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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (65652)	8/23/2010 2:58:56 AM
From: elmatador	Respond to of 219585

abrupt "jump depreciation" of the U.S. dollar (that is, a spike in the value of foreign currencies). Hussman: Bernanke's Quantitative Easing Is About To Trigger A Collapse In The US Dollar Reported by Business Insider on Sunday, 22 August 2010 (9 hours ago) In his latest weekly letter, John Hussman warns of an imminent and disorderly collapse of the US dollar, courtesy of Ben Bernanke's move towards more quantitative easing. The whole thing is worth reading, but here's the key part of it: From the standpoint of the two parity conditions, the very long-term implication of quantitative easing is a gradual devaluation of the U.S. dollar (an increase in the dollar price $/FC of foreign currency). If this increased inflation risk was reflected in interest rates (so that real interest rates were held constant), the U.S. dollar would simply move along that gradually sloped PPP line, and likewise, foreign currencies would gradually appreciate against the dollar. However, because of economic weakness and credit strains, coupled with the demand for Treasuries by the Fed, quantitative easing instead moves U.S. interest rates in the opposite direction, falling rather than rising. From the standpoint of interest rate parity, capital market equilibrium then requires the U.S. dollar to depreciate immediately, by a sufficient amount to set up the expectation of future appreciation in order to offset the shortfall of U.S. interest rate returns. In short, quantitative easing is likely to induce what the late MIT economist Rudiger Dornbusch described as "exchange rate overshooting" - a large and abrupt shift in the spot exchange rate that occurs in order to align long-term equilibrium in the market for goods and services with short-term equilibrium in the capital markets. This adjustment is depicted in the diagram below. In response to the monetary shock, a modest but long-term depreciation in the dollar (a rise in the U.S. dollar price of foreign currency) is required, depicted by the blue line. However, since nominal interest rates in the U.S. actually decline, ongoing equilibrium in the capital market requires that the U.S. dollar must be expected to appreciate over time by enough to offset the lost interest. As a result, quantitative easing is likely to result in an abrupt "jump depreciation" of the U.S. dollar (that is, a spike in the value of foreign currencies). onenewspage.com

To: Haim R. Branisteanu who wrote (65652)	8/23/2010 2:59:12 AM
From: elmatador	Respond to of 219585

real estate bubble. Blackstone signs first major China housing deal (AFP) – 44 minutes ago HONG KONG — US private equity giant Blackstone Group has signed a deal to make its first major investment in China's booming housing market, a report said Monday. The Financial Times reported that Blackstone and Great Eagle Holdings, one of Hong Kong's largest property developers, agreed to a deal involving the construction of luxury apartments in the coastal city of Dalian. Blackstone would back the development of more than 1,000 new homes, the report said, without citing a source or the value of the deal. Great Eagle has already said it would welcome a joint venture partner for the project, the paper said. The plan also calls for construction of about 400 hotel rooms in Dalian, a trading and financial centre dubbed the "Hong Kong of northern China", the paper said. The deal comes less than a week after Blackstone said it planned to double its India investments to as much as three billion US dollars over the next five years. Earlier this year, China's housing minister said the country's soaring property prices would likely continue up in 2010, despite government moves to rein them in amid fears of a real estate bubble.