Rants of FA Thought
Disclaimer:
Following post can be ‘extremely speculative’ and what my rant thought is not backed up with sufficient or any credible source or form of information.
It is convenient to blame the strengthening of US Dollar since people selling their equity or covering their short sell or liquidating asset to buy US$.
Question is,… American’s citizens keeps spending money like normal, the International trade company in Shandong Province in china I interviewed recently mentioned ‘ Business As Usual’, and they even cannot keep up with the demand lately. The US govt keeps printing the bond and the financial institution is falling like a fragile glass.
With the Approval of more than $700billion dollars to buy the trouble asset backed by the sub prime mortage, there is a likelihood that the asset is ‘over-valued’ to safe the falling value of the illiquid asset.
Where do they get the money from by the way? Again!, debt…. Which they will have to print MORE international bond.
HELLO!!, I thought with the more money a country issues the LOWER THE VALUE!????
Euro VS USD has breached below 1.4, and last night it was at 1.38 USD/Euro from 1.6 in the last 2 months????
Anyone want to try answering this question fundamentally?
Here is the speculation,… whatever they do,… China would more than likely to tell George W Bush, ‘Ai mate, … if you do not happen to know yet, we hold about $1.2trillion USD in your currency bond. That is equal to $1000/Chinese citizen. WE CAN PRACTICALLY FEED THE ENTIRE NATION FOR 2 YEARS ON THE BACK OF THE BOND ALONE! WITHOUT HAVING TO DO ANYTHING!
And FYI (for your informazione), your money has lost value with RenMinBi or Yuan more than 20% in the last 2 years. If you are offering 5% interest on it (which u kept cutting it down now BTW!!) , what is the point of me getting an interest of 10% in 2 years and losing 20% in value?
And with you printing this money again, keep lowering your interest rate, the value will keep getting lower! And come on,… I understand that you do help maintaining the appetite to buy our product, but this is a NO BRAIN.
So, may I speculate on the back of this? , ‘the value of USD is increasing lately in order to encourage the creditor country to allow US Govt to build a demand appetite for their ‘brand new’ shiny bond.’
So this is the speculation and (DISCLAIMER ON), ‘any country that can possible purchase that shiny new $700billion bail out bond, will see USD against it to increase in value’