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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (66988)7/28/2006 7:17:41 AM
From: russwinter  Read Replies (1) of 110194
 
Think the Fed wants a stable dollar (except against fixed currency regimes like the yuan and yen) for two reasons:

1. As an offset to much higher import prices that are coming. Chinese exporters are not profitable (*), and their carte blanche subsidies such as easy credit, the ability to pollute with impunity, and tariff subsidizes are being removed which will make it worse.

2. The need to keep attracting foreign capital flows, which made all the more difficult when you offer shave Roman coins.

(*)
Although the reported profits of China's largest industrial enterprises climbed 28% in the first half of 2006 over the same period in 2005, companies in some sectors have seen profits squeezed, sometimes to the vanishing point. According to government numbers, 80% of the profits in the Chinese economy went to companies in the oil, power, coal and nonferrous metals sectors. The other 30 sectors of the economy shared just 20% of corporate profits.

articles.moneycentral.msn.com
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