Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: Box-By-The-Riviera™ who wrote (1917)	5/26/2003 9:14:52 PM
From: Haim R. Branisteanu	Read Replies (1) of 4905

It is difficult to understand what you really intend to say. In one post you ask a question in another one you shut me down. In summary my view is that neither the US nor the EZ are in a sound financial position. I fail to understand the whole hoopla with the recent strength of the EUR which reminds me more of a BUBBLE as other major currencies are not appreciating as fast as the EUR v. the USD ........ and if comparing Japan to Germany or France I do not see a lot of differences from a social / economic structural point of view. Japan must fight deflation and a pile of bad loans and rigid working laws ....... Germany which is 1/3 of EZ economy is facing deflation and similar bank troubles as Japan. France is on their way to get into recession and social unrest (strikes etc.) ...... not to mention Italy which government debt is bigger than their own GDP .... as such I do not see why all the excitement about the EUR at a time that 2/3 of EZ are in or close to recession with no solution in sight similar to Japan. As a reference point on April 7 the EUR was around 1.055 now 7 weeks later 1.19 or around 12.8% higher at a time that EZ economies are stagnating or even contracting v. the US which is muddling along. As a comparison the Yen appreciated less than 4% from 120.5 to 116.5 which is reasonable due to the weakening of the US economy. Mexican peso from 10.75 to 10.277 or 4.5% Canadian dollar from 1.475 to 1.370 or 7.6% Swiss Frank from 1.390 to 1.2850 or 8% Therefore the rise in the EUR is disproportionate by about 50% and clear sign of speculative activity. Not to mention the Asian currencies which barely moved as a result of the peg. IMHO China India et- al has exported a lot of deflation and crippled most world economies. Most of those countries healthy GDP growth came at the expense of the US GDP and EZ GDP. Jobs created in those countries were mostly a drain on jobs in the Western Hemisphere and relative little has been done to encourage local consumption on a relative basis. I speculate that some one in this administration came up with the great idea of giving up the strong USD policy without addressing the issue of the peg in China HK, Taiwan etc. ....... or it may be that letting the USD slide is punishing EZ for not helping in the ME and be flooded with Asian goods .... or may it is punishing the ECB of being so stiff and refusing to lower interest rates and jump-start EZ economies which will serve as the impetus of economic growth all the current turmoil in FX market will be resolved if most countries will drop the peg and let their currencies find their point of equilibrium based on flow of funds ...... my bet is that the Yuan (spl?) will appreciate by around 20% to 25% and the EUR will drop back to the 1.08 to 1.12 area. Those changes will also take care of most of the US trade deficit except energy imports were another solution must be found in alternative energy and energy conservation

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