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

To: RealMuLan who wrote (22246)	1/26/2005 4:41:50 PM
From: RealMuLan	Respond to of 116555

Giant in decline By Marshall Auerback In his 1849 novel Les Guepes, Alphonse Karr penned the classic line: "The more things change, the more they stay the same." In the case of the United States in 2005, however, the opposite might be true: The more things stay the same, the more they are likely to change ... for the worse. In that regard, compiling a list of potential threats to the US this year has a strangely deja-vu-all-over-again feeling. After all, such a list would represent nothing more than a longstanding catalogue of economic policymaking run amok. Virtually the same list could have been drawn up in 2004, or 2003, or previous years. Such threats would include: a persistent and increasing resort to debt-financed growth and a concomitant, growing imbalance in the trade deficit, leading the US ever further into financial dependency and so leaving it dangerously indebted to rival nations, which could (at least theoretically) pull the plug at any time. This, in turn, is occurring against the backdrop of an increasingly problematic, Vietnam-style quagmire in Iraq, against imperial overstretch, and against a related ongoing crisis in energy prices, itself spurring an ever more frantic competition for energy security, which will surely intensify existing global and regional rivalries. ... atimes.com

To: RealMuLan who wrote (22246)	1/26/2005 4:55:23 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Economist: China Loses Faith in Dollar [Yiwu what do you make of this? Who is the Fan guy? Is he important? Mish] Wednesday January 26, 4:37 pm ET By Edith M. Lederer, Associated Press Writer China Has Lost Faith in Stability of U.S. Dollar, Top Chinese Economist Says at World Forum DAVOS, Switzerland (AP) -- China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist said Wednesday at the World Economic Forum. At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar." But he stressed that the Chinese government is under no pressure to revalue its currency. China's exchange rate policies restrict the value of the yuan to a narrow band around 8.28 yuan, pegged to $1. Critics argue that the yuan is undervalued, making China's exports cheaper overseas and giving its manufacturers an unfair advantage. Beijing has been under pressure from its trading partners, especially the United States, to relax controls on its currency. "The U.S. dollar is no longer -- in our opinion is no longer -- (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English. "So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable ... reference ... say Euros, yen, dollars -- those kind of more diversified systems," he said. "If you do this, in the beginning you have some kind of initial shock," Fan said. "You have to deal with some devaluation pressures." The dollar hit a new low in December against the euro and has been falling against other major currencies on concerns about the ever-growing U.S. trade and budget deficits. The U.S. currency came under some pressure Wednesday, drifting lower versus most currencies including the Japanese yen and the euro, as dealers mulled the Chinese official's statements. Fan said last year China lost a good opportunity to do revalue its currency, in July and October. "High pressure, we don't do it. When the pressure's gone, we forgot," Fan said, to laughter from the audience. "But this time, I think Chinese authorities will not forget it. Now people understand the U.S. dollar will not stop devaluating." Asked how speculation about revaluation could be curbed, he noted that China imposed a 3 percent tariff on Chinese exports. Some Chinese experts say that perhaps inflation can be reduced this year, "but I'm not that optimistic," Fan said, noting that fuel prices keep rising. "So maybe China (will) have 4-5 percent inflation in 2005," he said. Fan, whose nonprofit institute specializes in analyzing the Chinese economy, stressed that the country's development is a long-term process that will take decades, maybe a century. Since China's economic modernization began over a decade ago, 120 million rural laborers have moved into cities, but another 200 million or 300 million people need to move into the cities from the countryside to spur development, he said. "The income disparity is huge, and income disparity will stay with us for a long time, as long as those 200 to 300 million rural laborers stay in the countryside," Fan said. Nonetheless, William Parrett, chief executive of Deloitte Touche Tohmatsu, told the panel that Chinese companies are making significant progress in becoming global giants, led by state-owned companies. "It's probably at least 10 years before the objective of the government of 50 of the largest 500 companies in the world being Chinese" is achieved, he said. biz.yahoo.com

To: RealMuLan who wrote (22246)	1/26/2005 5:25:36 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Bush vows to press China, Russia on liberty WASHINGTON (AFP) - US President George W. Bush vowed to "constantly remind" Chinese leaders to make progress on human rights and to press Russian President Vladimir Putin on democratic reforms. "In my meetings with Chinese leadership in the future, I will constantly remind them of the benefits of a society that honors their people and respects human rights and human dignity," the president said. Referring to Putin, Bush said: "I will remind him that if he intends to continue to look West, we in the West believe in Western values." news.yahoo.com