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

To: RealMuLan who wrote (33992)7/21/2005 9:08:23 PM
From: Elroy Jetson  Read Replies (1) | Respond to of 116555
 
Leonard Rist created the US Dollar peg system for Singapore when he was Economics Director for the World Bank. The results have worked well for Singapore.

America never complained about this because only because Singapore is nothing more than a single city. The same was true of Hong Kong, and the few Latin American nations which have a dollar peg are quite small. China on the other hand is too big to attach themselves to the US economy.

In any event, the American government should have been complaining about the Chinese government loans being made to virtually every industry, and which are unlikely to ever be repaid. These subsidies are the real source of the problem, not exchange rates.
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To: RealMuLan who wrote (33992)7/21/2005 9:08:58 PM
From: regli  Read Replies (2) | Respond to of 116555
 
I think it was a great strategic move by the Chinese. It will blunt most attacks regarding revaluation especially once the basket is disclosed (I don't believe that the Singapore approach will work with China).

At the same time it signals to the U.S. some of the risks as clearly now the reserve diversification will begin in earnest. As most governments in the region will likely follow China's lead (see Malaysia), I expect much more pressure on the dollar.


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