Interesting article on free trade, currency controls and conventional wisdom:
http://business.guardian.co.uk/story/0,,1664984,00.html
http://business.guardian.co.uk/story/0,,1664984,00.html
The US dollar pegged to the yuan
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counter_violent
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Atilla said:
I wish I'd never asked the question. I did question my thoughts at the time as to weather or not the question would be seen as "personal" and in questioning myself, I figured that I would give myself the benefit of the doubt that members might be BIG enough to know that it was in no way intended as a personal question, but more as a general Question in the sense that the question was asked of Three members. Funny how we all find ourselves unable to ask the right questions is'nt it. Maybe there are no Right and Wrong Questions after all, and maybe there are no Right and Wrong answers by the same token.
CV,
"Maybe there are no Right and Wrong Questions after all,"..that's a bit of a surprise from you.
Look my comment was made because of this stuff and similar.
"So what is your prediction for the $?
Are we likely to see interest or tax rises?
Will there be a soft or hard landing?
Coming back to the thread - what will be the impact on the $ and the Yuan?"
All of these questions share one obvious trait ..they are all asking for the unknowable. That is any answers will only be known at the wrong time , with hindsight. You can't trade ,or invest on this. When you're watching price do you ask yourself this type of question ,or do you ask what is price doing , how does this compare to what I have known in the past where price behaves like this etc etc. In other words you deal with what you know not with what is unknown.
I can't add to this , 'you' either get it ,or 'you' don't but I'm "surprised" because I thought CV that you did.
My question right now , is what am I doing back on this thread LOL fortunately I do know the answer and I can live with it
"Maybe there are no Right and Wrong Questions after all,"..that's a bit of a surprise from you.
Look my comment was made because of this stuff and similar.
"So what is your prediction for the $?
Are we likely to see interest or tax rises?
Will there be a soft or hard landing?
Coming back to the thread - what will be the impact on the $ and the Yuan?"
All of these questions share one obvious trait ..they are all asking for the unknowable. That is any answers will only be known at the wrong time , with hindsight. You can't trade ,or invest on this. When you're watching price do you ask yourself this type of question ,or do you ask what is price doing , how does this compare to what I have known in the past where price behaves like this etc etc. In other words you deal with what you know not with what is unknown.
I can't add to this , 'you' either get it ,or 'you' don't but I'm "surprised" because I thought CV that you did.
My question right now , is what am I doing back on this thread LOL fortunately I do know the answer and I can live with it
counter_violent
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chump said:CV,
"Maybe there are no Right and Wrong Questions after all,"..that's a bit of a surprise from you.
Look my comment was made because of this stuff and similar.
"So what is your prediction for the $?
Are we likely to see interest or tax rises?
Will there be a soft or hard landing?
Coming back to the thread - what will be the impact on the $ and the Yuan?"
All of these questions share one obvious trait ..they are all asking for the unknowable. That is any answers will only be known at the wrong time , with hindsight. You can't trade ,or invest on this. When you're watching price do you ask yourself this type of question ,or do you ask what is price doing , how does this compare to what I have known in the past where price behaves like this etc etc. In other words you deal with what you know not with what is unknown.
I can't add to this , 'you' either get it ,or 'you' don't but I'm "surprised" because I thought CV that you did.
Chump, don't you worry lol. I'm firmly in the camp that is very selective as to who deserves help and information and who most certainly does not (at the risk of sounding Socratean ) wash my mouth out.
My question right now , is what am I doing back on this thread LOL fortunately I do know the answer and I can live with it
My question is slightly different. Why did I bother writing anything on this thread in the first place?
With that i'll bow out.C V
Atilla
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I will follow developements and invest in companies in one form or another and use these as inputs in reaching decisions to make informed investment decisions.
What does this mean? I know gobbldegook when I see it.
ANSWER: I was refering to news about other countries and companies investing in Africa. Surely you must have heard about the herd mentality in trading shares. There is always the possibility I'm a fruit cake and it is gobbledegook. Keep your options open eh? However, your sentence asks a question which you then answer yourself as "I know gobbledegook when I see it." I'm really happy for you.
China has invested billions and India has doubled it's investment in the last year.
Good for them.
ANSWER: What the heck does it matter whether I have invested or will be investing in Africa for when there are much bigger stakes and forces at play. Hence, the reference to the Chineese and Indians and to masquitos when there are elephants around the place. China=Elephant, I=masquito.
If I was decision maker in US or Europe as I have outlined before I would be warming relations and investing in these countries (er... that's not overthrowing or undermining there governments)
There must be valid reasons as to why this has not happened already then. All I can assume is everyone who has gone before was wrong.
ANSWER: Yes I'm sure there are always reasons to actions. Absolutely. Point remains $ is falling reflecting weakening economy and Yuan is appreciating. This didn't happen by chance. One should reflect on past decisions, actions and outcomes and feed back into future decisions to improve direction. As is always quoted in disclaimers, past record is no indication or guarantee of future income. If people are happy with todays current events then that's fine too.
Why is it such a BIG question whether "I" invest in these countries. I don't think I'm that important really.
Well, if you are confident investing in these countries, then just do it, I have no opinion One way or another.
ANSWER: Forgive me but I didn't think I was asking anyones permission. The point is what is the BIG question about little ol "me" investing in these countries. Who gives jack diddly dot as to what I trade or do and what impact that's likely to have.
In chasing masquitos you may get sat on by an elephant.
Eric Cantona ?
ANSWER: It's an expression for people who make much fuss about little things when there are bigger jobs in hand. They get behind.
Think SMALL questions and you may understand it a little more.
Good point, now what is it i'm trying to understand?
ANSWER: This was me being cheeky. Sorry. I thought if you ask BIG question of little ol 'dear me' then using reverse logic if you ask SMALL question about why China deemed it viable to invest in Africa you may see a small glimmer of the point I was trying to make about up and coming Africa other than SA.
I think we should move away from the "YOU's" and discuss non-personnel current events and our views on them how they reflect investment decisions. This is afterall a trading website.
I wish I'd never asked the question. I did question my thoughts at the time as to weather or not the question would be seen as "personal" and in questioning myself, I figured that I would give myself the benefit of the doubt that members might be BIG enough to know that it was in no way intended as a personal question, but more as a general Question in the sense that the question was asked of Three members. Funny how we all find ourselves unable to ask the right questions is'nt it. Maybe there are no Right and Wrong Questions after all, and maybe there are no Right and Wrong answers by the same token.
Dear Counter_Violent,
At the end of the day all discussions in this forum are interesting and participation is voluntary. It stimulates, provokes and challenges the mind.
I am glad you did ask the question. Perhaps I didn't answer it in the right way. Either way the thread is about Fundamental Economic analysis and is an interesting one to read - in my view at least.
Kind regards,
What does this mean? I know gobbldegook when I see it.
ANSWER: I was refering to news about other countries and companies investing in Africa. Surely you must have heard about the herd mentality in trading shares. There is always the possibility I'm a fruit cake and it is gobbledegook. Keep your options open eh? However, your sentence asks a question which you then answer yourself as "I know gobbledegook when I see it." I'm really happy for you.
China has invested billions and India has doubled it's investment in the last year.
Good for them.
ANSWER: What the heck does it matter whether I have invested or will be investing in Africa for when there are much bigger stakes and forces at play. Hence, the reference to the Chineese and Indians and to masquitos when there are elephants around the place. China=Elephant, I=masquito.
If I was decision maker in US or Europe as I have outlined before I would be warming relations and investing in these countries (er... that's not overthrowing or undermining there governments)
There must be valid reasons as to why this has not happened already then. All I can assume is everyone who has gone before was wrong.
ANSWER: Yes I'm sure there are always reasons to actions. Absolutely. Point remains $ is falling reflecting weakening economy and Yuan is appreciating. This didn't happen by chance. One should reflect on past decisions, actions and outcomes and feed back into future decisions to improve direction. As is always quoted in disclaimers, past record is no indication or guarantee of future income. If people are happy with todays current events then that's fine too.
Why is it such a BIG question whether "I" invest in these countries. I don't think I'm that important really.
Well, if you are confident investing in these countries, then just do it, I have no opinion One way or another.
ANSWER: Forgive me but I didn't think I was asking anyones permission. The point is what is the BIG question about little ol "me" investing in these countries. Who gives jack diddly dot as to what I trade or do and what impact that's likely to have.
In chasing masquitos you may get sat on by an elephant.
Eric Cantona ?
ANSWER: It's an expression for people who make much fuss about little things when there are bigger jobs in hand. They get behind.
Think SMALL questions and you may understand it a little more.
Good point, now what is it i'm trying to understand?
ANSWER: This was me being cheeky. Sorry. I thought if you ask BIG question of little ol 'dear me' then using reverse logic if you ask SMALL question about why China deemed it viable to invest in Africa you may see a small glimmer of the point I was trying to make about up and coming Africa other than SA.
I think we should move away from the "YOU's" and discuss non-personnel current events and our views on them how they reflect investment decisions. This is afterall a trading website.
I wish I'd never asked the question. I did question my thoughts at the time as to weather or not the question would be seen as "personal" and in questioning myself, I figured that I would give myself the benefit of the doubt that members might be BIG enough to know that it was in no way intended as a personal question, but more as a general Question in the sense that the question was asked of Three members. Funny how we all find ourselves unable to ask the right questions is'nt it. Maybe there are no Right and Wrong Questions after all, and maybe there are no Right and Wrong answers by the same token.
Dear Counter_Violent,
At the end of the day all discussions in this forum are interesting and participation is voluntary. It stimulates, provokes and challenges the mind.
I am glad you did ask the question. Perhaps I didn't answer it in the right way. Either way the thread is about Fundamental Economic analysis and is an interesting one to read - in my view at least.
Kind regards,
Atilla
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chump said:CV,
"Maybe there are no Right and Wrong Questions after all,"..that's a bit of a surprise from you.
Look my comment was made because of this stuff and similar.
"So what is your prediction for the $?
Are we likely to see interest or tax rises?
Will there be a soft or hard landing?
Coming back to the thread - what will be the impact on the $ and the Yuan?"
All of these questions share one obvious trait ..they are all asking for the unknowable. That is any answers will only be known at the wrong time , with hindsight. You can't trade ,or invest on this. When you're watching price do you ask yourself this type of question ,or do you ask what is price doing , how does this compare to what I have known in the past where price behaves like this etc etc. In other words you deal with what you know not with what is unknown.
I can't add to this , 'you' either get it ,or 'you' don't but I'm "surprised" because I thought CV that you did.
My question right now , is what am I doing back on this thread LOL fortunately I do know the answer and I can live with it
These question which you are ridiculing is being asked and discussed by some of the most important bodies in the world as well as being discussed by Bloomberg, Reuters and countless traders in trying to form a view, opinion or understanding of the fundamentals.
The reason why I'm replying is because I respect all your points of view including those people who may suggest I'm talking nonsense. I suppose I have to question my self and bounce of ideas againts you guys as a benchmark of comparison or somekind.
If the reaction is an over whelming ridicule then I may as well go away with my tail between my legs and read The World According to Garp...
So ,let me get this right. You've been "patronised" and "ridiculed" and all by someone who's views are "sadly biased" and thus are at odds with your own.
Your response is to include the obligatory "respect" so all neutral readers can see that you are clearly a reasonable man deserving of their sympathy as you " go away with my tail between my legs ".
It's all about 'you' and yet that will tell 'you' nothing will it.
Your response is to include the obligatory "respect" so all neutral readers can see that you are clearly a reasonable man deserving of their sympathy as you " go away with my tail between my legs ".
It's all about 'you' and yet that will tell 'you' nothing will it.
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Atilla
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chump said:
You tell me nothing but talk down and lecture on tangents - Obnoxious arrogance comes to my mind. Other people have made very interesting comments.
Your comments about it's not Africa's turn yet and the world is not ready for Africa I feel were biased, yes very much so. Here is a reminder quoted from just one of your lenghty comments.
"The African countries will get their bite of the cherry just as soon as their turn in the pecking order arises.
They can help themselves massively by making themselves more effectively exploitable..stop shooting each other ,stop electing govt's that are both venal and stupid and do what we do and elect govt's that are venal and smart enough to understand that the parasite that kills the host is also a dead parasite.
When an African country looks juicy enough to cooperate in the exploitation and development process they'll have to fight the money off with a stick.
That's the bottomline , African countries have not yet figured out how to make themselves look juicy enough.
Central America , Chavez , he's going to abolish the current rules for El Presidente and create a lifetime rule and the people will buy it ...now that's magic , no longer wil the gringo screw them they'll get to be screwed by one of there own and they'll actually like it ..for a little while anyway."
China loans create ‘new wave of Africa debt’ Perhaps the African countries like China's exploitation more than others.
Africa-South American summit begins Some of the African leaders are thinking bigger than you suggest in your article.
Considering Chavez has won a resounding victory in elections which have been declared as free and fair - Chavez does have a point. He is changing the consitution based on democracy. I heard the opposition leader on the BBC World service shouting he wanted a more equitable distribution of Venezuela's oil revenue. I fell of the couch laughing my head off. :cheesy:
Atilla
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chump said:
Congo's Kabila: from rebel to historic president
Another African nation rising from the ashes. Oh dear, it seems we have another Chineese connections. :!:
That pecking order is getting mighty close... :cheesy:
"You tell me nothing "...that you want to hear ,or really think about..true
"Other people have made very interesting comments". ..that you wanted to hear ...true
The kind of soundbite and waffle exchange you are referring to generally leaves people feeling good about themselves ..it's called 'stroking'.It takes you no further towards asking the right questions than you were when you started .
"Other people have made very interesting comments". ..that you wanted to hear ...true
The kind of soundbite and waffle exchange you are referring to generally leaves people feeling good about themselves ..it's called 'stroking'.It takes you no further towards asking the right questions than you were when you started .
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Quote from AFX on 8th Dec 2006 - "A top priority for the Democratic-controlled Congress, which convenes in January, will be raising the federal minimum wage from 5.15 an hour to 7.25 an hour. That wage has not been increased for nearly 10 years."
Will exacerbate problems in the sense that it will make China more competitive imo.
Will exacerbate problems in the sense that it will make China more competitive imo.
Atilla
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Quote:
Originally Posted by henry766
If Fed have to raise rates , equity markets won't like it , that much is clear ,a falling dollar seems to make raising of rates more likely, ( if nothing else a weakening currency is inflationary)? which seems to make your comments about everyone else expecting a rise very interesting jimmy.
Wrong cause/effect attribution there no?. Rates are expected to fall because the economy is weakening therefore the dollar is falling.
__________________
this is in reply , the reason why rates may rise is because of inflation , which these days with central bank(s) controlling interest rates , is the reason U.S. or any other western economy may raise rates , may have to , even if economy not doing so well.I'm not saying this will happen , and generally slowing economies are deflationary , but most of the influence to central banks is the rate of inflation ( and future inflation) in deciding interest rates (seems to me anyway)
Originally Posted by henry766
If Fed have to raise rates , equity markets won't like it , that much is clear ,a falling dollar seems to make raising of rates more likely, ( if nothing else a weakening currency is inflationary)? which seems to make your comments about everyone else expecting a rise very interesting jimmy.
Wrong cause/effect attribution there no?. Rates are expected to fall because the economy is weakening therefore the dollar is falling.
__________________
this is in reply , the reason why rates may rise is because of inflation , which these days with central bank(s) controlling interest rates , is the reason U.S. or any other western economy may raise rates , may have to , even if economy not doing so well.I'm not saying this will happen , and generally slowing economies are deflationary , but most of the influence to central banks is the rate of inflation ( and future inflation) in deciding interest rates (seems to me anyway)
Atilla
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henry766 said:
All getting very confusing... In determining currency impact of interest rates and inflation you have to consider real rate of interest rates.
Real Rate = interest rate - inflation.
1. If interest rates fall and and inflation rises real rate of interest will fall -> $ :arrowd:
2. If interest rates rise and inflation rises real rate of interest remains on average the same, the $ is likely to :arrowd: ( however, depends on magnitudes of rises ).
3. If interest rates rise and inflation falls real rate of interest rises -> $ :arrowu: .
The Fed at the moment is worried about slowing economy (hence considering reducing interest rates to stimulate) and inflationary pressures (requires raising interest rates to dampen demand) - puts us in scenario 1 - worst of the lot. Resulting in $ :arrowd: .
Once again fundamentals are important...
1. Balance of Payments defecit - > $ :arrowd:
2. Budget Defecit - > $ :arrowd:
No two ways about it.
However, raising interest rates damages business and reduces expenditure.
When the adminisration begins to consider raising taxes to starve inflationary pressures in the economy that's when we will know they are serious.
No politician these days mentions taxes. One way or another someones gonna pay for all the excess dollars in circulation.
Good point Atilla , i think your saying that there are opposing influences on u.s. interest rates becuase of a faltering economy that will result in weakening dollar, I quote
"The Fed at the moment is worried about slowing economy (hence considering reducing interest rates to stimulate) and inflationary pressures (requires raising interest rates to dampen demand) - puts us in scenario 1 - worst of the lot. Resulting in $ . " ,
But i said if the dollar weakens , this will be inflationary , which if true , your confirming what i said in that you said " and inflationary pressures (requires raising interest rates to dampen demand) "which seems to be in essence what i said in my earlier post , the only area where i can see a conflict is if you don't think a falling currency is inflationary , though i agree this also means economy is slowing (deflationary), in truth the fed will keep interests rates as low as they can and still keep a hold on inflation , but this is always true at all times in all economies ( why raise rates and slow economy if no inflation).
so if economy stays same but dollar falls this will mean some inflationary pressure ( my earlier point you dissagreed with)
if economy slows and doller falls, inflationary pressures maybe reduced in which case , YES interest rates may come down , but only if , and i did say in my earlier post "if nothing else " meaning in a sense all else being equal , meaning the economy etc , then a falling currency IS inflationary , which i stand by .
As regards your point about "real interest rates" as opposed to plain old interest rates , I understand your point ,but i believe we were all talking about the Fed and their rates , rather than the "real rate of interest ". In general people arn't referring to your "real rates" when talking about interest rates and i wasn't either , i suspect thats because your in a grey area ,after all inflation isn't either a fixed or completely objective figure , people have very different ways of stating inflation , some include price of crude , some don't , some are weighted more on wages , some more on retail prices .Whats more the real rate of interest one would actually receive if invested in another country would also depend on perceived /future currency movement , which is why i simply stated "if the fed raise rates " rather than adding up and reaching subjective conclusions about the "real interest rate ", forgive me but my life is too short
"The Fed at the moment is worried about slowing economy (hence considering reducing interest rates to stimulate) and inflationary pressures (requires raising interest rates to dampen demand) - puts us in scenario 1 - worst of the lot. Resulting in $ . " ,
But i said if the dollar weakens , this will be inflationary , which if true , your confirming what i said in that you said " and inflationary pressures (requires raising interest rates to dampen demand) "which seems to be in essence what i said in my earlier post , the only area where i can see a conflict is if you don't think a falling currency is inflationary , though i agree this also means economy is slowing (deflationary), in truth the fed will keep interests rates as low as they can and still keep a hold on inflation , but this is always true at all times in all economies ( why raise rates and slow economy if no inflation).
so if economy stays same but dollar falls this will mean some inflationary pressure ( my earlier point you dissagreed with)
if economy slows and doller falls, inflationary pressures maybe reduced in which case , YES interest rates may come down , but only if , and i did say in my earlier post "if nothing else " meaning in a sense all else being equal , meaning the economy etc , then a falling currency IS inflationary , which i stand by .
As regards your point about "real interest rates" as opposed to plain old interest rates , I understand your point ,but i believe we were all talking about the Fed and their rates , rather than the "real rate of interest ". In general people arn't referring to your "real rates" when talking about interest rates and i wasn't either , i suspect thats because your in a grey area ,after all inflation isn't either a fixed or completely objective figure , people have very different ways of stating inflation , some include price of crude , some don't , some are weighted more on wages , some more on retail prices .Whats more the real rate of interest one would actually receive if invested in another country would also depend on perceived /future currency movement , which is why i simply stated "if the fed raise rates " rather than adding up and reaching subjective conclusions about the "real interest rate ", forgive me but my life is too short
Some very good points being made and although i haven't posted for a few days i have been following the discussion with interest and watching the markets reaction to yesterday's Fed statement i found quite revealing.
They seemed to be at pains to point out the inflationary risk still remains but the sharp movements in bonds and the $ suggested that those markets saw the adding of the word "substantial" in front of "cooling housing market" was the more pertinent point. Personally i now think that the Fed will not be raising or lowering their rates for a very long time, and i think previous points made all through this discussion explain exactly why.
They seemed to be at pains to point out the inflationary risk still remains but the sharp movements in bonds and the $ suggested that those markets saw the adding of the word "substantial" in front of "cooling housing market" was the more pertinent point. Personally i now think that the Fed will not be raising or lowering their rates for a very long time, and i think previous points made all through this discussion explain exactly why.
Atilla
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henry766 said:
Hi Henry,
Very interesting discussion indeed. The old grey cells are doing over-time. I wasn't disagreeing with you but pointing out relationships with respect to interest rates and inflation and currency movement $.
You are 100% right that :arrowd: $ leads to rise in inflation. The relationship whilst negative depends on the marginal propensity to import and whether such imports are included in your index - basket of measurement. I'm sure the Fed has a computer model which will tell it by exactly what this relationship is. I wouldn't have thought it's not a big factor though.
Similarly, rise in inflation causes the $ :arrowd: . Hence a catch 22 scenario. This is assuming a free competitive markets where the $ fluctuations takes the strain of a BofP defecit.
In general there is a lot of money flushing around in the US at the moment a lot of which is going on imports. I don't know how much of the raw products and inputs the US imports but I doubt it's as high as goods and services. The collosal rise in commodity prices have not had the same impacts on the Global economy as back in the 70s after 74 oil shock. I'm not sure the fall in $ will have add substantially to inflation beyond that of the commodity prices.
An area where I would have a different opinion is if the US economy slowed, then I would assume the $ would rise - not fall. Reduced income leads to reduced expenditure & fall in imports and so less dollars in circulation. If the Global economy is doing fine then it is possible to have an export led growth as with some of UKs experience with Mrs T and the 90s.
Another interest to me in all these relationships is where one believes the economy to be in the growth cycle. In a trough - recession, mid-growth or mid-fall or peak. Until we ask the question where is the US economy in this cycle it's difficult to reach the correct verdict on movement of these measures. The Fed and stats are giving mixed singles which sounds like stagflation to me. Slowing housing & manufacturing, whilst inflationary pressures and rising employment.
Also, real rates of interest are important to exchange rates as big multinationals, companies and countries move bn's of $ around the globe on a nightly basis. If you wish to be on top of currency's I wouldn't discount hot capital flows. I do accept your point it's not much use to your indegenous consumer and their calculations.
I'm a little dissapointed that everybody is heavy on supply side economics with interest rates, inflation and currencies. A little bit of John Maynard Keynes - demand side economics would go a long way here. I would re-iterate until the US administration starts to consider raising taxes, we will have imbalances in BoP & Budgets.
Finally, my analysis of today is that the CPI was high and the markets immediately factored in an interest rise hence the $ rose and then thoughts of a slowing economy kicked in as an after thought and the $ began to fall again.
Life is too short...? Good idea I read in a book is to scrap bottom half of your list and if it's important it'll come back to you, otherwise not. Thus, reduced workload and doubled time. Enjoy...
