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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (14092)	10/26/2004 7:14:10 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

CSB ? what is that

To: RealMuLan who wrote (14092)	10/26/2004 7:35:25 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Is Bush looking for a favor right in front of the election? If so what? Mish

To: RealMuLan who wrote (14092)	10/26/2004 10:19:27 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

OK here is my take. While one should NEVER discount stupidity from the Bush administration, SOMETHING was likely granted for this display of support for China Taiwan reunion. Now is Bush stupid enough to give this bargaining chip away for nothing? Yes, I believe thay have proven that time and time again. That said, one has to think that a bell was ringing in someone's head or this statement would not have been made. (I am attempting to give this administration some credit in other words). OK let's move on to the next step. What is this all about if indeed it is something other than stupidity? The most likely candidate is a float of the Renmimbi. Now, China does not want to do that. Not yet. If they did they already would have, unless of course they were holding out for this kind ocf concession! In a mish mash of stop/go/stopgo/yes/no/maybe/when we see fit/no/yes/making progress/no/we are not ready/perhaps/on schedule/etc etc etc Why would China agree to such a tradeoff? This is where it gets interesting 1) China is not stupid. No doubt they realize that if Bush loses they will not have to fulfill their end of the bargain. I assume that China knows that this election is 50/50 more or less. So if they agreed to such a bargain there is only a 50% chance they we be held to it. In the meantime China got a PUBLIC announcement of support from the US Sec of State for reunification of China and Taiwan. Since it was public even if Kerry wins it will be harder, much harder for the US to back off that statement. OTOH, should Bush lose, a 50/50 chance there is every reason to believe that Kerry will not know of this "secret arrangement" and every reason most likely for Bush not to disclose it. In other words ther is right off the bat a 50/50 chance that China got a MAJOR freebee. 2) Assuming Bush wins... China may or may not have any intention of living up to their end of the bargain. Personally I doubt they would without "other" concessions. "Other" can be anything: actual progress towards reunification, more statements from the US, etc. 3) Then again, perhaps China extracted a huge bargaining for NOTHING. In other words, they already planned to float the RMB for their own reasons and extracted a policy change from the US for nothing. 4) In a variation of #3 China intended to float the RMB but will a) move up the schedule IF Bush wins, or b) fulfill their end of the agreement "in due time" with delays as necessary. My best guess is that China hopes Kerry wins, they will have gotten this huge concession for nothing, but IF Bush wins they will delay the float of the RMB until they are damn good and ready. In other words, heads China gets what it wants, tails China gets what it wants and the US gets only what it was going to get anyway. Mish