trumptman
06-15-2006, 09:04 AM
In a thread concerning gold I mentioned the following...
I'm just of the opinion that the dollar slide isn't going to strengthen Japan, China, etc. There is a very clear reason they keep their currency depreciated and some seriously harsh consequences to their own economies when they convert their dollars to their own currencies. Japan has already been through this once. We all remember the late 80's, early 90's "Japan's going to bury us and own the world" mantra. Instead the dollar depreciating against the yen caused massive asset appreciation there and inflation that then popped into deflation and a decade long recession.
This thought, that the dollar slide is going to strengthen the exporters and those who have trade surpluses while crushing the U.S. is repeated often around here.
Just thought I would toss a log on the fire so to speak...
China tries to cool (http://quote.bloomberg.com/apps/news?pid=10000006&sid=a0j7eBSTi..k&refer=home)
``The risks to the economy are from the investment boom turning to bust,' said Julian Jessop, chief international economist at Capital Economics in London. ``The best way to avoid a hard landing in 2007 or 2008 is to start deflating that investment bubble now.''
and
``We will remove the firewood from under the cauldron so that banks do not have the money to lend,'' central bank Vice Governor Wu Xiaoling was quoted as saying in the Shanghai Securities News today. She said banks that led lending to ``overheating'' industries will be forced to buy more central bank bills.
Finally...
The central bank raised its key lending rate on April 28 by 0.27 percentage point to 5.85 percent and told banks to rein in loans. The move came after Wen and other government leaders warned that excessive investment in some industries is leading to higher raw material prices, overcapacity and falling profits.
This is why trade surpluses which appear to be good are not in the long run. This is why there should be fair trade instead of free trade.
The countries that hold dollars will have overheating economies. Their currency will cause massive inflation and overinvestment within their own economies. Eventually they will become later versions of Japan with massive government debt, a train wreck of a banking system and still desperately export driven.
Nick
I'm just of the opinion that the dollar slide isn't going to strengthen Japan, China, etc. There is a very clear reason they keep their currency depreciated and some seriously harsh consequences to their own economies when they convert their dollars to their own currencies. Japan has already been through this once. We all remember the late 80's, early 90's "Japan's going to bury us and own the world" mantra. Instead the dollar depreciating against the yen caused massive asset appreciation there and inflation that then popped into deflation and a decade long recession.
This thought, that the dollar slide is going to strengthen the exporters and those who have trade surpluses while crushing the U.S. is repeated often around here.
Just thought I would toss a log on the fire so to speak...
China tries to cool (http://quote.bloomberg.com/apps/news?pid=10000006&sid=a0j7eBSTi..k&refer=home)
``The risks to the economy are from the investment boom turning to bust,' said Julian Jessop, chief international economist at Capital Economics in London. ``The best way to avoid a hard landing in 2007 or 2008 is to start deflating that investment bubble now.''
and
``We will remove the firewood from under the cauldron so that banks do not have the money to lend,'' central bank Vice Governor Wu Xiaoling was quoted as saying in the Shanghai Securities News today. She said banks that led lending to ``overheating'' industries will be forced to buy more central bank bills.
Finally...
The central bank raised its key lending rate on April 28 by 0.27 percentage point to 5.85 percent and told banks to rein in loans. The move came after Wen and other government leaders warned that excessive investment in some industries is leading to higher raw material prices, overcapacity and falling profits.
This is why trade surpluses which appear to be good are not in the long run. This is why there should be fair trade instead of free trade.
The countries that hold dollars will have overheating economies. Their currency will cause massive inflation and overinvestment within their own economies. Eventually they will become later versions of Japan with massive government debt, a train wreck of a banking system and still desperately export driven.
Nick