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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Joe S Pack who wrote (42199)	12/1/2003 2:31:13 PM
From: Maurice Winn	Respond to of 74559

<That's why they will revalue the Renminbi. Estimates range from a doubling against the dollar on the high end to up 30% or so on the low end. No one expects the dollar to strengthen against the Renminbi.> I do. I expect the Renminbi and Yuan to fall [whatever the difference is between those two things] relative to the US$. I expect China to click on the mouse and pixelate another umpty billion or those renminbi thingamies. The China government doesn't need to raise taxes. They can just print themselves a huge pile of renminbi with which to go shopping. They have a vastly burgeoning economy and huge demand for renminbi. So they can print a lot without causing inflation. The USA is pixelating billions of dollars too. So China can print vast amounts without causing inflation or an excessive shift versus the US$. If the number of renminbis [what a silly word that is; it should be rembi or something easier to type and spell] was doubled, then people would presumably not keep bleating on about how it is undervalued. Or, if they still thought it was undervalued at twice the number, China could go guts and dilute the rembi by a factor of 10. Or 100. At some stage, the tedious whining that the rembi is undervalued would be plainly wrong - those who insisted that it was undervalued could be invited to convert their US$ to rembi. We would see whether they wished to put their money where their mouth is. Mqurice

To: Joe S Pack who wrote (42199)	12/1/2003 3:43:59 PM
From: Maurice Winn	Respond to of 74559

Hi Nat. And what's more: <Why shouldn't the dollar weaken? America is keeping its short-term interest rate below the inflation rate by printing money and providing it in unlimited quantity. When the cost of money (1% interest rate) is below the inflation rate (2%) the use of the money is free. In fact, today it is subsidized by the 1% difference. We are also running a current account deficit of about 5% of our GDP; it is still rising. We have zero net national savings because of the federal deficit; that is not likely to change. With facts like these, why would anyone want the greenback? > I want the greenback so that I can go shopping with it. Also, to earn interest while I wait to go shopping. Also, to get a capital gain when it increases in value compared with other currencies such as the kiwi, rembi, yen, euro. Yes, for a couple of years, the US$ interest rates have been derisory and the currency has crashed from 39c [to buy a kiwi dollar] to 64c, which is so many % I can't calculate it, but it's more than a 50% change which is huge. When the fear of a US economic implosion is finally over, Uncle Al KBE will zoom interest rates up again to restore the value of the US$ as the world's pre-eminent store of value and means of exchange. When interest rates zoom up, the US$ will zoom up and those with debts will zoom down. Many companies have large debts. They are enjoying a false sense of security if they haven't been paying them off flat out or otherwise restructuring their financial positioin. When interest rates are back to 7% or so, the stock market will drop, including the likes of Microsoft and QUALCOMM which have large cash holdings. Even those will drop because people will sell something to repay loans. That will include houses, cash rich companies and indebted companies. Of course the indebted companies will drop further than those whose profits will rise as their interest receipts rise [such as MSFT and QCOM]. I am waiting for US interest rates to rise and for the debt levels of the wildly enthusiastic borrowers to be tested against their income. Jay seems to think that what is coming in one end isn't enough to pay what is required at the other end. Which means a financial crunch. I suspect he is right. When assets are sold to repay loans and lots of people are doing that simultaneously, that means prices drop. On the other hand, the Maestro, our idol, has perhaps got everything elastoquidynamically engineered so that money flows are not unduly disrupted and all will be well. House prices and share prices might not fall. Interest rates gently rise to only 4%. Adjustments will be gradual and unexciting. Earth's economy will continue to improve. Regional dislocations will be small. We shall see. Mqurice