Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (9050)	3/1/2004 1:24:01 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

<Why does it have to be a re-peg?.> Because the most important aspect now is to be able to get all these scarce goods (that are priced in USD) as cheaply as possible. Remember Coxe's point? "But even with the stunning growth in exports, profitability can not follow sales for products relying on significant input costs for energy and/or metals, or grains. Because commodities are denominated in dollars, manuafacturers' input cost are soaring. " Chinese goods producers are being drowned by these prices (in some cases going up 1-2% a week), how would just turning of their electricity (which is and will happen naturally anyway) and raising their interest rates going to solve their immediate input price challenge, indeed even availability ? They need to try and be able to compete in the next stage of the mad scramble. I'm not saying it will work, I'm just saying it's about the only short term tool they can try. It's way to late to be controlling this by "withholding new mfg permits" too. In fact raising rates in China only, without freeing up the the RMB at least some, will encourage even MORE backdoor speculation against the USD and for the RMB.