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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (31525)5/1/2005 7:48:54 PM
From: Taikun  Read Replies (3) of 110194
 
The USD represents good value here. I'd be wary of these calls for a big drop in the USD or a big spike in the value of the RMB.

I posted this a couple of days ago:

I posed this question the other day. How can the USD be overvalued compared to where? The UK? The UK is frighteningly uncompetitive and have a paucity of major companies compared to the US.

People like the Swiss Franc. Switzerland is amazingly high cost. Some investors like the Euro, but the Euro zone has low growth, terrible bureaucracy and high debt. Those same investors try to tell me US debt is too high. The Euro zone has been breaking their benchmarks.

Then there is Japanese debt, the highest of the OECD. How can the USD fall against the Yen? I am not sure this is possible. Japan is still hugely expensive.

The US remains a very cheap place to do business, with good laws and low taxes. China only supplies a fraction of US goods. Those goods may be visible because they are at WalMart, but the #1 US exporter is Boeing, and Boeing is made in the US (and Japan)

Boeing is going gangbusters, with the Euro up high and $20bn in Dreamliner orders in the last two weeks from Air India and Air Canada.

How can the USD go any lower? Airbus will be out of business and so will Japan. I would tend to agree with Jay. I don't think we're going to get a rout in the USD even with financial industry problems (GM, FNM etc) because they will be contained.

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