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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 (50169)	1/18/2006 11:57:13 PM
From: GST	Read Replies (1) \| Respond to of 110194

<Did not the US$ fall by some 30 freaking %> Not against the Chinese RMB. And as for imports from China, they have been soaring along with FDI in China -- the country that now leads the world in FDI. China is more or less the low cost supplier to global markets. As our economy weakens we "might" buy less from them -- although even that somewhat irrelevant and is debatable. If our economy falters people might be even more inclined to shift their consumption patterns towards the low cost producer and buy even more from China instead of less as you assume. At any rate that is pretty much a distant second to the issue of the future slide in the dollar and the coming rise in interest rates. The dollar/bond bubble will burst. That is the mother of all bubbles -- housing is a sideshow in comparison.

To: mishedlo who wrote (50169)	1/19/2006 12:41:58 AM
From: TimbaBear	Respond to of 110194

Yo Mish How much did the US$ fall 2003 -2004 and how much did prices from China rise. Did not the US$ fall by some 30 freaking % Did imports rise by 30%? HELLO!!! The Yuan is pegged to the dollar!!!!!! Of course they wouldn't rise! But what happened instead? China's industrial base exploded because it was willing to keep the peg to increase trade. Japan bought USD to keep the yen weak to compete with China. But then the US consumer was in the middle of extracting record amounts of equity from the home mortgages. Now the US consumer is looking peaked, and China and Japan have been down that road and have more USD than they feel comfortable with. Now when the USD falls, the Yuan will not be so closely pegged and the Yen not so heavily defended. Look at the rise in the Yen over the last 6 months, it is not being defended so this is not merely conjecture. Two years ago there was not the USD bloatedness that there is today....we're talking another trillion or so in that seemingly short span of time. May not be a lot of money in the overall scheme of things, but it certainly looks like it has taken the edge off the appetite for more. Timba