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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (73795)	6/6/2010 4:42:42 PM
From: Haim R. Branisteanu	2 Recommendations Read Replies (2) \| Respond to of 74559

We are in the midst of a full blown trade war Germany & France v the US, There are two basic approaches which were not reconciled in Bussan Korea The German French approach spend what you have and save for rainy days versus The US approach borrow whatever you can and spend - and tomorrow will take care of you To understand the differences it is very easy – US is running a trade deficit and huge budget deficit which needs financed, unemployment is high and election are around the corner with the democrats almost as a given loosing big time. The B administrations needs the electorate to “feel good” generate new good paying jobs to be re-elected. Solution – induce the countries with high savings rate, small budget gaps and surplus trade to spend to abandon and enable the US to dump on them US produced goods and services. The environment was already primed to sell trillions of junk US debt at very low finance rates and in actuality the concocted plan 6 to 7 months ago to appreciate the USD went well beyond their wildest dreams and acts now as a boomerang stifling out any chance of a sustainable recovery as evidenced by last Friday unemployment numbers. US needs a FIX now elections are in November - their solution – press the EU and BRIC in being the big spenders - what will happen after that? – who cares the Congress will not be lost to the republicans. EU is very lucky they have Merkel the new Iron Lady and it seems that Sarkozy, goes along as is Berlusconi and the Benelux – which in turn undermines the BO administration plan to hold on to a majority in congress – after all “it is the economy stupid” The EUR bashing continues in full force in the hope that other sovereign countries will dump the EUR and force the EU into submission to US fiscal policies, as evidenced in this article nytimes.com What the newspaper misses on purpose is that the US states and municipality debt market is not 2.6 trillion from a 16 trillion economy but over 3 trillion from a 13.6 trillion US economy. More so the newspaper misses to report that states like CA, ILL, NV, FL, NY and the list goes on are all in the red at a rate of 1% to 3% negative budgetary gap on top of the US federal budget gap of around 11.5%, and higher average unemployment rate than the EU. Now why is Geithner so insistent? - he may be better running for the hills as EU manufacturing is booming Germany added 47K good paying new workplaces last month, which adjusted to the US population represents about 150,000 jobs added when at the same time the US added close to ZERO good paying jobs if excluding the census workers. SO US income tax receipts are down Germany are up, and closing furhter down the German budget deficit. The low EUR is a blessing for the EU and it is reflected in the EU trade numbers with the US and China who has a peg to the USD, and the other BRIC countries who have a fast growing economy. In 2009 goods imported from China where EUR 214.7 billion v exports of EUR 81.6 billions With the US imports form the US where 221 billion v exports of 281 billion For 2008 goods imported from China where EUR 247.8 billion v exports of EUR 78.4 billions With the US imports form the US where 271.8 billion v exports of 367.6 billion With all BRIC imports where EUR 486,469 billion v exports of EUR 241,514 billions trade.ec.europa.eu From those numbers it is clear that the countries that are most suffering from the lower EUR is not Germany or France et-al but China and US which are and will be losing millions of jobs, of which I estimate the US alone something in the range of 2 to 4 millions of jobs that will not be created by election time. Based on those number and assuming a pre-tax profit of around 7% on around 1.310 trillion EUR,in exports, a depreciation of 10% in the EUR will ad around 3% to 5% in more tax receipts to the EU governments This will amount to around 65 billion in more taxes without counting the manufacturing multiplier effect of 4. In summary the lower EUR is boosting the EU exports of manufactured goods and also services, tourism income, which I cannot quantify, and substantially lower EU budget deficit, which will make the biased article in the NY Times a bit- let say questionable. ON the other hand the US realized that this time indeed their supremacy in the financial markets is at risk and run scared putting all their efforts in devaluing the EUR by lowering the EUR credibility and smearing the EU wherever they can without being to confrontal, so that the world will see thought their statements the real US intentions, in hope of massive dumping of EUR assets by sovereign institution watch and accumulate