resolve of China’s reformers, who must find a way to gradually deleverage overextended regional governments and investment-intensive sectors while simultaneously rebalancing the national economy toward a more sustainable consumption-driven, service-intensive model. The trouble is, their efforts may prove too little too late to slowly let the air out of a massive debt bubble. Even rapid productivity growth from “new economy” sectors may not be enough to overcome the debt equation.
At first blush, China’s ruling elite do not appear to be in denial about the severity of the debt problem, the urgent need for structural reforms, or the opposition from vested interests within the Communist Party; but the jury is still out on whether President Xi Jinping and his allies will maintain the political capital necessary to complete, or even continue, the task. With little margin for error, he will either lead the Middle Kingdom through the greatest transformation in world history... or he will preside over one of the most spectacular busts on record.
Before we dive into recent data and explore the transformation taking place across the People’s Republic, let’s step back and think intentionally about the conditions that often set “rich” developed economies apart from their “poor” developing peers.
I am going to quote extensively in the next two sections from a recent blog post by Peking University Professor Michael Pettis. Pettis provides a CRITICAL foundation for understanding the transformation taking place and the reforms required to keep it going, so please bear with me. We will have plenty of time to delve into the recent data in the second half of the letter. Unless otherwise noted, all quotes are excerpted from his brilliant post,"The Four Stages of Chinese Growth."
Becoming a Developed Economy
Becoming a truly developed country depends on far more than just accumulating an abundant capital stock or a highly capable workforce. Durable growth and sustainable development depend on “social capital” – or institutional structures including property rights, the legal code and the justice system, the financial system, corporate governance, political culture and practice, tax structures, etc. – which establish and/or maintain the right incentives for economic resources to be used efficientlycreatively, and ultimately,productively.
Pettis explains: “In a country with highly developed social capital, incentive structures are aligned and frictional costs reduced in such a way that agents are rewarded for innovation and productive activity. The higher the level of social capital, the more likely they are to act individually and creatively to exploit current economic conditions and infrastructure to generate productive growth.” Extending his argument, John and I would contend that high levels of social capital effectively incubate innovation and entrepreneurship so that, with disciplined savings and investment over time, the right incentives produce lasting wealth and ever-higher levels of development.
I think MIT Professor Robert Solow would agree with us on this front. Solow’s work on the US economy – which has become a textbook economics lesson – explains that innovation has accounted for more than 80% of the long-term growth in US per capita income, with capital investments accounting for only 20% of per capita income growth. In other words, the United States and the rest of the post-industrial, developed world owe their epic rise in living standards to the underlying “social capital” that properly incentivized innovation, entrepreneurship, and thus technological transformation over the last two centuries.
The lesson here is powerful. It is not enough just to mobilize resources and direct investments to the “right” sectors as China’s central planners have been doing for the last few decades. Once the basic building blocks of economic development are at hand, they still need to be used creatively, effectively, and productively.
Pettis elaborates, “In developed countries … abundant social capital encourages residents and businesses to use available conditions and infrastructure in the most productive ways possible. Undeveloped countries, on the other hand, are poor because they do not have the often-intangible qualities that allow citizens spontaneously, and without planning, to exploit their economic and infrastructure resources most efficiently and productively.”
Emphasizing the importance of incentive-aligning institutions, developing economies must not only strive to create (1) policies aimed at providing and improving the basic building blocks of production like adequate infrastructure, abundant capital stocks, and healthy, educated workforces but also (2) policies and institutions capable of streamlining the commercial incentives for using those resources as productively as possible with as little waste as possible.
Like the USSR in the Cold War era, the People’s Republic has been wildly successful in mobilizing resources; but failing to use those resources efficiently may be its downfall.
[As an aside, I would encourage anyone and everyone interested in these ideas to readthis 1994 Foreign Affairs article by Paul Krugman. It’s one of those papers that has stuck with me since college and has dramatically informed my thinking about consumption-repressing, resource-marshaling, investment-driven growth miracles.]
Today China enjoys access to an abundance of raw materials, a plentiful supply of human capital, a large and growing capital stock, and extensive infrastructure assets; but after decades of policies meant to build up the supply of those basic economic building blocks, the institutions and incentive structures underlying its socialist market economy are deeply and inherently skewed in favor of vested interests at various levels of government.
And this is precisely why Xi Jinping’s widespread crackdown on corruption is SO important. Transforming China into a more developed, consumption-driven, service-intensive economy requires that China achieve, according to Pettis, “a dismantling of the distortions and frictions that create rent for the elite, thus undermining the ability of the elite to capture a disproportionate share of the benefits of growth.”
Overcoming vested interests and reforming China’s underlying institutional structures to properly incentivize innovation is absolutely possible, but it demands strong and unwavering leadership. As we will see in the next section, Xi will have to channel his inner Deng Xiaoping to guide the People’s Republic through its next great transformation.
The Four Eras of Chinese Growth & Development
In contrast to popular development narratives, Dr. Pettis thinks of China’s modern growth and development in four stages. Let’s see what he has to say…
  1. The First Liberalizing Period, late 1970s to early 1990s
In the late 1970s and early 1980s Beijing forced through a series of liberalizing reforms that I would characterize as aimed at building social capital. By eliminating laws that severely constrained the ability of Chinese to behave productively, these reforms unleashed an explosion of economic activity that generated tremendous wealth creation. It became legal, for example, for Chinese to produce and sell as individuals, not just through the relevant and usually badly managed state-controlled collectives or organizations. A limited number of farmers were allowed to keep anything they produced above some quota, and agricultural yields doubled almost immediately. If a man believed there was a shortage of bricks in his town, he could create a company to manufacture bricks, and China’s hopeless jumble of soaring brick inventories in one part of the province matched by severe brick shortages nearly everywhere else was replaced with a system in which the more efficien tly you made and delivered bricks, the richer both you and the country became.
But the implementation of the reforms was not easy. It undermined a very powerful party structure (not to mention the managers of the old state-controlled brick manufacturer) that had been built up over the previous three decades around the ability of its members to constrain and direct economic activity, and so these reforms met with powerful elite resistance. It was only, I would argue, because of the credibility, prestige, and power that Deng Xiaoping and the men around him had, and the loyalty they had built within the PLA, that Beijing was able to overcome elite resistance and successfully implement the reforms. Even in the 1990s, Deng struggled with elite opposition and my understanding is that his famous 1992 Southern Tour was arranged mainly to outflank and defeat provincial opposition to continued economic liberalization.
  1. The Gershenkron Period, early 1990s to early 2000s
As Chinese productive activity swelled it soon began, however, to run into infrastructure and capacity constraints. This began the second phase of China’s astonishing growth, one characterized by the marshaling of domestic resources to fund an investment boom aimed at creating infrastructure and capacity. Like the many previous examples of investment-driven growth miracles, China embarked on a program to resolve the major constraints identified by Alexander Gershenkron in the 1950s and 1960s as constraining backward economies: a) insufficient savings to fund domestic investment needs, which had to be resolved by policies that constrained consumption growth by constraining household income growth, and b) the widespread failure of the private sector to engage in productive investment, perhaps because of legal uncertainties and their inability to capture many of the externalities associated with these investments, which could be resolved by having the state identif y needed investment and controlling and allocating the savings that were generated by resolving the savings constraint.
Because China’s infrastructure was far below its ability to absorb and exploit infrastructure efficiently and productively (its social capital exceeded its physical capital, in other words), it was relatively easy for the central authorities to identify productive investment projects, and as they poured money into these projects, the result was another surge in wealth creation from the early 1990s to the early 2000s. Although all Chinese benefitted from this wealth creation, the new elite benefitted disproportionately, in large part because of the constraints imposed on the growth of household income aimed at generating higher savings. Of course over time these new elites became politically entrenched. This elite today is famously referred to (in China) as the “vested interests”.
  1. Investment Overshootingearly 2000s to 2014?
But China was still an undeveloped economy with “backward” (in Gershenkron’s sense) social, legal, financial and economic institutions that sharply constrained its citizens from achieving the levels of productivity that characterize developed countries. Its social capital was still very low, in some cases perhaps even as a partial consequence of policies that had led to the earlier rapid investment-led growth by allowing elites to control access to cheap capital, land, and subsidies. As investment surged, China’s physical capital converged with its social capital (i.e. its infrastructure more or less converged to its ability to exploit this infrastructure productively), after which additional physical capital was no longer capable, or much less so, of creating real wealth.
Instead, continued rapid increases in investment directed by the controlling elites (especially at the local and municipal levels) created the illusion of rapid growth. Because this growth was backed by even faster growth in debt, however, it was ultimately unsustainable. This period began around the beginning of the last decade, I would argue, and it is the period in which we currently find ourselves.
  1. The Second Liberalizing Periodcould begin in 2014?
What China needs now is another set of liberalizing reforms that cause a surge in social capital such that Chinese individuals and businesses have incentives to change their behavior in ways that generate greater productive activity from the same set of assets. These must include changing the legal structure, predictably enforcing business law, changing the way capital is priced and allocated, and other factors that determined the incentives, so that Chinese are more heavily rewarded for activity that increases productivity and penalized, or at least less heavily rewarded, for rent seeking.
But because this means almost by definition undermining the very policies that allow elite rent capturing (preferential access to cheap credit, most importantly), it was always likely to be strongly resisted until debt levels got high enough to create a sense of urgency. This resistance to reform over the past 7-10 years was the origin of the “vested interests” debate.
Most of the reforms proposed during the Third Plenum and championed by President Xi Jinping and Premier Li Keqiang are liberalizing reforms aimed implicitly and even sometimes very explicitly at increasing social capital. In nearly every case – land reform, hukou reform [note: household registration system or the removal of the distinction between rural and urban citizens and thus the freer movement of labor], environmental repair, interest rate liberalization, governance reform in the process of allocating capital, market pricing and elimination of subsidies, privatization, etc. – these reforms effectively transfer wealth from the state and the elites to the household sector and to small and medium enterprises. By doing so, they eliminate frictions that constrain productive behavior, but of course this comes at the cost of elite rent-seeking behavior.
Drawing on this four-stage development framework, Pettis’ research reveals an insight that many economists and China watchers are simply missing. China’s current overcapacity and over-indebtedness is not just the unfortunate consequence of hurried post-crisis stimulus, but an inherent by-product of its command-and-control growth model.
After decades of marshalling resources, educating its workforce, and building out a modern infrastructure, China has amassed the building blocks for economic development. China’s central planners successfully overcame the country’s capacity constraints during the so-called Gershenkron Period, but the problem today is overcapacity and widespread misallocation. More investment in bloated “old economy” sectors like low-value-added manufacturing or construction may support employment and keep the economy growing at or above its headline growth target for a while longer; but as John and I explored in our last China letter (Can Central Planners Revive China’s Economic Miracle?) – the investment boom cannot go on forever.
It’s time for central planners to take another step back in order for China to take a giant step forward.
Mini-Stimulus & Third Plenum Progress Report
Among the various reforms set forth in last November’s Communist Party Third Plenum, ranging from financial liberalization to a crackdown on corruption and pollution, the most challenging is the gradual deleveraging of the Chinese economy while simultaneously rebalancing the national accounts toward a more sustainable consumption and service-heavy mix.
As John and I have argued for several months, these kinds of liberalizing reforms will not be easy and may require a far greater slowdown than anyone in Beijing publicly admits – but they are China’s only hope of avoiding either a hard landing or a long, frustrating period of depressed growth. Debt has a cost, and that cost must be paid in one form or another.
Although Xi and China’s State Council members seem to understand this dynamic, they are not following through with timely reforms. After a period of weakness in the first half of the year, the State Council announced what could be best described as a mini-stimulus in early April, which in the following months has turned into a full-blown stimulus package.
Rather than encouraging the national economy to rebalance toward domestic consumption or allowing previously misallocated capital to seek out more productive uses in “new economy” sectors like services and technology, China’s State Council is responding to slowing economic growth with more of the same: (1) government spending on railway expansion and shantytown renovations (which may or may not be productive)to replace decelerating private sector demand, (2) “targeted” interest rate cuts to encourage additional credit growth (which will almost certainly be unproductive), (3) last-minute bailouts to prevent corporate defaults (which they told the world to expect a lot more of in 2014), and (4) tax breaks for small and medium-sized enterprises (which remain seriously disadvantaged relative to larger public or state-owned firms).
Since the State Council’s announcement in early April and Premier Li Keqiang’s subsequent guarantee that 2014 economic growth would top 7.5%, the so-called “mini-stimulus” has led to another surge in lending activity,
slightly better real GDP growth (7.5% YOY in Q2 compared to 7.4% YOY in Q1 – according to the highly questionable National Bureau of Statistics),
and the strongest manufacturing PMI print in eight months (51.7 in July, compared to 51.0 in June, 50.8 in May, and 50.4 in April).
And, of course, Chinese stocks are SURGING on improving “old economy” indicators like industrial activity.
John and I believe this kind of stimulus-fueled “improvement” – although it is boosting China’s economy and lifting Chinese markets in the short term – is a very bearish sign that Beijing is afraid of the short-term pain associated with its admittedly urgent reform agenda. This kind of about-face may reveal one of two things: (1) the reformers’ resolve is fading, or (2) the economic reality in China is more unstable than we outsiders realize.
A Few Final Thoughts
[John here] As he did the last time he wrote on China, Worth actually ended up writing enough content for two letters. We’ll see Part Two next week.
As I’ve been saying for some time, we think China looms as the single biggest risk to the world economy, if only because no one yet fully recognizes the substantial and I think principal risk that derives from the innumerable global interconnections – with almost everything of a financial nature – that the world’s second-largest economy has forged over the last two decades. I say that fully cognizant of the risks that both Japan and Europe create for the world, risks Jonathan Tepper and I explored at some length in our book Code Red. Next week Worth and I will pin down realities we all need to recognize regarding the global risks posed by the ongoing political machinations within China. Stay tuned.
Montana, San Antonio, DC, Barefoot, and Boston
That sounds like an ambitious schedule, but it is actually stretched over three months, which is the lightest travel schedule I’ve had in five years. Which of course means it will change. Who knows, I may show up in a city near you. My travel life takes some strange twists. In a few weeks I will go up to Flathead Lake, Montana, to be with my partner Darrell Cain for a very long weekend, trying to actually relax. Last year when I was there I was finishing my book Code Red (ergo massive deadline), so I really had no time just to sit and read and think and meditate. My full intention is for this year to be different.
Tonight finds me in Grand Lake Stream, Maine, at Camp Kotok at Leen’s Lodge (highly recommended), where I’ve spent the first Friday of August for the last eight summers with my youngest son, Trey. This annual ritual has been a special time for me, marking the years as my youngest son has grown into a young man. And the reminder is made physical by the pictures in my phone. There are a few more tattoos and other things that make the old-fogey dad a little uncomfortable, but as we sit and catch fish I remember the 12-year-old kid who caught his first fish. He still has the same joy and facial expressions. Where did my little boy go? It’s hard for me to think back over how fast the time has flown.
Philosophical moment. Most of us of with older children experience the phenomenon of how fast our children grow up. It is both thrilling and uncomfortable. But life around us has otherwise tended to flow on smoothly, for the most part. What if the life we experience also changes rapidly in the future, which I think is the likely probability? Does the difficulty we have dealing with how quickly our children grow and change suggest that we will also find ourselves challenged in dealing with accelerating change in the world around us? Just asking…
I had the privilege here of sitting next to Paul LePage, who is the governor of Maine and running a very competitive and combative race for reelection. His problem is that the local media hates him, although he has won over a significant portion of the population with the substantial successes that he has had in the last four years. He has turned Maine around from being an economic joke and a disaster case into a state that is more than respectable. Maine’s unemployment rate has gone from being among the worst to being among the best. Taxes are significantly down. Growth is up. He’s reduced the welfare rolls from 27% to 19%.
He is an interesting character. I’ve been around politicians for the last 35 years, at all levels. And while I’m not significantly involved in politics today, there was a time when I was really into it. After a while, it dawns on you that there are politicians on both teams who are there for the personal benefits they can grab as opposed to the passion they bring to the table. Sadly, the first group is much larger than the second.
Paul is one of the passionate ones. Actually rather extremely so. Four years ago he was a businessman who got fed up and decided to run for governor, and in a very odd election year won as a Republican in a very deep-blue state. In the world of politics strange things happen.
Paul is rather outspoken, which is what has gotten him in trouble with the media. (Besides the fact that he is a libertarian in a state with a very liberal media.) He tells a story about Barbara Bush, who was with him at a collegiate event last year and asked if she could speak to him in private. Who tells Barbara Bush no? She leaned into his ear and said, “Governor, it is very important to get reelected. Maine needs you. Zip it!” He said “Yes ma’am” and has been a good boy ever since (at least on a relative basis).
Given his views and track record, if LePage were governing a state with a population of 10 million (Maine has 1.3 million), the media would be following him as a potential presidential candidate. As it is, he is off everyone’s radar screen. Unless you are in Maine. As I sat at the table and listened to him rattle off businesslike answers to question after question posed by members of the media (for the purposes of this dinner I got to sit with Bloomberg and a few of the other big dogs – go figure), I saw a man who translated his personal philosophy into practical solutions.
Sometimes his solutions were nuanced, but he decided to simply override his Democratic legislature, which wanted to postpone what he felt was a needed nursing home subsidy until after the election cycle – a delay that would have meant even more much-needed nursing homes in Maine would be closing down. He mandated the expenditure in a somewhat Obama-like fashion (or at least that’s what it sounds like to me, but then I’m just a country boy from Texas).
Governor LePage is an original. I’m not sure how he would play on a national stage, but he fits right into my image of Maine over the last 30 years. And I would make him an honorary Texan in about two heartbeats.
That’s all the news from Maine, where the world is a perfect sunset, the fish are all biting (we caught 36 today), and all the children are forever young. Have a great week and enjoy the wild ride into the Age of Transformation.
Your sometimes wishing things would slow down analyst,

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