User 142738

Strong RMB, Yen Not Good for the World

sidney: The paragraphs you wrote are similar to the words written in the book “The Japan That Can Say No.” Oddly enough, the appreciating yen has increased Japan’s government debt, in dollar terms, from $8.5 trillion to $9.2 trillion; in yen it’s approximately ¥850 trillion. If Japan’s debt increases by ¥50 trillion and the yen rises to ¥85 per dollar, they’ll regain the dubious distinction of being the world’s most indebted country — and will cement their place as most indebted per capita.

I use Japan as a recent example of how an export-centric economy utilizes its foreign currency reserves as collateral for issuing debt. This is in conjunction with depreciating the currency. Depreciation of China’s currency was actually part of Deng Xiaoping’s economic plan; off the top of my head, I believe the yuan was devalued from $0.52 to $0.12. The United States did this in the 1930’s (from 0.05 oz. t. gold to 0.024 oz. t. gold), Japan did this in the 1990’s (from $0.0139 to $0.0069), and China will more than likely do this (again) in the 2010’s.

Also, sidney, I wouldn’t give the World Trade Organization too much credit. China collects taxes by levying high tariffs on imports — a no-no for most WTO members. It’s China, not the WTO, that you should be blaming.

Treasuries and the U.S. Dollar: Twin Bubbles

The author claims that Japan government debt is 7 trillion dollars, which is a gross underestimation. You can find a comprehensive list of the past and present national debt of Japan, translated to English, here:

www.mof.go.jp/english/...

Translated to dollars at a rate of 95.43 yen per dollar, the total government debt is approximately $8.8 trillion. This is up from approximately $5 trillion in 2001.

Furthermore the author justifies such large deficit spending by using the country's savings rate as collateral. Many Japanese keep their money in "dollar accounts," not at the least because the interest rates are higher. Interest gained in dollars are also exempt from local taxes, which can be very high.

Has the history of issued 100-year Japanese bonds been forgotten? This article is rubbish!

Global Stock Markets: We All Fall Down!

mdmrjsds: Are you referring to Japan?

U.S. Decouples From Global Markets - in Reverse

The pound sterling is falling faster than the dollar, but thank you for playing.

Global 'Oil Shock' Rattles World Stock Markets

I normally have no opinion about the "peak oil" theory, but the chart shown in the article clearly shows production, not proven reserves. The "peak" was considered to be at 1981 in 1979. Now it's predicted to be at 2010 in 2008.

I'm also incredibly skeptical about numbers coming out of China about oil consumption (as well as any other number). The Chinese Communist Party's motto should be: "If at first we don't succeed, lower the standards." The worldwide poverty line is set, rather arbitrarily, at living on less than $1 (adjusted for purchasing parity) per day. The Party defines their poverty line at living on less than $0.70 per day. I contrast this with poverty lines defined by individual first-world governments that go up to $33 a day!

Considering how notorious the "big four" emerging markets are for putting price ceilings on commodities like cooking oil and gasoline, I'd predict 1970's-style shortages and rations, not to mention riots in the streets of Peking and Bombay.

Global Equity Market Caps: U.S. Loses Ground to China

China is hellbent on photocopying the successes -- and shortcomings -- of the United States. They're rationing gasoline and fixing food prices in a futile 1970's-style inflation war.

Also, the two-letter abbreviation for China is "CN"; "CH" is Switzerland. I was a bit confused.