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

To: Tommaso who wrote (30837)	5/26/2005 12:45:18 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 116555

As always Jim Rogers is right - but China does not care a bit about it... for them a trade war exchanged the real war and hope to achieve the same goals - control of the world - who said they are the dormant giant many many years ago?

To: Tommaso who wrote (30837)	5/26/2005 1:18:14 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Snow keeps pressure on China to revalue [God I hope China puts a 27.5% tariff on all goods coming out of China right here right now - Mish] Thursday, May 26, 2005 4:46:47 PM afxpress.com WASHINGTON (AFX) - Treasury Secretary John Snow kept up pressure on China to move to a more flexible foreign exchange rate in congressional testimony on Thursday Speaking to the Senate Banking Committee, Snow repeated his views that China is now ready to adopt a more flexible rate and must do so "without delay" to safeguard global economic growth. The United States has been urging China to abandon the strict peg of the renminbi to the U.S. dollar. U.S. labor and manufacturing interests say the Chinese policy keeps Chinese exports cheap relative to U.S.-made goods, costing hundreds of thousands of American jobs China has balked at U.S. demands on its currency, saying it would act on its own timetable, suggesting that U.S. pressure could be self-defeating Snow expressed confidence in the U.S. policy. "We've got their attention and I think they'll move," he said A stronger renminbi would make U.S. goods more competitive, but it could also raise prices for U.S. consumers and could have a large impact on the U.S. economy. If China were to reduce or reverse its large purchases of U.S. securities (needed to keep the renminbi weak), U.S. interest rates could rise rapidly. Senators were highly critical of Snow for being soft on China. Sen. Elizabeth Dole, R-N.C., said she was "astounded" that Snow had not gone further and branded China as a manipulator of its currency "You cannot ask one side to play by the rules and the other does not," said Sen. Charles Schumer, D-N.Y., who has sponsored a bill that would punish China with high tariffs if it does not revalue its currency. "If free trade is to work, currencies need to float." Schumer said China's currency manipulation is destroying political support for trade agreements that end up being one-sided China has become the largest single source of the U.S. trade deficit and current account deficits. The deficit with China was $162 billion in 2004, more than twice the deficit with second-place Japan Snow told the senators that flexibility is in China's interest, as well as in the interest of the world "China's rigid currency regime has become highly distortionary," he said in prepared remarks. "It poses risks to the health of the Chinese economy, such as sowing the seeds for excess liquidity creation, asset price inflation, large speculative capital flows, and overinvestment." "Sustained, noninflationary growth in China is important for maintaining strong global growth and a more flexible and market-based renminbi exchange rate would help the Chinese achieve this goal," Snow said. Snow said Chinese action by itself would not solve all the world's economic imbalances. He pledged to bring down the U.S. fiscal deficit and encourage more domestic savings. He also called on Europe and Japan to pull their weight in the global economy The United States is not demanding an immediate, full float of the Chinese currency, Snow said. "What we are calling for is an intermediate step that reflects underlying market conditions and allows for a smooth transition - when appropriate - to a full float." Snow repeated that if China does not act soon, it would likely be in "technical violation" of U.S. trade laws as a currency manipulator. Such a designation would lead to mandatory consultations and would further inflame U.S.-China relations

To: Tommaso who wrote (30837)	5/26/2005 2:01:09 PM
From: mishedlo	Respond to of 116555

GM weighs $10bn sale of mortgage business From James Doran, Wall Street Correspondent [As I see it that debt is worthless so why not sell it for $8Billion. That would leave GM almost $40Billion in cash. How long would it take for them to burn thru that? About 1 second if they funded their pension plan, but how long otherwise?] business.timesonline.co.uk GENERAL MOTORS, the ailing Detroit carmaker, is weighing up a $10 billion (£5.5 billion) sale of its residential mortgage business, amid increasing calls for a radical overhaul of its profitable finance arm. The group has already embarked on a restructuring of General Motors Acceptance Corporation (GMAC) to try to raise the finance unit’s credit rating from junk status. GM has suffered two credit rating downgrades, the most recent of which was announced on Monday by Fitch. The downgrades were based on the poor performance of GM’s car manufacturing business, but they are potentially crippling to GMAC, which sells car loans, mortgages and insurance and last year accounted for $2.9 billion of GM’s $3.6 billion profits. The world’s biggest carmaker has said it is examining methods by which it can retain the finance arm while securing its credit rating, so as not to damage the unit’s ability to raise finance. However, The Times has learnt that GM — in which Kirk Kerkorian, the US billionaire, is trying to buy a 9 per cent stake — is now considering more radical solutions. It is understood that one plan under discussion is a sale or a flotation of the group’s residential mortgage business, which last year made profits of about $1 billion. The group has already begun talks to dispose of part of its commercial mortgage company, which last year made profits of $200 million, to a group of unnamed investors. Brian Johnson, auto industry analyst with Sanford Bernstein, the New York research firm, said: “With interest rates still low and the housing market so hot . . . it is an ideal time to sell (the residential mortgage business). And it is not core to the auto business.” He believes the unit could fetch $8 billion to $10 billion. It could attract the interest of banks such as HSBC, Bank of America, Wachovia and Wells Fargo. Toni Simonetti, spokeswoman for GM, said that it was willing to examine all possibilities in securing a separate credit rating for GMAC, but said the preferred option would be to keep the unit. She described talk of a mortgage-arm sell-off as speculation. GM shares closed down more than half a percentage point at $31.49.