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

To: TobagoJack who wrote (58375)	1/6/2005 10:39:35 AM
From: BubbaFred	Respond to of 74559

Robyn Meredith On The Global Economy 01.06.05, 7:00 AM ET Instability. The drooping dollar will continue to roil currency markets and corporate profits in Europe and Japan, but big American companies like Ford Motor (nyse: F - news - people ) and General Motors (nyse: GM - news - people ) will be helped by the weak dollar. Meanwhile, the dollar's effects will be magnified because the Chinese currency is pegged to the dollar. Economic recoveries in Europe and Japan are question marks as a result. Ditto U.S. interest rates. Record oil prices have retreated, but could spike again. Offshoring will continue to muddy the U.S. employment picture. Remember: There's no law that says Westerners deserve to be paid ten times more than Asians for the same work, whether the work is white collar or blue collar. The Unconventional Wisdom China will not float its currency, the renminbi, anytime soon. Sometimes bankers talk about their wish lists, wind up talking too much to themselves, and then start to believe something will happen because they're all betting on it. First, that won't happen because China knows its banking system isn't ready to handle the strain. Second, it won't happen because the Americans and Europeans are telling China to do it, and Chinese leaders are proud. Third, China gets to choose when it happens because it has plenty of dollar reserves to quash speculators. The Misplaced Assumption That India could become like China and develop a massive goods-exporting trade. It won't happen anytime in the next five years--and probably the next ten--for exports that require roads to leave the country. Services are another story: India, China, Malaysia and the Philippines, as well as locations in Eastern Europe, are poised to dramatically boost service exports as offshoring continues, less controversially now that the U.S. presidential election is over. The Watch List • Chinese companies blowing up: The generally low standards of corporate governance and management skills will come home to roost as the companies increasingly compete with outsiders. • Chinese companies overpaying, mostly for weak but well-known American and European businesses: Too much money is sloshing around China, and too much pride rests on the idea that Chinese companies--like Olympic athletes--can compete on the world stage. Example: Lenovo's deal to buy IBM's (nyse: IBM - news - people ) PC business. • Indian pharmaceutical and offshoring companies like Infosys (nasdaq: INFY - news - people ), Tata Consultancy Services and Wipro (nyse: WIT - news - people ) will continue their tear. The Bold Prediction China's economy will grow at more than 10% annually in 2005, despite authorities' attempts to slow it down. forbes.com