Last week, the China Investment Corporation (CIC), China’s sovereign wealth fund, filed what seems to be its first ever 13-F disclosure with the U.S. Securities and Exchange Commission (SEC).  The move is significant both from a financial disclosure perspective, showing as it does the CIC’s continued commitment to disclose information about its portfolio in line with other institutional investors (13-F’s are required of investment managers managing over US$100 million in assets, and report their U.S. long positions, including options and shares), but also because it allows a glimpse into a part of the Chinese government’s foreign asset portfolio. As RGE has noted in the past, how China allocates the approximately US$2.8 trillion in government managed foreign assets, will be important for several asset classes.

Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at roubini.com.

RGE Analysis:

How to Avoid a Greek Tragedy in Europe by Nouriel Roubini and Arnab Das

Greece is the lynchpin of eurozone sovereign risk. We advise going flat for now. Greece is the debt crisis of the moment, but its problems are far from unique. On their resolution rides the fate of Greece's neighbors, the eurozone and perhaps the EU itself. Greece, like the rest of the PIGS, has an excessive public debt and fiscal deficit and is uncompetitive. A sovereign debt restructuring that reduces both the debt stock and interest burden and a substantial real exchange rate devaluation would clean up the national balance sheet, restore competitiveness and reinvigorate growth. [Available to RGE Clients Only]

Regulatory Impediments to Ending Japan’s Lost Decade by Mikka Pineda

Even after the end of Japan’s financial crisis of the 1990s, the economy has yet to regain the stratospheric ascendancy it maintained throughout the post-war years, and it continues to punch below its weight. This analysis explores how legal restrictions—combined with demographic change and increased global competition—may be trammeling the Japanese recovery. Regulations in the areas of labor mobility, savings accounts, land use, retail distribution, trade and biotechnology are doing more harm than good, and significant reform is a necessary first step toward truly ending Japan’s lost decade. [Available to RGE Clients Only]

This week, RGE tracked a series of events that revealed the Obama administration's juggling act: an effort to maintain growth, tame the fiscal deficit and garner the congressional support needed to implement policy. Democrats' loss of the Massachusetts Senate seat raised questions about President Obama's ability to take forward reforms on financial regulation, fiscal austerity and health care. Though Obama’s response was prompt and decisive, with proposals for financial-sector reforms that surprised markets and plans to address the ballooning fiscal deficit, his waning political capital will stand in the way of achieving his fiscal, social and economic goals.

The only Thailand Prime Minister to serve out a full term, Thaksin Shinawatra was ousted by the Thai military in 2006, and since then has been traveling the world as a man without a country.  Sentenced to two year prison term for corruption by Thai Supreme Court, Thaksin has eluded extradition deftly, but recently Thaksin’s increasing stopovers in Cambodia has brought a frown upon the “Land of Smiles.”

Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at roubini.com.

RGE Analysis:

In The People’s Bank of China and the Road Not Taken Adam Wolfe and Rachel Ziemba look at the steps that China has taken thus far to rein in excess liquidity and provide their inflation expectations for 2010.  They also consider when China will raise interest rates.  [Available to RGE Clients Only]

As meetings in Davos begin, political scientist Ian Bremmer and economist Nouriel Roubini share their region-by-region political and economic expectations for the year ahead.

The sustainability of China’s debt-fueled, investment-led growth is little questioned—it simply can’t go on forever. The real question is how it will end. 

Andy Xie thinks the crunch will come in 2012 when the Fed starts tightening and the wall of money that has been betting on renminbi appreciation and Chinese growth prospects reverses course. Pivot Capital Management thinks the crash is coming this year. China is more developed than most estimates assume, and the productivity of new investment is dropping rapidly, the hedge fund argues. 

It’s a move that should be second nature to a practitioner of Southside Chicago basketball. Driving forward, shoulder down with the basket always the ultimate goal, it’s sometimes necessary to pause, look your defender in the eye and throw a head fake. The fake has to be convincing or you’re just not going to score. But done properly, the head fake clears the lane, sending your opponent lunging in the wrong direction as you charge toward the hoop.

With Professor Roubini’s comments on sovereign risk in Davos receiving widespread attention today, we would like to call your attention to three Roubini.com pieces provided to our clients over the past three weeks on sovereign debt and, in particular, the fiscal deterioration of certain eurozone countries (“the PIIGS.”)

Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at roubini.com.

RGE Analysis:

Comparing 2010 Growth Forecasts for Major Economies by Rachel Ziemba, Elisa Parisi-Capone, Christian Menegatti, Arpitha Bykere, Bertrand Delgado and Mikka Pineda [Available to RGE Clients Only]

The Greece Dilemma: Sovereign Debts Imperiling the Euro and Challenging EU Ties by Arnab Das, Elisa Parisi-Capone and Natalia Gurushina [Available to RGE Clients Only]

Housing Starts: No Reason to Expect a Strong Recovery in 2010 by Prajakta Bhide [Available to RGE Clients Only]