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

To: mishedlo who wrote (27747)	4/18/2005 11:17:21 AM
From: russwinter	Read Replies (2) \| Respond to of 116555

Popular Trade Delusions by Charles Mackay, Monday April 18 2005 wallstreetexaminer.com A weekend statement by the Group of Seven G7 goads China towards currency revaluation. The fog of trade delusions has now descended upon the G7's policy. The G-7 took advantage of China's voluntary absence from its meeting to issue a stinging rebuke of China's foreign exchange policy. While the G-7's statement is important in itself, it is even more important with regard to the formal stance on China trade and foreign exchange policy that the US will soon take (See Majority Report - The Third Wave for more information on the development of that policy). After vacillating on the issue of China's revaluation a few weeks back, the GWB administration has now firmly moved into the camp of pushing China to revalue its currency. Federal law requires the President and Treasury to take such action after a determination has been made that a country has interfered in exchange rates (and/or trade in general). A negative determination about China should be issued by the Treasury by the end of April. What absolutely convinced the administration to move forward was the threat of duties on Chinese imports to be imposed by Congress. The problem with Japan, China, and the US is that trade policy is being driven by popular delusions within these countries. To some extent, this popular sentiment cannot be controlled by the respective governments - and starts to take on a life of its own. The real root of trade friction as well as most other current economic problems is the inflationary/consumption-based policies of the US government and Federal Reserve. They have overstimulated consumption and asset purchases (mostly real estate), through policies of high budget deficits and negative real interest rates, to such a high level that the economy can only be supported by the input of substantial foreign savings. So far, both China and Japan have willingly cooperated in providing their share of the necessary amount of those savings. Also, both China and Japan have resorted to an inflationary expansion of their respective monetary bases to keep up their support of the US dollar, and in Japan's case, that expansion was hyperinflationary in early 2004. Funding of the trade deficit by foreigners is reaching record, and previously unimaginable, levels which may exceed $800 billion in 2005. Yet the US wants still more support for its consumption-based economy, struggling under the weight of escalating energy prices. But asking for more now is just an another unrealistic delusion. It is not likely that China can do any more than it already has - and it too must worry how to secure energy supplies at a reasonable cost. China and Japan are directly competing for the same energy reserves in the East China Sea, and this conflict between these twin Atlases of the ad-hoc Bretton Woods II dollar regime bodes poorly for the future funding of the US current account deficit. Unless China decides to revalue in the next few weeks to preempt a trade war, your local Wal-Mart may have some noticeably bare shelves in a few months. posted Monday April 18, 09 55 AM ET

To: mishedlo who wrote (27747)	4/18/2005 11:29:28 AM
From: shades	Read Replies (1) \| Respond to of 116555

"Japan to be so casual about it does make my blood boil. " Govern your emotions or be governed by them. “In your anger do not sin. Do not let the sun go down when you are still angry, and do not give the devil a foothold” (Ephesians 4:26-27).

To: mishedlo who wrote (27747)	4/18/2005 12:35:46 PM
From: RealMuLan	Read Replies (2) \| Respond to of 116555

Thank you for the post, Mish. This is off the topic, so this will be my last post on the subject. Yes, all wars committed atrocity, yet those did by Japanese soldiers in China had NO comparison, they could not even matched by Nazi-Hitler's crime. At least Hitler used gas chambers, and had not used bioweapon. But Japanese used the most cruel/disgusting ways to kill a lot of Chinese as well as bioweapons. The books "Rape of Nanking" and "A Plague Upon Humanity" tell those stories. The Japanese soldiers behaved worse than animals! Just think about it makes me sick. Here is an article on the book "A Plague Upon Humanity" Message 21239128