Exchange Rate Wars

[altman]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

Edited April 8, 2008 by altman

[Naam]

What in the arsenal of the USA can be used against an exchange rate attack?

cruise missiles

[Theyreallrubbish]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

Oooh! Those evil wicked Chinese! Lending you hundreds of billions of dollars in dollar denominated debt and then not agreeing to let you devalue your currency so its easier to pay back! How dare they! That's pretty much a Causus Belli right there!

Alternatively, how about the US electorate stops voting in neo-con fanatics determined to bankrupt the USA in order to destroy Roosevelt's New Deal institutions?

Heck no, its only the neo-cons that are saving America from being a country where everyone is forced to marry someone of the same sex and have an abortion every 3 months. Plus the neo-cons give you $300 of your money back every election year. (Who cares that they actually borrowed that money from the Chinese and you'll be paying interest on it for the next 30 years?)

[sriracha john]

What in the arsenal of the USA can be used against an exchange rate attack?

cruise missiles

Not only cruise missles....

but according to globalfirepower.com in head to head competition, the USA has huge advantages in the area of

Military Aircraft

U.S.A. = 18,169

China: = 2,700

Armored Vehicles

U.S.A. = 29,920

China = 13,200

Missle Defense Weapons

U.S.A. = 35,324

China = 2,162

Navy Ships

USA = 1,866

China = 232

[Gary A]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

I really hate politics and was hesitant to reply to this, BUT, as long as the US continues to insist on beings the world's policeman, the dollar will NOT go up. George Bush says about the weak dollar, "So what"! Don't look for the US to even try to strengthen the dollar. When imports are too expensive, Americans will buy products made in the USA. The people hurt the most are the disloyal expats. There is no sympathy for us.

My retirement, fortunately, was based on a 25 baht to a dollar exchange rate. Naturally I am not happy with the weak dollar but remembering the best advice I ever had, I refuse to get too excited about it. That advice was, "Don't concern yourself with things you have no control over".

[colino]

Its not just Americans mate us Brits are getting a pounding as well ,Dec 07 i got B70 to the pound

now its down to B60.45 , doesn't seem much but each month i lose more and more

[ChiangMaiThai]

I currently earn Baht and have a large debt in US dollars. So the more the dollar sinks, the less I owe. Always a silver lining...

For my selfish purposes, I'd like to see it at about 20 to the dollar!

[Jingthing]

I didn't realize George Bush (Mr. Weak Dollar Policy) was Chinese?

There is no God given right for the citizens of any country to be able to well afford to live in luxury in other countries.

Edited April 8, 2008 by Jingthing

[bendix]

There is no God given right for the citizens of any country to be able to well afford to live in luxury in other countries.

Jingthing, I'm sure this troubles you as much as it troubles me, but over the last few months I've started to agree with just about every post you've made.

[dannyman]

There is no God given right for the citizens of any country to be able to well afford to live in luxury in other countries.

Jingthing, I'm sure this troubles you as much as it troubles me, but over the last few months I've started to agree with just about every post you've made.

[BigSnake]

Maybe time to PACK IT in and go home.

[nokia]

Not only cruise missles....

but according to globalfirepower.com in head to head competition, the USA has huge advantages in the area of

Military Aircraft

U.S.A. = 18,169

China: = 2,700

Armored Vehicles

U.S.A. = 29,920

China = 13,200

Missle Defense Weapons

U.S.A. = 35,324

China = 2,162

Navy Ships

USA = 1,866

China = 232

Most of China's military statistics are unknown. I wont be surprised if the actual numbers are about the same.

If America's discount stores like Wal-mart are full of cheap CHina-made toys & products,

then it wont difficult for the Factory of the World to mass produce huge number of unknown military hardware,

albeit slightly inferior quality but at far lower costs.

[PattayaParent]

What in the arsenal of the USA can be used against an exchange rate attack?

cruise missiles

Not only cruise missles....

but according to globalfirepower.com in head to head competition, the USA has huge advantages in the area of

Military Aircraft

U.S.A. = 18,169

China: = 2,700

Armored Vehicles

U.S.A. = 29,920

China = 13,200

Missle Defense Weapons

U.S.A. = 35,324

China = 2,162

Navy Ships

USA = 1,866

China = 232

But just you try invading and controlling that huge population with just a few hundred thousand soldiers. It'll make Iraq look like a holiday camp!

[sibeymai]

The Aussie Dollar has risen from around 21 to the baht in 2000 to 30 now. Expect it to continue rising past the US dollar.

Guess some people just have the wrong sort of dollar.

How long until the US has a "2 for 1" offer ?

Edited April 8, 2008 by sibeymai

[GuestHouse]

Its not just Americans mate us Brits are getting a pounding as well ,Dec 07 i got B70 to the pound

now its down to B60.45 , doesn't seem much but each month i lose more and more

Blame who you like (it used to be the Japanese, before that the Russians and now the Chinese) - The fact is the Thai economy went to the wall in the mid 90s, the currency crashed, Thailand became as cheap as chips - tourism increased and a bunch of guys got it into their head that it would be cheap to live in Thailand (forgetting all the while that the reason it was cheap was a) the impact of the post economic crash on Thailand's currency and the growth in their own economy.

They didn't stop to think - Is this growth back home sustainable (despite plenty of forecasts and discussion on the very topic of overspending and the risk to their own economy), nor did they stop to think that perhaps the Thai currency might strengthen on the back of all the obvious growth in the Thai economy - again, not that there was a shortage of warnings and discussion on the topic.

Remember the fool’s definition of good advice: - 'Advice that agrees with what they already believe to be true".

I wonder – How many people now facing trouble coping with the change in the cost of living in Thailand gave up work in their high earning years to retire early instead of putting a handful more years in to ensure that when they retire they can do so with the comfort and security they had assumed based on 'unsustainable exchange rates?

Edited April 8, 2008 by GuestHouse

[Ciaphas]

Those bad bad chinese selling mortages to the sub prime market and collapsing 3 american banks todate. And those naughty chinese making america go to a war that now costs america 20 billion per day in interest alone.

[a2396]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

Oooh! Those evil wicked Chinese! Lending you hundreds of billions of dollars in dollar denominated debt and then not agreeing to let you devalue your currency so its easier to pay back! How dare they! That's pretty much a Causus Belli right there!

Alternatively, how about the US electorate stops voting in neo-con fanatics determined to bankrupt the USA in order to destroy Roosevelt's New Deal institutions?

Heck no, its only the neo-cons that are saving America from being a country where everyone is forced to marry someone of the same sex and have an abortion every 3 months. Plus the neo-cons give you $300 of your money back every election year. (Who cares that they actually borrowed that money from the Chinese and you'll be paying interest on it for the next 30 years?)

EXACTLY!! This has little if anything to do with Chine, except for the fact that they have been outproducing and outcompeting the US for quite a few years now. Before that, it was Japan. Next on the list India & others. For decades the US government has been asleep with no real economic policy to protect and/or enhance the counry's economic base. Now, when the chips come back, the tactic is to blame other countries. Many 'shoes to drop" yet. The idiotic policy or spending billions or trillions on foreign military adventures and at the same time cutting taxes is unbelievable lunacy.

[stumonster]

What in the arsenal of the USA can be used against an exchange rate attack?

willpower

stop printing so much , less dilution = stronger pool

[a2396]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

Oooh! Those evil wicked Chinese! Lending you hundreds of billions of dollars in dollar denominated debt and then not agreeing to let you devalue your currency so its easier to pay back! How dare they! That's pretty much a Causus Belli right there!

Alternatively, how about the US electorate stops voting in neo-con fanatics determined to bankrupt the USA in order to destroy Roosevelt's New Deal institutions?

Heck no, its only the neo-cons that are saving America from being a country where everyone is forced to marry someone of the same sex and have an abortion every 3 months. Plus the neo-cons give you $300 of your money back every election year. (Who cares that they actually borrowed that money from the Chinese and you'll be paying interest on it for the next 30 years?)

EXACTLY!! This has little if anything to do with Chine, except for the fact that they have been outproducing and outcompeting the US for quite a few years now. Before that, it was Japan. Next on the list India & others. For decades the US government has been asleep with no real economic policy to protect and/or enhance the counry's economic base. Now, when the chips come back, the tactic is to blame other countries. Many 'shoes to drop" yet. The idiotic policy or spending billions or trillions on foreign military adventures and at the same time cutting taxes is unbelievable lunacy.

[Lost in LOS]

lucky for me I worked those few extra years and hard.... and I am ok

but the difference is dramatic in the 2 years i have been here

lets take 100,000 US as an example

when i got here I got 6% interest in Cd's in America

interest @ 6% = 6,000 X 40 baht [ 2 years ago] left me with 240,000 baht to play with

NOW interest @ 3.5% for Cd's in America

interest @ 3.5% = 3,500 x 31.5 [exchange rate now] = 110,250 baht to play with

dramatic difference when you figure Americans are getting it from both sides

240,000 baht 2 years ago

110,250 baht now

129,000 baht less

[ then America really sticks it to us by also taking away 20% + income taxes

[elektrified]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

Ah errrr the Deutschmark has not been used since about 2001 or 2002 as I recall when it was replaced by the Euro. I concur with some of your other observations, not all of them.

Edited April 8, 2008 by elektrified

[altman]

i had forgotten that the DM had been incorporated into the Euro. very ameri-centric of me. sorry. (for what is worth, when i was in germany in the mid sixties, the dollar traded at about 4 DM, and a liter stein of beer was about 1 DM. that means 4 liters of lowenbrau for $1. it was good to be there then)

in addition to the fall in the value of the dollar we now have SE Asian inflation to add to our misery.

the cost of both motor vehicle and cooking gas rises weekly. the cost of rice is reaching a crisis state worthy of front page news articles.

as our US dollars lose value we have fewer baht to spend and as the price of goods in thailand increases we are able to buy less with those fewer baht.

these are the personal effects of a global phenomenon.

my questions remain:

is exchange rate war a new thing... assuming that it is a conscious effort by the chinese to drive the dollar down, just as though it were a physical war?

is this a realistic analysis of what may be happening? do/can the chinese benefit from this?

and what can america do about it? so far they have been selling assets to who ever will buy them. arab countries seem to lead this charge. won't the loss of american assets weaken them when/if another attack is made?

and a new one...

has gwb been so preoccupied with his physical war in iraq that he is blind to the potential of something new, an exchange rate war?

[Richie1971]

American ex-pats in Thailand are in trouble. The value of their retirement nest eggs has fallen over 25% in just the past few years.

For a person on a fixed-income that may be the difference between eating at a farang cafe for an early morning coffee and making instant at home. Neither is a great hardship when compared to the average Thai household, but to a man who had dreamed of taking his final years in leisure and indolence, it can make a difference.

I offer my current thoughts here:

China is responsible for the falling dollar.

Had China re-valued their Yuan currency when asked to do so by the US last year, international money traders and speculators wouldn't now be driving the dollar lower to reach what, they think, is the appropriate exchange rate between the two.

That this pushing of the dollar down against the Yuan is also reflected in it's value relative to the Euro, Pound, and Deutschmark is ancillary, but required to keep the relative rates between them the same.

If China had used an army of men to invade and do as much damage as has been caused by the fall of the dollar, the USA would not hesitate to use an equal force against them.

What in the arsenal of the USA can be used against an exchange rate attack?

Is this a new phenomenon, (exchange rate wars), or have I just noticed it?

I do fell for the guys who planned their retirements on the dollar rate but it doesn't take a genius to work out that the world order is changing and our oriental cousins the Chinese are the top of the pyramid - I don't think anyone, especially the emerging economies governmets take much notice of what the US or the Brits say especially with regard to their respective economies - i'm noo economics expert but from what I see the US is sinking further and further into the mire as reflected in the housing prices - from what I have read (accurate or not?) it is cheaper to buy a house in some areas of Illinois than it is a second hand car - if this is true or even remotely accurate then Illinois is the Issan of the western world - I'm not a US basher, I'm english and recognise our number one friend and allies but it just appears the influence is shrinking by the day......

[quiksilva]

The Aussie Dollar has risen from around 21 to the baht in 2000 to 30 now. Expect it to continue rising past the US dollar.

Guess some people just have the wrong sort of dollar.

How long until the US has a "2 for 1" offer ?

I take it you haven't been to the UK for a while then?

[distortedlink]

Those who are feeling the pinch because of faltering exchange rates, only have themselves to blame.

Any Westerners thinking of residing in Thailand long term should be well prepared.

Prior to coming over I based my early retirement income for my required cost of living expenses on the exchange rate being 40 baht = £1. Any extra as a bonus. Also brought over sufficient savings to last a few years so as I can hang out financially in Thailand until the exchange rates improve in my favour.

Bank interest rates and exchange rates will inevitably increase and decrease during their stay here, plus higher inflationary costs over the years.

For those who are considering retiring in Thailand with only enough income to suffice their cost of living based on current rates and living costs, should think again.

Edited April 9, 2008 by distortedlink

[cclub75]

my questions remain:

is exchange rate war a new thing... assuming that it is a conscious effort by the chinese to drive the dollar down, just as though it were a physical war?

is this a realistic analysis of what may be happening? do/can the chinese benefit from this?

The expression is good... but based on a mistake in my opinion.

Yes, we have an exchange rates war.

But no, the Chinese are not trying to drive down the USD !

China has a 1,3 trillions of USD reserves... (and counting) It's a mountain. It would take only a fraction of it, to dump on the market, to send the USD to hel_l.

This is your mistake.

What the Chinese are trying to do, it's to drive down... their own currency ! At least, to curb its appreciation versus the USD.

They buy the USD on a massive scale... they keep their interest rates low (with the growth they have and the inflation they have, their interest rates should go to the roof, but no, they don't want to do it, because they are afraid to curb economic growth).

I would rather say that the weak USD is a torpedo sent by the US against China. It's acting like a leverage to force China to reevaluate their RMB.

China is cheating since the beginning. They have destroyed large part of western industries with :

-their low wages

-compounded by their weak currency

China is nothing more than a fast train, driven under amphetamines : they need super hyper growth in order to calm and to provide work to hundred of millions of chinese.

China with a strong currency (like it should have now), would simply collapse. Their economy, the state, the social structure is simply not tailored to have a strong currency.

So, to summarize I agree with your idea of "war", but... the other way around.

[lioness]

so it's the fault of the Chinese, rather than bad management by the American government????

[shawndoc]

Wow. Let's also not forget what the US Fed has been doing the last couple years. In order to prop up wallstreet and the banks the Fed has had the printing presses going like mad. There's been quite a bit of coverage of how the Fed has been causing the US $ devaluation. Its been absolutely insane.

[britmaveric]

No worries Yanks the $ will rise, sooner rather than later.

Edited April 9, 2008 by britmaveric

[Naam]

When imports are too expensive, Americans will buy products made in the USA. The people hurt the most are the disloyal expats. There is no sympathy for us.

at ten times the price of imports