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

To: 8bits who wrote (25563)	1/30/2005 6:40:38 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

"Rule of Page One" is pretty catchy. i guess where i would part company with Coxe is that it seems EUR/CAD/AUD etc. have become speculative plays over and above any fundamental justification, thanks to the manipulation of the Asian Mercantilists who are the ones whose currencies should actually be rising (and of course also the ones who are funding our C/A deficit). the most ridiculous case is AUD, which was the biggest industrialized currency gainer two years ago and had a high beta move last year as well, but now Australia has a worse C/A deficit than the US! they’re going to have to borrow to generate the cash to ship to the headquarters in the United States to claim benefit of this. And then the question will be, since those assets are on their balance sheet now in foreign currencies, when they convert those into Dollars as a result of borrowing, that does produce upward pressure on the Dollar in the last sentence, i think he means, "does that produce pressure on the Dollar?" and to me it seems, if they sell foreign denominated bonds and buy USD with the proceeds, that is definitely producing upward pressure on USD just as when foreign banks sell bonds and buy USD from their exporters. the cos doing this will pay the bonds back, presumably, with locally (foreign sub) generated cash flows. perhaps one could say that US Government is bribing its own corporations to engage in currency intervention to support USD (albeit under the populist facade of "Jobs Creation"). USG has to do this because it does not itself have enough forex to sell in order to prop up USD itself. so in exchange for having US corporations do the dirty work of dollar-propping, USG rewards them with plutocratic tax breaks. one way of looking at it.