Re: Calm before hopefully a gentle storm...

On Jun 28, 9:48 am, ltlee1 <ltl...@xxxxxxxxxxx> wrote:
On Jun 28, 12:59 am, "fyfp...@xxxxxxxxx" <fyfp...@xxxxxxxxx> wrote:

The Olympic is about to start and when one looks beyond Olymic, one
wonders what the next excitement will be  for both China and the rest
of the world.

My own experiences in the past seem to have suggested that the next
storm will be one in which whoever will get into the White House will
have to gradually notch up the interest rates in order to check the
rampant growth of this Goliath named inflation.  Since my economics
knowledge has already been 'given back' to teachers, I am looking
forward to being enlightened on this issue by high-tech economists
like Albert Fung and T Lee...and perhaps Jim Walsh too.

In particular, I wish to be illuminated on the various ramifications
for China by such an interest hike and what one can do to guard
oneself against the possible damages.

I am not any kind of economists.

Then you should stop right here, and should not go any further.

This is how I see the situation.

Inflation is not a problem in America. In contrast, the economy is
beleived to be in a recession.  Since, America is in a recession, the
Fed is no position to increase rate aggressively to defend the dollar.
Inflationary pressure experienced by China, to a large extent,
reflects people's expection on lower dollar exchange rate. As I have
posted before, some Chinese exporters such as clothing manufacturer
were using their dollar proceeds to buy copper. Such and similar
speculations, of course, push the price of commodities higher and
contribute to inflation.

Last year, the Fed's atttiude is that it does not care about a weaker
dollar. It changed it tune recently. It is now tryingn to talk up the
dollar. I don't think that will be enough. The central bankers need to
get together to stabilize the dollar. This would end the speculation
on commodities and the cycles of speculative price increase. Such
stabilization effort would entail China, Japan, and other large dollar
holders not dumping their dollar holdings. This also means that
America needs to relax its rules over exporting to China or China
buying American companies.

.

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