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

To: elmatador who wrote (51419)	7/7/2004 1:30:08 PM
From: macavity	Read Replies (1) \| Respond to of 74559

Mumbo jumbo: All I can point to are the technicals. The IT path is down, and we could well retest the EUR=130. However, I think that the back of the Long-term dollar decline is over. I am Long EUR short USD but this is because I am Europe-based and it is a hedge against my dollar-assets making me flat. From EUR=1.20 - 1.30 the Monthly charts do not give too much away. If we get to 1.30, or if the WEEKLY charts point up (before we get there) I will look to go long the dollar. Remember it is a plan, and not a prediction. :) For now, agreed, IT charts are bearish while USD<89.5 Next support ~87 then ~85. -macavity

To: elmatador who wrote (51419)	7/7/2004 9:26:36 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Elmat, <<dollar's fate ... in the hands of the Bank of Japan and the People's Bank of China>> Maybe, but China has weak hands, and now trembling hands, covered with slippery soap, soon to be hands needed elsewhere as the itch spreads, and then the USD/US$ will be dropped, even as the RMB devalues against the appreciating USD (relative to RMB) but depreciating US$ (relative to whatever). The economic pain then felt by the appreciating currency nations, along with decreased demand for certain types of commodities will cause some commotion in Canada/Australia, as well as perturbation in Europe/Japan, pushing them to ... ease interest rate and print money ... and then perhaps up goes energy even though demand growth slows (China/India will still use more rather than less oil) ... or, alternatively, the lowered purchasing power will set off new dominos in the already conflicted arid desert towns. What I have described above is perhaps the least anticipated development of the drama of the script of collapse and the theme of doom, as we travel toward TeoTwawKi. And yet, no single element in the script is new to reality. Together, improperly choreographed, the script elements lead to disaster. The sorting out and cleansing will likely be quite messy. Learn the concept of GOLD before it is too late, and know that all while all currencies are kings and queens now, all the royalties are, ultimately, trash. ... and then we smack into ACF Mike's demographic wall, and so, you see, there simply will be no time for Maurice's Q to take form of any substance. Chugs, Jay China: Credit Crunch Beginning to Hurt July 07, 2004 Summary stratfor.com As China's central bank curbs lending to cool down the country's rapidly expanding economy, evidence is starting to emerge that the dearth of funds is causing problems for businesses and investors. Analysis Angry investors demonstrated at the main branch of the Bank of Communications in Shanghai on July 2-5 after they failed to receive guaranteed returns from an investment product promoted by the bank, The Wall Street Journal reported July 6. The incident is yet another sign that China's financial system remains shaky, in spite of Beijing's desperate attempts to salvage it. The latest mishap, however, is specifically a byproduct of the Central Bank's efforts to curtail overlending; more blowback is likely to follow as Chinese firms are cut off from easy credit. Up to 50 protesters at a time reportedly began gathering at the bank after they were tipped off by a source inside that money was not available to return the principal or the 5.2 percent interest due on their investments. Customers say the Bank of Communications implicitly promised to back returns on a high interest-bearing trust. When the trust matured July 2, however, the investors did not receive payments on $10.4 million in investments. The investors who demonstrated at the bank complained that they were advised to pour money into an unsound venture. The Bank of Communications sponsored a trust launched by Jinsin Trust & Investment Company to finance dairies in China. The company said it would receive a 6.5 percent profit from existing deals to sell dairies to a privately-held company, D'Long International Strategic Investment Co. However, D'Long reportedly ran into financial problems after Beijing started to clamp down on excessive bank lending, and Jinsin apparently did not receive the returns it promised its investors. Failing to meet financial obligations in China's immature and poorly regulated capital market is not uncommon. In fact, not repaying loans is practically a national pastime in China, where it is estimated that banks are racked by over $500 billion dollars in non-performing loans. However, the example of Jinsin and D'Long illustrates the challenges Chinese policy-makers face in attempting to rationalize economic growth in a country addicted to cheap loans. According to China's central bank, bank credit in 2003 accounted for about 85 percent of funds raised by Chinese businesses. Most Chinese firms -- state-owned and privately held -- are comparatively undisciplined with their finances because they measure success by market share instead of returns. This creates a cycle of debt and expansion that is not necessarily profitable. When the firms no longer have access to loans, their business models begin to crumble and their investors, believing in guaranteed returns, start protesting in bank lobbies. As China's central bank cuts lending in order to prevent an overheated economy, the drying up of funds is causing a financial chain reaction throughout the country. Businesses and investors are now facing defaults on loans because they cannot refinance their debts. It's a rock-and-a-hard place dilemma for China, which now seems stuck between too much growth and too little. Copyrights 2004 - Strategic Forecasting, Inc. All rights reserved.