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

To: ild who wrote (49547)	1/12/2006 12:09:59 PM
From: pogohere	Read Replies (1) \| Respond to of 110194

It's unlikely the Chinese are worried foremost about the return on their US old maid cards. They appear to be more concerned with how to facilitate the move from the farms to the cities while simultaneously figuring out how to move investment to the hinterlands where most of the people live and work. And accomplishing all that without millions of people taking to the streets in frustration when things (corruption, pollution) get out of hand. Where do you see the end of the liquidity chain? If the liquidity stays in the global system it moves from one asset class to another. Somehow, for a resolution, the liquidity needs to be removed from the system. One solution that comes to mind is to shoot the failing currency: exchange new US$ for old and retire the old. I believe this is a traditional remedy.

To: ild who wrote (49547)	1/12/2006 6:19:14 PM
From: TimbaBear	Read Replies (3) \| Respond to of 110194

If China buys Russian oil it will result in USDs being pushed over to Russia. Russia in turn will buy French cheese and wine. French will buy Chinese made toys, so the USDs will be back to China If you were in one of the countries that had USD-based assets (currency, debt,etc) and you believed the US was headed for very hard times economically and you wanted to limit your exposure to those hard times, are you saying you couldn't find a way to do it? We have to start looking at things from their perspectives not our own. 1. The only real way to spend USDs is to buy something in the US and return USDs to the US. What can they buy in the US? IMHO there is no tangible/productive assets that can be bought in the US. China couldn't buy Unocal. Come on now....the only way? From what I have read of your posts, you're a very bright person and I suspect if you were the bag holder and didn't want to be, once your creative juices started flowing, there would be more than one approach you would think of. For example, suppose if you had debt you owed to the US, you could accelerate the payment of it and use USD to pay it. Furthermore, you could work trade deals with countries that you know have substantial USD denominated debt and structure the terms so that your payments were to be made in USD. The clue to whether that might be already happening might be to look at whether USD denominated debt to foreign countries is falling or not, and then try to gauge whether any acceleration in those paydowns seems to be occurring. One of the very first things, however, would be to slow down the inflow of USD denominated assets. Toward that end, the deployment of new capital into US debt would be stopped or severely curtailed. Signs of that might be a slow down in rate of foreign participation in US debt offerings. If I were in a position of power in one of those countries, I might also consider finding new ways to conduct business in non-USD terms, perhaps one approach I might take is to start Euro-denominated exchanges for commodities or even create a new gold-backed exchange currency of some sort. What I would not do is sit around believing there is nothing I could do.....and I don't think you would either. Timba