Re: Chinese currency activities

Yes, I like csm, they report well... the USA has made a bet on monetary
policy, and the
chinese have merely taken the other side of the bet... now that it turns out the
chinese are
winning the bet, the usa wants to cry "cheating". Hard to say how this will
turn out, but it
can't be good.

One move the Chinese might make that I have not heard anyone mention, is the
Chinese may
simply absorb the Hong Kong dollar into the RMBY. The whole system is ready to
do this, the
banks in Hong Kong already offer both RMBY and HK$ at the atm's, and all
accounts are
automatically dual currency accounts. What makes me think this is since USA has
begun
complaining about the RMBY, China has slowly been revaluing, and it looks like a
mid-air
refueling operation, with the RMBY inching towards parity with the HK$. Will
one day, when
they have been at par for say a week, will china announce there is no more Hong
Kong
dollar?

The usa economists will have no idea what the impact is, or will be, it will
through our side of
the bet for a loop. It would certainly buy the Chinese some time.

Just my hunch.

John
On Sun, 14 May 2006 22:32:06 -0500, "Randal Tietz" wrote
:

> This is a multi-part message in MIME format.
>
>
> Check this out:
> http://www.csmonitor.com/2006/0515/p16s02-cogn.html?s=hns
>
> Salient paragraphs from the article:
> Over the past 15 years, the US has bought $1.1 trillion more in Chinese
merchandise than
it has sold of American goods to China.
>
> The result is that China, by the end of this year, will have socked away $1
trillion in US
Treasury securities in its international reserves as a byproduct of keeping down
the value of
the yuan. Last year alone, the US had a record trade deficit with China of $202
billion.
>
> Some $47 billion of that deficit, notes Washington economic consultant Charles
McMillion,
was in "advanced technology products." In other words, China isn't just making
sweatshirts,
toys, and electronic products for sale to the US.
>
> Many economists worry that China and other Asian nations with huge hoards of
US
securities could decide to dump them. That could knock the dollar for a loop,
raise US
interest rates, pop the housing bubble, and cause a recession. Many nations in
Europe and
elsewhere have been relying considerably on sales to the US for their own
prosperity.
>
> To proponents of yuan revaluation, this change would be good for China. It
would, Morici
says, encourage rural and domestic development where it is sorely needed and
dampen the
excessive boom in cities where most exports are made.
>
> In its new five-year plan, China has stated its intent to encourage just that.

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