KIT

Why These Currencies Will Benefit from China's Commodities Purchases

When China buys commodities they devalue their own USD holdings. Its unavoidable if they want to grow. One gets the other. Pressing the USD down raises the EURO crushing the countries ( Spain Greece ) that are near default on their bonds and kills German exports, the only strong economy there. This will collapse the EURO in the end.

Strong commodity dollars kill commodity economies. Canada at par stops cold. China's products then have no place to go on the worldstage. We buy their products because they are cheap to us they are NOT cheap to their own people.

Buying Commodities to hedge USD loss is for them a net losing game.

They need to step back from 10% growth maybe to 4% something the world can handle

Friday FX View: You’re All Mad!

U.S. growth, or more accurately a contraction in growth, came in about half as bad again for the second quarter. Joblessness continues to soar - in the Eurozone the rate of unemployment reached 8.9% in April, while 6.27 million Americans continue to claim benefits this week. One of the big three automakers filed for Chapter 11 bankruptcy. And so the stock market put in its best month for nine years, while the euro is marginally higher. Dropping in from another planet, you’d be forgiven for thinking that the world has gone mad.

It has gone mad and in the end investors in this mess will get hurt. The real stress test is not the B***S*** bank fantasy test but the BALANCE SHEETS and CASH FLOW of businesses that cant hide their garbage. It's only been 6 months from the crash only one quarter reported this year. It will take 3 quarters before the damage shows up on real balance sheets.

Watch LIBOR its down to 1% banks can get money for less than that from the govt ... the banks still dont trust each other enough to lend to themselves.

People are behaving like the government has fixed the problem by handing a new credit card to someone who is near bankrupt.