Lawrence, Steven.... Let's get one thing straight Mr. Kam. No one is making up #'s. I read as much as I can and the 20% HK reserve depletion figure is from bridge news, reported in the middle of last week. Here's where you're being mislead: The exact total of foreign reserves that HK has is $US160B. That's exact. Now, how can Beacon and Tiger have the resources to smash the peg? (I will continue to call it a peg regardless of what you say - every single article I've read from many different publications all around the world, and every single finance official, too has been calling it a peg... and even one went to Harvard, your fellow alum Mr. Lawrence Summers). Anyway, how can they smash it? Simple. The margin requirement for currency trading is below 3% in most cases for these big hedgies. In addition, they can work out increasingly favorable rates with money center banks that are involved in global capital markets. If Tiger wants to attack the $HK, lets say with $US1B, that can be leveraged into more than $US50B in most cases. With dozens of hedge funds and Intl. speculators doing this, the HK Govt. does not stand a chance. They DO NOT have enough $ to defend the currency perpertually. Also, regarding your oh-so-eloquent piece on how the $HK is backed by $US, the whole point is that it really isn't anymore. That's why the peg will be broken. It is not reflecting fundamentals and is seriously overvalued. Also, you don't have to insult our intelligence by explaining that the $US used to be backed in gold. I think we all finished 6th grade here. Since the $US is now floated, it no longer is backed by anything, really. In HK's case, the $HK is not fully backed by $US, which leaves the Intl. Fncl. Community ever so sure of it's overvaluation, independent of the economic problems.
Also, there's no reason to use such a harsh tone in your posts unless you've been long HK stocks since 16,000 or something. In that case it would be understood.
As for Steve, In a nutshell I believe that a currency going from 26 to 35 to the $US in such a short span was quite a serious move. Also, hope you didn't vote for that bonehead Estrada. Can you give us all some insight on him? I read that because of his lack of education, he assembled quite a diverse panel of businessman and others and economic advisors, but supposedly there's no cooperation among 'em. |
