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Discussion Topic:
Credit Worthiness?
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martinrooy |
03-17-2009 @ 7:55 PM
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Joined: Jul 2007
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It was not that long ago China announced a huge fund for diversification purposes of their foreign exchange surpluses. And wasn't it about a year ago China announced their futures exchange? Since then we have had a near total market collapse with the result of bargain basement prices for equities of all sorts and commodities also.
I'm not sure if it was the Mid East or China but I remember someone investing big chunks into the U.S. situation while it was considerably higher than today. That loss might have scared them right into gold and silver. If price is an indication then gold has likely received the larger amount of funds or silver was man handled to a greater extent than gold.
Whatever the situation one fact is certain, China is worried about America's credit worthiness and so am I. Who would invest in a country which seems it might go the way of Zimbabwe.
Index
1 yr approx high
1 yr approx low
Percent drop
DJIA
13200
6400
51.52%
FTSE
6400
3400
46.88%
Shanghai
4000
1800
55.00%
Hong Kong
26200
10300
60.69%
Japan
14500
7000
51.72%
France
5100
2450
51.96%
Germany
7200
3550
50.69%
Russia
26100
7000
73.18%
It seems no one is afraid of the effects of a falling dollar on companies in the U.S. or the PPT is doing a great job.
I do see one solution for business conducted in dollars. Do not hold dollar accounts or dollar notes receivable and do not do, forward sales. Do hold payables in dollars, if possible.
I hope businesses wise up to coming dollar problems. If for no other reason than to protect investors and attract them also. When and if they wise up, surely they can manage a plan for protection? Although some miners have done a poor job of protecting hedges and they refused to listen to sage advise when it was timely, it begs the question whether or not companies will properly manage with a falling dollar? If miners must do forward sales then they should buy protection from rising prices.
Inflation will come. Governments always deny that which everyone else can see coming, right up to the point where it hits them between the eyes. Then they back-peddle and lay blame. When inflation comes and at the some point before it is severe, equities might well become a safe haven! Especially those where management have protected the company from a dollar fall.
P.S. This new proposed mining legislation (H.R. 699, I believe). I wonder if it is meant to be a deterrent to foreign investors, re China?
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martinrooy |
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03-24-2009 @ 8:32 PM
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Joined: Jul 2007
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This took me by surprise. It speaks volumes about the lack of trust in dollar notes.
Montana State legislation being introduced which proposes to accept gold and silver in physical or electronic form as currency. Here is the link.
http://agoracom.com/ir/Niogold/forums/discussion/topics/323386-states-taking-money-into-their-own-hands/messages/1098606#message
Here is a quote,
“Wagner joins legislators in several other states encouraging their respective governments to reconsider accepting gold as a form of payment. Indiana's S.B. 453, Colorado's H.B. 09-1206, Missouri's H.B. 0561, Georgia's H.B. 430 and Maryland's H.J.R. 5 are among the gold currency bills introduced just this year in various legislatures.
Montana's H.B. 639 has been referred to the Legislature's State Administration Committee.”
You may find the actual bill in PDF format here; http://data.opi.mt.gov/bills/2009/billpdf/HB0639.pdf .
I guess people have had up to their ears with the fed.
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martinrooy |
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03-25-2009 @ 7:27 PM
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Joined: Jul 2007
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From Midas today,
As for China’s criticism of the U.S., Volcker was unsympathetic. "I think the Chinese are a little disingenuous to say, ‘Now isn’t it so bad that we hold all these dollars.’ They hold all these dollars because they chose to buy the dollars, and they didn’t want to sell the dollars because they didn’t want to appreciate their currency. It was a very simple calculation on their part, so they shouldn’t come around blaming it all on us."
My thoughts are;
1.the Chinese received dollars from sales of products.
2.why should anyone rush to dump that with which you paid them with.
3.when China came to the store (U.S.) to buy an oil company they ran into so much resistance they gave it up. Thus the store won't sell or the shelves are bare.
4.if China dumped dollars for yen it would probably send the yen soaring and they might eliminate competition from Japan and then they could buy Japan with all those yen.
5.how happy would Volcker and all be, if China took him up on that logic and sold all the dollars they have. I-N-F-L-A-T-I-O-N
How can thinking like Mr. Volckers' be creditable? It must be a bluff or he wants a devalued dollar ASAP.
Since many resources are priced in dollars most are happy to have a reserve of them. Since the West buys so many manufactured goods from China, we should be happy to have a reserve of renminbis. Thus the U.S. can buy from China and pay with dollars and we should sell to China and accept renminbis. And if we don't wish to sell or we don't have anything they want and we want what they make, then we shouldn't complain if China has dollars.
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