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by Ashraf Laidi
Posted: Feb 22, 2010 5:00
Comments: 2338
Posted: Feb 22, 2010 5:00
Comments: 2338
Forum Topic:
USD
Discuss USD
hike wages 15%
revalue RMB 10%
and now reduce US reserves by 2/3...
I think there is only one action
free float of RMB
and
hang the criminal princelings higher
hard to believe ...
if RMB is appreciated 2- 5% to the USD the reserves and UST assets will also lose 2-5% in RMB.
This doesn't make sense thus the most probable consequence is USDx raises also 2-5%. If that is so, China makes after all an effective move to quell inflation. Commodities would drop significantly.
rumor china raise RMB by one time, around 1st may, by 2-3%(maybe 5%). how will this affect on usdx?
the key reason would be keep people at home but not gathered on street against governor.
if they do raise wage, i dont think we will change our government in this crisis. even pork price double can not bring people on street show their power.
saving Ezone banks. No restructuring no haircuts. Since these bailout after bailout is the very same as QE ( but with the difference that it isn't clear how much more bailouts will be needed)
the fx markets bet on a series of rate hikes. Of course the transfer union finds broad support
in the PIIGS ..but nowhere else. Thus the thread the EUR hangs on is much thinner than the USD support. It is clear FED must continue to monetize US treasuries, it is also clear that the US cannot default as it is indebted in its own currency. But US banks don't hold US treasuries while Ezone banks are full to the brim with PIIGS debt. Thus EUR can default from within.
Could it just be like back in the end of 2009 when he said he had envisioned 1.57 by the end of that year, only to witness a grand reversal at 1.51?
After all, German Ifo and PMI look like rolled over the hill, the last PPI m-o-m was almost flat, and the so hot german GDP growth in the 1st quarter is projected a meager 0,8 per cent, which is what ... twice as low as in the US?
Technically the Fed should start hiking as soon as the core CPI is close or over 1.6% (it is 1.2% in the US vs 1.3% in Europe now). This is so because by the time the Fed has raised to 1 per cent, the core may well have swung over the 2 per cent threshold. And the core is on the rise (just look at the prices received in the Fed's local reports)
And Ben Bernanke is NOT Alan Greenspan. The treasury bubble is to burst.
Everywhere we look, the charts are parabolic. Feels like a correction is in the air.
Thoughts on the dollar, anyone?