The Chinese have announced they will allow their currency off the leash. While not a floating policy quite yet, the yuan will edge up over time. Pegged to the dollar since July 2008, the yuan has remained at about 6.83 per dollar. Some economists have described the yuan as 20% undervalued (although when you search to source this, it’s mostly the IMF and politicians that make this claim). This new found flexibility is a step toward what Washington policymakers have been pushing hard for. The conventional wisdom is that an undervalued yuan hurts US exports to China’s growing consumer base. But Donald Trump made an interesting point regarding China, and I quote:

The most frightening element of this ten-year forecast is that an estimated $5.6 trillion of the debt would be interest expense. Yes, that’s right, interest.

Many have oversimplified that Buffet didn’t understand dot.com’s, therefore he didn’t invest in them; and this is why he was able to have the last laugh once the floor caved in on the bubble. As he says: “Risk comes from not knowing what you’re doing.” My feeling is that Buffet knew exactly what dot.com’s were, he simply chose not to bite. In the irrational exuberance of market surges, Buffet, as stated above, knew these companies were not making a profit, therefore there was no true underlying value for most of them. Any great investor, or gambler, knows that the biggest wins usually come when you’re the 5% minority making the wager, and public opinion is going the other wa

There’s a lot of talk out there about green shoots, economic recovery and stabilization. Most people aren’t predicting giant leaps in GDP anytime soon, but some are predicting modest global GDP growth between 2-4 percent for 2010. As Greece goes bankrupt and looks to its EU compatriots for help, remember they’re not the only nation on the belly up path. And from a United States perspective, here are the numbers you should be hearing on a daily basis, but aren’t. It isn’t just a matter of restoring economic growth and reducing unemployment. Surprise, surprise: debt, unfulfillable promises and easy money have consequences. Unfortunately, we have plenty of all three:

Economic forecasts are a funny thing. If they attempt to project anything beyond the short-run (one year), be very skeptical. But short-run forecasts are not iron-clad either. I have a great time on this site making fun of economists and their predictions. Guessing what the intricate convergence of millions, if not billions, of different economic agents and their decisions will be, is kind of an exercise in futility. So if I were to predict what crude oil will do in 2010, I’d give you some markers to help you make your own decision long before I took a specific barrel price and defended the position.

Economic historian Niall Ferguson and James Fallows discuss the Chinese reaction to U.S. fiscal policy. In short, many in China see U.S. fiscal policy as out of control and the dollar heading for major depreciation.

Typical government response; program X hasn’t worked, it’s obviously because we didn’t spend enough:

We got some grim news today. According to Treasury Spokesman Ronald Schuler, speaking at a live press conference carried by the prestigious Onion News Network, all of our currency is extremely unsafe, will probably kill us and therefore must be recalled:

…from what I have gathered, our current president believes we need to change a few things. Well, I agree with him. I thought President Bush was a disaster. Unfortunately, though, other than the ridiculous hero worship and cult of personality that Obama’s got going, it really doesn’t seem like much of anything is changing.