china raises interest rates because..

they believe they can counteract the economic forces from their currency peg.  The global economic force is simply too overwhelming.  It is not a black market, it is simply THE MARKET.

The Fed (will eventually)  force the government to unwind the fixed exchange rate policy by exporting inflation.  In reality, we want inflation in the U.S. markets to get us out of the recession, but because China has such a strong stance on keeping their exchanged rate fixed, the inflation is bought by the Chinese government in the form of U.S. dollars.

The government can attempt to keep the exchanged rate fixed, but there is a tipping point that will result in rampant inflation of core prices, resulting in the same scenarios they were trying to avoid (political instability and protest).  The authoritarian government is too stubborn to realize that they do not have unlimited access to capital.  

The end game: China will eventually have to let their currency appreciate, or continue to soak up the inflation that should theoretically be occurring at home.

China keeps their currency exchange rate fixed in a narrow band because:
-they are scared of losing manufacturing jobs to other lower wage economies
- this would result in less jobs, protests and instability

By keeping the currency rate fixed at an artificial level, they are risking rampant inflation as traders and currency speculators will flock to buy the yuan in anticipation of China attempting to crack down on inflation in food/energy/real estate/core goods.  Because they are so poor, a disproportionate share of income is spent on food. The 11% increase in food prices will also result in protests, riots and instability if the government allows that to continue.

black markets and the NCAA

OPEC controls supply in order to manipulate price of oil.  OPEC profits off the resources of set of countries. The US created ExxonMobil and Chevron in order to compete globally.

BCS (NCAA) controls supply to manipulate and profit off of student athletes. NCAA profits off the resources of educational institutions and operates as a cartel.  

The 'BCS' conferences are equivalent to the government bureaucrats who profit from their countries resources.  The rest of the population (conferences) represent the bourgeoisie or the havenots.  The government redistributes the profits within the system to select aristocrats. 

Black Markets are created when there is a misalignment between goods and services. They are frequently derived from government intervention or in this case a poorly run monopoly.   Because of the demand for services from athletes a black market is created to fill the void left in the market by the NCAA. The NCAA has determined that it is 'illegal' to pay athletes for their services, the same way a drug such as marijuana or cocaine is determined to be illegal.  The black market exists because of demand within the system, in this case for the talents of high school football players. 

The problem now is that there is so much demand for college football, the talent has spread so deeply and evenly within the system to division 1-AA and division II.

The BCS has turned college football into an ice skating competition in 3 out of every 4 years, because of the inability to play games that are demanded by the public.

I will argue that the BCS leaves billions of dollars on the table ever year (until they receive a new contract with a playoff system where people actually care about multiple games).  I would also argue that because they are so satisfied with the current revenues, that when they do realize there are billions of dollars lying on the table, they should be donated to scholarships and families of athletes in need.

The BCS is probably the most inefficient monopoly on the planet. Can you imagine how many additional viewers would be tuned in to games in a playoff system? I am an avid fan, but once the regular season is done, there is no more than two games worth watching.  Nobody wants to see a dust bowl match up between Oklahoma and Connecticut.

Keywords:

Economic Incentives

Money

Houses

Cars

Jersey Sales

Ticket Sales

Advertising Sales

Naming Rights

These are the reasons why college athletes would take money.

beats

http://www.youtube.com/watch?v=iScWJMGz2cU

best baseball players of All-time, position by position

 SP:
21. Roger Clemens, 7 CY, STEROID ERA, 2 WS, 2 TRIPLE CROWNS
19 Cy Young
Walter Johnson
Sandy Koufax
45 Bob Gibson
Randy Johnson
31 Greg Maddux
30 Nolan Ryan
Tom Seaver



RP:
42 Mariano Rivera


1B:
4. Lou Gehrig
5. Albert Pujols
Pete Rose


2B:
Roger Hornsby 
42. Jackie Robinson
12 Roberto Alomar

SS:
33. Honus Wagner
2. Derek Jeter
13 Alex Rodriguez
8 Call Ripken, Jr.

3B:
13. Alex Rodriguez
Pete Rose
Mike Schmidt
Chipper Jones

OF:
Ty Cobb
3. Babe Ruth
25. Barry Bonds
24. Willie Mays
9. Ted Williams
20 Frank Robinson
21. Roberto Clemente
Shoeless Joe
7. Mickey Mantle
5 Joe DiMaggio
Hank Aaron
Ricky Henderson
Jimmy Foxx
Stan Musial
Hack Wilson
Carl Yastrzemski


C:
Johnny Bench
Mike Piazza


U
Pete Rose

#1 Aruba Sunset Photos taken with Sony CyberShot

housing turnover rate

The housing turnover rate. I'm a first time home buyer. I purchase your house for 340,000, financing 329,000 at 5.875% for 30 years in Arlington VA on October 30, 2008. If the seller had purchased the property in 2000 for 203,000, they would be 'in-the-money' by 137,000 plus the amount they paid in principle during the first 8 years. The seller could then use the proceeds to finance the purchase of another house at a higher price, hence the term 'trading up'.

Trading up does not happen without:
a) first time home buyers,
b) investors,
c) other demand sources- immigration/jobs/population demographics.

If there is no demand from one of these sources, trading up does not exist and cycle grinds to a halt, much like was happening at the time of my purchase. The house price depreciation problem (or good fortune depending on your perspective) can also be characterized as a demand problem.

Demand was exhausted as the supply of credit went to borrowers who would not obtain a mortgage under normal conditions. The supply of credit was made possible by the rapid expansion of securitization and the re-distribution of credit risk, hence subprime lending, piggy back loans/2nds, alt-a lending, no-doc, and low-documentation mortgages.

Prices rise when demand exceeds supply. Pent-up demand enabled builders to ramp up new construction. The fundamental problem with new construction is that it takes the builders 6 to 18 months to complete the finished product, which was based on demand in the past (can your builder spell futures contracts?). In some areas the expansion of credit led to a build-up in the outer edges of suburbs, as in Northern Virginia, while other areas experienced subprime lending.

By the time late 2007 or early 2008 comes around, the supply wave is still in the pipeline and the demand wave is long gone and credit has contracted to only borrowers with the best credit histories. Prices will rise as the supply of homes shrinks and new investment occurs in the form of jobs.