Comments on: Links: RMB appreciation and breaks the 7:1 exchange rate mark and more to come methinks http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html About China blogosphere, travel, and entrepreneurship Mon, 01 Dec 2008 19:22:15 +0000 http://wordpress.org/?v=2.6.2 By: Mind the Gap at 14:28: the Three Day Mourning Period and the American Twitterati http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-1419 Mind the Gap at 14:28: the Three Day Mourning Period and the American Twitterati Mon, 19 May 2008 10:37:03 +0000 http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-1419 [...] Westerners, for good reason in my opinion, have a strong sense of the value of ideals of freedom of speech, freedom of press, and freedom of religion. No doubt in my mind that those of us in the U.S. have more guaranteed freedom and liberty, protected by the U.S. constitution, the Bill of Rights, the separation of powers, the rule of law, the independent judicial system, and elected legislators and governors and President. The Chinese have none of these things (or at least, they have these things in much more weakened form). In my mind, my US passport is worth far more than a Chinese passport and I would never trade it in (although I think the RMB is more valuable than the USD). [...] [...] Westerners, for good reason in my opinion, have a strong sense of the value of ideals of freedom of speech, freedom of press, and freedom of religion. No doubt in my mind that those of us in the U.S. have more guaranteed freedom and liberty, protected by the U.S. constitution, the Bill of Rights, the separation of powers, the rule of law, the independent judicial system, and elected legislators and governors and President. The Chinese have none of these things (or at least, they have these things in much more weakened form). In my mind, my US passport is worth far more than a Chinese passport and I would never trade it in (although I think the RMB is more valuable than the USD). [...]

]]> By: CNY ETNs: Hedging RMB Appreciation and Dollar Decline http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-941 CNY ETNs: Hedging RMB Appreciation and Dollar Decline Fri, 11 Apr 2008 14:18:35 +0000 http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-941 [...] 4/11:  Also see my most recent post on RMB Appreciation on 4/11 when the RMB crossed the 7:1 exchange rate level.  Also related as a 3/30 post with more [...] [...] 4/11:  Also see my most recent post on RMB Appreciation on 4/11 when the RMB crossed the 7:1 exchange rate level.  Also related as a 3/30 post with more [...]

]]> By: Links: RMB appreciation and the emergence of a new Asian reserve currency http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-940 Links: RMB appreciation and the emergence of a new Asian reserve currency Fri, 11 Apr 2008 14:15:41 +0000 http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-940 [...] 4/11:  I posted more links on RMB appreciation on 4/11 when the RMB crossed the 7:1 [...] [...] 4/11:  I posted more links on RMB appreciation on 4/11 when the RMB crossed the 7:1 [...]

]]> By: Paul Denlinger http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-932 Paul Denlinger Fri, 11 Apr 2008 08:34:00 +0000 http://cnreviews.com/elliott_ng/links_rmb_appreciation_and_breaks_the_71_exchange_rate_mark_and_more_to_come_methinks_20080411.html#comment-932 The main issue is that the US dollar has lost credibility as a global reserve currency with the credit bubble. Central banks and individuals have lost faith in its value, some are even moving into commodities in preference to the dollar because they see how irresponsible the Fed became under Greenspan. Before China recirculated its surplus in US T-bills, thinking that these were safe. For a long time, this delayed the reform of China's domestic banking system, which was not able to pump money into the areas which needed investment money the most. Foreign VCs and PE firms filled this void. Now though, everyone wants to get out of US dollars. This is a good thing, it will stimulate reforms of China's banking sector. With the dollar on the skids, and continuing to go down more in the foreseeable future, the Chinese government has no choice except to invest more in the development of China internally, and rely less on exports to the US. This is a good thing because it is abnormal for a comparatively poor country to subsidize the profligate spending of a rich country. Money should flow from the rich country to the poor country, where it returns a decent ROI, then flows back to the lending nation, or be rolled into new investments in the poor country. Americans will have to adjust to a much lower standard of living, but this is a good thing. The credit bubble just revealed that Americans were borrowing against tomorrow to party today. Now, tomorrow has arrived. The main issue is that the US dollar has lost credibility as a global reserve currency with the credit bubble. Central banks and individuals have lost faith in its value, some are even moving into commodities in preference to the dollar because they see how irresponsible the Fed became under Greenspan.

Before China recirculated its surplus in US T-bills, thinking that these were safe. For a long time, this delayed the reform of China’s domestic banking system, which was not able to pump money into the areas which needed investment money the most. Foreign VCs and PE firms filled this void. Now though, everyone wants to get out of US dollars. This is a good thing, it will stimulate reforms of China’s banking sector.

With the dollar on the skids, and continuing to go down more in the foreseeable future, the Chinese government has no choice except to invest more in the development of China internally, and rely less on exports to the US. This is a good thing because it is abnormal for a comparatively poor country to subsidize the profligate spending of a rich country. Money should flow from the rich country to the poor country, where it returns a decent ROI, then flows back to the lending nation, or be rolled into new investments in the poor country.

Americans will have to adjust to a much lower standard of living, but this is a good thing. The credit bubble just revealed that Americans were borrowing against tomorrow to party today. Now, tomorrow has arrived.

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