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Chinese Premier Wen Jiabao has rejected criticism that China's exchange rate controls keep its currency undervalued in order to boost exports. He said keeping the yuan stable was "an important contribution" to global recovery from the economic downturn. He was speaking at the end of China's annual
Publ.Date : Sun, 14 Mar 2010 05:55:00 GMT
BEIJING — Premier Wen Jiabao sharply defended China ’s currency and trade policies on Sunday against what he called foreign “finger-pointing,” charging instead that the developed world seeks to force unfair changes in those policies “just ...
Publ.Date : Sun, 14 Mar 2010 08:26:00 GMT
China's prime minister has rejected foreign calls for allowing the yuan to appreciate and blamed the US for strained ties between Washington and Beijing. Wen Jiabao used a news conference marking the end of China's annual parliament meeting on Sunday ...
Publ.Date : Sun, 14 Mar 2010 07:07:00 GMT
The San Francisco-based 9th U S Circuit Court of Appeals panel rejected two legal challenges by Michael Newdow, a doctor, who said the references to God are unconstitutional and infringe on his religious beliefs. The same appeals court caused a national uproar and prompted accusations of judicial
Publ.Date : Fri, 12 Mar 2010 09:47:00 GMT
... sooner or later,” China must be cautious on the timing. “We oppose countries’ pointing fingers at each other and even forcing a country to appreciate its currency, because that won’t help renminbi exchange-rate reform,” Wen said, using ...
Publ.Date : Sun, 14 Mar 2010 02:56:00 GMT
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Internet Forex Trading Currency Trading Signal
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The US is dedicated to debasing its currency. Are you ready?
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Author: Dr. Marc Faber for The Daily Reckoning Australia
There is a risk in
holding cash in an environment of asset price inflation - a condition that
usually occurs when governments create large fiscal deficits and inflate the
money supply. The practice is endemic to banana republics and declining
empires...and it is happening in the US at this very moment.
The global
recession and financial crisis have refocused attention on government stimulus
packages. These packages typically emphasize spending, predicated on the view
that the expenditure 'multipliers' are greater than one - so that gross domestic
product expands by more than government spending itself. Stimulus packages
typically also feature tax reductions, designed partly to boost consumer demand
(by raising disposable income) and partly to stimulate work effort, production
and investment (by lowering rates).
The existing empirical evidence on
the response of real gross domestic product to added government spending and tax
changes is thin... But the evidence is quite strong that these policy responses
usually trigger inflation.
I suppose that even someone without any common
sense might understand that a "strong currency" over longer periods of time
reflects a high degree of prosperity and economic success, whereas a chronically
weak currency is symptomatic of economic imbalances, such as a lack of
competitiveness or overconsumption, arising usually from excessive supply of
money and credit.
I would also suppose that even if someone never travels
overseas, he would understand that if the US dollar loses 50% of its value
against all the other world currencies (everything else being equal), it means
the US is 50% poorer relative to the rest of the world. (Now, this is not
entirely correct, since the US has overseas assets that would appreciate in
value in USD terms).
Moreover, stock price movements become extremely
volatile and erratic in countries with a depreciating currency. In the long run,
the depreciation of the currency will usually more than eliminate the gains in
local currency terms. So, whereas in 2007 both the Dow Jones and the S&P 500
exceeded their previous highs reached in 2000 in US dollar terms, these indices
failed to make new highs in Euro terms. In addition, whereas the US economy
expanded in US dollar terms between 2001 and 2007, in Euro terms it actually
contracted!
Even with the S&P 500 having shot up since the beginning
of the year by over 25%, it has merely kept pace with the price of gold. And
during the last 10 years, the S&P has lagged behind the official US
inflation rate...while lagging VERY far behind both the euro and gold. Since the
end of 1999, the S&P 500 has delivered a total return after inflation of
about MINUS 25%.
Unfortunately, the US is not the only country that is busily
debasing its currency. "Everyone" is doing it. Because of the current collective
debasement of all paper currencies by central bankers, I believe that precious
metals and mining companies will maintain their purchasing power.
In the
1980s the US dollar was a very strong paper currency compared to the Mexican
Peso. Today, there is no paper currency that is as strong relative to the US
dollar as the US dollar was relative to the Peso in the 1980s! The only
"currencies" that have a chance of becoming as strong against the US dollar as
the US dollar was against the Peso between 1979 and 1988 are precious metals
such as gold, silver, platinum, and palladium.
Also, I should add that
precious metals could appreciate even if the US dollar miraculously recovered
strongly against foreign currencies for an extended period of time. Such dollar
strength would probably be a symptom of some horrible economic or political
problems around the world, which could be friendly to precious
metals.
Central bankers and pundits seem to believe that they have
averted the second Great Depression, while ignoring the fact that more and more
debt produces less and less GDP and fewer and fewer jobs.
For now,
though, the low ten-year bond yield is the lifeline from which all support
flows. Much of the investment universe holds together because money can still be
had for cheap - not by the volition of a cooperative private sector, rather
induced by a US government that simply distributes money for free. Such an
ill-conceived idea could only have been born in the test tube of a central
banker.
Private lenders comprehend the difficulty of making profits when
being forced to lend for nothing, so the government increasingly finds itself to
be the interest-free lender of last resort.
Ultimately, if central
bankers continue this process for long enough, it is the dollar, and any
currency or economy still pegged to it, that could eventually crash. Therefore,
we investors find ourselves in the precarious position of having to maintain
sufficient liquidity, but not too much in case the real value of these liquid
reserves is wiped out by politicians and central bankers gone
mad.
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