Hello Ike; RE:" intervention "
Beg to differ on benefits of government intervention in HK, now spreading to other Asian equity markets. It may, perhaps, squeeze out smaller (short) players, but it throws down a challenge to larger, better-kapitalised speculators to go one-on-one. Ultimately, there are few fundamentals upon which the smaller Asian markets can rely upon and, if pressed - they will have insufficient (local) reserves left over, requiring (global) assistance or, worse - affecting Red China. It's dangerous.
I do believe in the principle of intervention to maintain orderly markets, in the traditional sense of a "specialist" willing to assume risks in the face of uncommon volatility. This is different.
So I did agree with the massive selling of USD for DEM and YEN on Monday morning (CET), when the ruble was set afloat, and the S&P Futures were struggling to hold ~1050: order/confidence was restored, and there are real fundamentals in the EU to base such actions upon.
Regarding the USD/YEN, it appears that a "cushion" of sorts is being constructed, as the issue is impending bank failures or, more likely, in the tradition of "saving face", massive restructuring by consolidation of the Japanese banking system. Rubin is scheduled to meet, in Japan, with their Ministry during September. They are, for example, planning to report the collective state of their banks, rather than the financial health of each institution.
We have the ability here to let our U.S.Treasuries go down, in the short term, raising our cost of kapital - to help Japan and their currency. Few believe that this is anything other than a temporary measure, however: no way the Yen can hold 135-138, if it gets there.
Coming from TheStates, and its kapitalist kultur, as I do - perhaps it is only natural that I dislike the hand of government in the market place. But then, we have never experienced (post WWII) economic melt-down nor abject poverty on such a scale - so perhaps our laissez-faire idealism is a luxury for us.
Ultimately, I agree with your conclusions. They are working their way out of the dismal hole they find themselves in. Commodities will, some day, go back up: But not where they were. We are, in effect, absorbing the oil/metals/timber, etc. of the C.I.S. into the post-cold-war kapitalist world. This is a fundamental change, not just 'a problem that gets solved'. The Americans will continue to sell off and consolidate the last vestiges of their industrial past, like C to DAI, and AN to BP, etc. - for our destiny is an information economy future.
with regards (as always)
-Steve |
