aarc

No-Brainer: Buying Yuan / Asia / EM and Selling Dollar / Euro / XLF

The US owns China now.

There is a saying borrow 1 million from the bank and the bank owns you. Borrow 100 million and you own the bank.

As for the US dollar. The Euro dollar exerts most of the pressure toward the weakness the dollar for more than 7 years that ended in mid-2008. Euro$ went up, US$ went down. Not after mid-2008 where the Euro$ dropped down like a stone. Extremely hard to recover from such a type of drop from a technical point of view. Fundamentals also not supporting a recovery in the price of Euro$/US$ in the medium to long-term.

Euro$ is now in a medium-term downtrend on the monthly chart and in a short-term corrective rally on the weekly chart . With no other currency expected to exert major pressure into the price of dollar vis-a-vis major currencies. The US$ is expected to go up in the next several months if not for several years as the Euro$ goes down.

I expect the US$ will start the next rally leg by late H2 2009 as the Euro$ goes down to an exchange ratio more likely in parity with the US$.

UUP should be able to reach close to if not greater than $30 as the Euro$ goes down to parity level with the US$.

Quant Easing: Central Banks Unleash the 'Nuclear' Option

My mistake; Japan has 127 million population. Still their land mass is way too small as compared to the US.

Quant Easing: Central Banks Unleash the 'Nuclear' Option

I have one BIG question:

Why is it that Japan after more than 20 years of deflationary recession has a 3.9% Unemployment Rate? Right! three point nine percent early this year that I read. And it said 3.9% unemployement rate was the worst Japan has ever had since the start of recession. Even if they started with 1%; that is 400% or so increase over 20 years.

Now the US has 8.1% unemployment rate right off the first year of deflationary recession from 4.6% in 2007. Almost double already right off the bat. What will it be if the US got hit by 20 years of deflationary recession?

Japan had a worse housing and stock market bubbles in the late 80's as compared to the US. Both countries have roughtly the same 300 million population; both countries are developed capitalistic democratic countries. The big difference is that the US has lots more land mass and lots more natural resources than Japan and hence should have fared better. Japan has the same consumer based economy as the US but more dependent on export so it must fare worse than the US.

What is it that Japan did during the 90' to present that they were able to prevent unemployment exploding to unmanageable levels? 3.9% over 20 years vs. 4.6% to 8.1% in just over a year of deflationary recession is a big deal.

Is it QE or something else? What are the wrong things US and Europe have been doing for more than a year? Avoiding the 20 years of mistakes by Japan?