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

To: mishedlo who wrote (26392)	2/13/2005 9:40:56 PM
From: yard_man	Respond to of 110194

I guess the theory is, if the dollars that "come home" go into circulation -- prices, in general, must go higher to recognize the increased supply and if the Fed monetizes the offloaded debt, then it's double whammy -- but I think that is a static view. The counter-party, of course, is the US. But of course, as you mentioned, from the book -- that's suicide for those with a large amount of exports to the US. If the US sees higher prices or rates -- credit contraction starts immediately. I think it is more likely that China and Japan give up only through attrition. That is, as more and more reserves are accumulated -- at some point there reaches a certain level of diminishing returns -- where the additional assets held support less credit expansion here and even lesser real capital formation in their own countries -- so they begin to slowly spend on other things and allow their currencies to rise slowly -- heck, this may already be happening. The all out chucking of the game is disastrous for everyone. Unless someone at the margin thinks they can somehow beat the game, where is the impetus for an outright collapse in the dollar? I think most of the moaning you have referenced has been about "slow down" -- "not so fast."

To: mishedlo who wrote (26392)	2/13/2005 11:11:29 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

Keep in mind the extent of US financing needs under Bretton Woods II. Maybe a trillion bucks a year needed for foreign sources, $900 billion, or even 800 billion if real progress is made on deficits. All you'd need to upset the apple cart is an adjustment at the margin by one, several or many participants. And it wouldn't even have to be into Euros, or gold, it could just be internally. For example, this project: 80% of Thailand's foreign reserves are USD assets. Get rid of Old Maid Cards, quit subsidizing Americans, and put the USD to good use: February 10 - Bloomberg (Anuchit Nguyen): “Thailand may use as much as a third of the nation’s $49 billion in foreign-currency reserves to help finance a 1.5 trillion baht ($39 billion) plan to build subways and other public works projects, Prime Minister Thaksin Shinawatra’s top adviser said. The government needs other sources of financing besides tax revenue, Pansak Vinyaratn said today… The appropriate level of Thailand's foreign-currency reserves should be at about $32 billion, he said.”

To: mishedlo who wrote (26392)	2/14/2005 7:26:19 AM
From: Haim R. Branisteanu	Respond to of 110194

India and China battle over Russian oil By Malcolm Moore (Filed: 14/02/2005) India is fighting China in the battle for Russian oil by angling for a supply deal and a stake in Yuganskneftegaz, the oil unit that was seized from Yukos and is now owned by Rosneft, the state oil company. Mani Shankar Aiyar, India's petroleum minister, will visit Russia on February 21 to discuss the possibility of the country taking a 15pc to 20pc stake in the oil unit, which is still the focus of legal action in the US. "There are no full stops and the dialogue is continuing," he said. The fact that Yukos has threatened to sue anyone who interferes with its former unit has not put India or China off. China has offered $6billion (£3.34billion) to fund the purchase of Yugansk, in return for a guaranteed 360m barrels of oil over the next five years. India has been offered a similar quota but wants a slice of equity for its national oil company ONGC. Rosneft paid $9billion for Yugansk, which pumps about a million barrels a day, through a holding company called Baikal Finance. Yukos has filed for damages concerning the sale of Yugansk, and is petitioning for $20billion from Rosneft, Gazprom and their subsidiaries. Yukos also said it would pursue Deutsche Bank, a situation that could see the German bank threatened in the US. One source claimed Yukos had discovered proof that Deutsche had played a role in the sale of Yugansk, a situation that would put it in clear contravention of the US bankruptcy court that ruled that the auction should be delayed. Yukos returns to court on Wednesday to persuade the judge that it should be allowed to continue its bankruptcy proceedings, and to plead that any claims against the company from the Russian government be heard in an international arbitration forum. Under its new plan for repaying creditors, the Russian government has slipped substantially down the list of importance. Meanwhile, a former Russian prime minister has hit out at the destruction of Yukos and the climate of uncertainty that it has brought to the economic outlook in Russia. Yegor Gaidar, who was briefly prime minister under Boris Yeltsin and is a noted free-market economist, told a group of institutional investors in London last week: "What they are doing could be explained rationally only if the goal was to stop economic growth. "Growth is very difficult to stop. It is very robust. Even the 1998 crisis only stopped growth for one year. So it is a very ambitious target but then, as Stalin said 'There are no fortresses that the Bolsheviks cannot storm'." He added: "Ten days ago we held a seminar with Russian government officials to try to set the agenda for this year. They asked how could we compensate for the negative effects. The answer is that it is impossible. You cannot compensate for this sense of unpredictability by any improvement in regulations when Russians really do not believe that tax and property rules will be upheld. No laws will resolve this problem." Mr Gaidar also called on the government not to bow to political pressure to use the country's savings to cut taxes. Russia has been building a budgetary stabilisation fund off the back of recent high oil prices, which amounts to 647.2billion roubles (£12.3billion). money.telegraph.co.uk