Stronger Baht/usd

[thedude]

Indebted US consumers 'threaten world growth'

DAVOS (SWITZERLAND) - SELF-INDULGENT consumers in the United States could scuttle global growth if they persist in using their homes as giant cash dispensers to fund purchases, Morgan Stanley chief economist Stephen Roach warned yesterday.

Addressing a World Economic Forum update on the economy, the self-confessed 'Davos bear' said that indicators suggested continued growth, but that in the US, 'either I've got the math wrong or something just doesn't add up'.

One problem, Mr Roach said, was 'self-indulgent American consumers' who use the value of their homes to back credit.

A real-estate bubble is growing in the US, however, and threatens to bring on a credit crunch, he added.

'We are in the early stages of a residential property price bubble in the US. Consumers know this and that is why they are turning their homes into a massive ATM machine.'

Mr Roach slammed a cycle of US consumers going deeper into debt to fuel imports from Asia while governments there bought US dollars, keeping interest rates low and allowing consumers to borrow more.

'This is an utterly insane way to run the world economy. You know that, we know that, but the Federal Reserve is in denial about that.'

At a separate press conference, New York Stock Exchange chief executive John Thain said: 'The current account deficit is at least in part due to the fact that the US economy is growing substantially faster than many of its trading counterparts.' -- AGENCE FRANCE-PRESSE

How much stronger will the Baht go this year? Any guesses?

[tuky]

moved to the finance, banking forum.

/moderator

[lional6]

And the problem is? They voted for a non thinking, non intervention good old boy. That can’t count to ten twice and get the same answer. What problem.

[Harmonica]

Indebted US consumers 'threaten world growth'

DAVOS (SWITZERLAND) - SELF-INDULGENT consumers in the United States could scuttle global growth if they persist in using their homes as giant cash dispensers to fund purchases, Morgan Stanley chief economist Stephen Roach warned yesterday.

Addressing a World Economic Forum update on the economy, the self-confessed 'Davos bear' said that indicators suggested continued growth, but that in the US, 'either I've got the math wrong or something just doesn't add up'.

One problem, Mr Roach said, was 'self-indulgent American consumers' who use the value of their homes to back credit.

A real-estate bubble is growing in the US, however, and threatens to bring on a credit crunch, he added.

'We are in the early stages of a residential property price bubble in the US. Consumers know this and that is why they are turning their homes into a massive ATM machine.'

Mr Roach slammed a cycle of US consumers going deeper into debt to fuel imports from Asia while governments there bought US dollars, keeping interest rates low and allowing consumers to borrow more.

'This is an utterly insane way to run the world economy. You know that, we know that, but the Federal Reserve is in denial about that.'

At a separate press conference, New York Stock Exchange chief executive John Thain said: 'The current account deficit is at least in part due to the fact that the US economy is growing substantially faster than many of its trading counterparts.' -- AGENCE FRANCE-PRESSE

How much stronger will the Baht go this year?  Any guesses?

He was also quoted in Economic Armageddon -- recently.

Where will the Thai Baht go? Don't know where it was, but where it was, wasn't it!

closed today @ 38.515 .... but we's a-going to 50+ in the not too distant future. Last call to unload real estate .... hold dollars and tom yam! .. when Gold hits $250 buy it all.

[thedude]

supposing Roachie is on the money this time. while Bush and Condi are out playing superheroes and freeing the world from itself, america continues to spend itself into such a level of debt that massive and continued devaluation is unavoidable. the assumption then is that cheaper american products re-invigorate exports and the balance is regained. but now that american productivity gains are low and labour is far more competitive from the Asian giants, will this correction actually occur? america will never be able win a price war, because its workers drive SUVs and live in large houses with mortgages.

not only that, but on the higher end of the value chain, you find the americans being challenged by a brave new Europe, whose top companies in aviation, energy, telecommunications, transportation, pharmaceuticals etc already give the americans a good run for the money. front-end commercial application of technology is no longer dominated by american companies. its no wonder that people see China as the new emerging superpower, not only do the Chinese have massive production capacity and the ability to absorb technologies fast, they have a really massive and comparatively debt free consumer market. will america stand idly by, waiting to become China's b*tch?

and so the only question left is this - what happens when you leave an angry child with lots and lots of weapons? at first its wars are fought on 'moral' grounds, but what if it just gives up pretending and turns into a giant bully, extortionist, angry that its losing its right to have the world feed its rampant and insatiable appetite for consumption? its scary but maybe some of those fundamentalists were right in identifying america as the real terrorists. okay maybe they have already been bullying the smaller and more helpless fringe nations, but what if they were to turn against the mainstream of the global community?

Edited January 28, 2005 by thedude

[Erwin1011]

I agree, Rav, the fiber of the American society will not allow it to play a second role. It will fight on whatever front it feels necessary.

Not exactly a nice prospect, i would say

[thedude]

Ravisher, i think you and i are on the same page on this one mate, it all leads to the same scary conclusion. As it is right now, the Japs and Europeans are getting sick of funding the US out of this blackhole (the Japs would rather plow some funds back into their own recovering economy), and as US bond yields get raised, putting pressure on interest rates, the whole world sighs and roll their eyeballs as once again their own growth priorities are held at ransom to the mighty americans. The developing world most of all doesn't like their own growth and fortunes to be so dependent on the ailing american economy, China becomes their alternate growth engine. China has been quite even-handed so far in dishing out its lucrative state contracts to both the americans and europeans, but what if China decides to lean towards Europe, forming a sort of favoured-nation relationship, and effectively forming a loose economic block of convenience. Its no secret that Chirac and Schroeder have both visited China recently, and i am sure they weren't just there to walk the Great Wall, there are some serious plans going on too. America is not the only one with the plans that the rest of the world knows nothing about. If the Europeans are allowed a bigger slice of investment into China, it helps them solve the currency problem the americans have so badly screwed them into, it will be sweet revenge. Anyway, the end result is still the same, an angry, hungry and vengeful America.

[Harmonica]

Some info for the participants in this thread w.r.t. Thai Baht vs USD:

Foreign buying/selling is the main driver of the Thai stock market -- this almost always (except for 2 times in history) coincides with similar movements in the Baht -- (easy to see why! If not, I can explain.)

Recently Foreign buying, i.e. NET buying has an almost vertical ascent on a graph -- very hard to sustain this sort of frenzy for long. What will hapeen when they change their collective minds?????

CRASH of market and Baht!

That's the ticket! IMHO.

[LivinLOS]

While I agree with that negative image in that I dont forsee America allowing its standard of living to erode without a fight you forgot one thing..

How did 'you' buy that big gun (and its ammunition) you bought it on credit from the guy who lives down the street.. Now you work for another guy in the same Rd.. Maybe he takes a dislike to your new found agressiveness.. Is he going to do biz with you ??? Is guy No1 going to continue lending you money ?? Of course not.. So where does the money to buy that ammunition keep coming from ??

What does America make anymore to sell.. Who wants to hold this guys IOU's when every time he signes one he then lowers his currency so he pay less than he borrowed..

The American century has left unproductive workers living in large over morgated homes driving massively innefficient cars all on credit.. Whenever you live on credit you either have to pay the piper or default.. Niether option is appealing for global stability..

Ravisher keeps commenting on what the US will 'allow' the fact is that its not about allowing anything, the fed can manipulate rates and keep a debt bubble spiraling but it cant control (more than a tiny amount) how others percieve the real value of the dollar to be.

[PeaceBlondie]

The nakedest emperor of all is Allen nud_e Greenspan.

[Harmonica]

>>>>>>Ravisher keeps commenting on what the US will 'allow' the fact is that its not about allowing anything, the fed can manipulate rates and keep a debt bubble spiraling but it cant control (more than a tiny amount) how others percieve the real value of the dollar to be. <<<<<<<<

Amen!

>>>>>>The nakedest emperor of all is Allen nud_e Greenspan.<<<<<

Greenie has nothing but scorn and derision to look forward to starting from sometime in 2005-2006 and on into History -- I like him but would not want to be in his shoes when the public starts the blame-game.

[LivinLOS]

I agree in the possibility of dire consequences... I am unsure the American public itself could be roused into a warlike state on economic arguments until things had got very bad.. The American mindset is one of benign leadership (in its people and PR) and to create a situation of war for profit is not something I see being easy to push past that public until they are really feeling threatened.

By which time it would be very hard to reverse any trends.. Also what would Amrica do with its gund.. You must buy some Chevvy's.. To default on its debt would be something Russia and Post WWII Germany etc all were forced to stick to.

Really the nut of this problem boils from the global experiment with fiat money.. We have only had the dollar seperate from commodity based money (that could not be inflated to nothing, printed on demand, etc) sice nixon.. That experiment (I believe) will be one that will cause economic termoil this century until a commodity based currency is once again established (its not coincidence that the forefathers wrote it into the constitution and very interesting that Bin Ladin is now advocating a Islamic gold currency and coin)...

For anyone enjoying this discussion 'The daily reckoning' is a very interesting and irreverant daily newsletter.. Its commentaries are thought provoking and the occasional Mogambo Guru is a crack up. I find the UK version pulls less punches than the US one which is a bit tamer and watered down.

[Harmonica]

>>>>>>I have little doubt in my mind that the economic war between the major players will only remain an economic war all the time there is some semblance of 'balance'... Once the USA starts loosing that war in a serious manner... something very nasty will happen... There will be a 'testing ground' during 2005 between the USA and China. Where that 'testing ground' will be I can only guess... but there will be one, of that I am quite sure. It will be interesting to see how the USA will react to that? With aggression, or with timidity? <<<<<<

>>>>once the USA starts losing that war in a serious manner <<<<<

You don't have too long to wait -- the slide is expected to start this year and then continue for several. 13 (14?) rate cuts Al -- and this is all we got??

>>>>It will be interesting to see how the USA will react to that? With aggression, or with timidity?<<<<

Timidity! -- China is not some pushover country like Afghanistan or Iraq -- the confrontation will come sooner than later!!

[LivinLOS]

And if this global war you believe may well hapeen.. Happens..

You advocate holding paper money ?? In a situation like that of chaos and instablity gold will skyrocket.. 3k per ounce would be easy in such a world..

[thedude]

war requires funding. how will america fund a war like that? more deficit spending? higher taxes? federal bonds (who will buy it)? who will come to the rescue, the Europeans?

we kind of knew all along that China's ascension would cause some nervousness among the first world, in particular america the lone superpower. but no one really thought that america would be in such a vulnerable situation as they are now, just when it needs to assert its dominance. which is why under present circumstances, i can't help but imagine that the chinese strategists and think tanks up in the politbureau are rolling on the floor, laughing their guts out, as they watch america self-destruct under such poor financial management, victim to its own undoing. they're losing the game even before its begun.

if there's anything superior about chinese politics, its their ability to wait, for generations if necessary, for their strategic game to unfold. american politics, like their sports, operate in short time spells, commercial time-outs, with 'specialist' players, goal based tactics, butt-slapping, pom-pom waving, tobacco chewing, trash talking, lite-beer sipping, its all surround sound big screen hormonal overdrive entertainment. i must say i'm a little dissapointed, i was looking forward to something more finessed, more artful and intriguing from the sino-american theatre. the americans seemed to have lost the plot and are just going for the easy road kill evil empires of Iran and Syria, and going broke in the process. sad really.

[Harmonica]

And if this global war you believe may well hapeen.. Happens..

You advocate holding paper money ?? In a situation like that of chaos and instablity gold will skyrocket.. 3k per ounce would be easy in such a world..

The scenario I'm looking at is a gradual leading upto a crescendo sort of thing -- not an all out confrontation on day 1 -- it will take time, so the $ has plenty of room to do its thing -- when this scenario does occur, remember that gold already hit a near 1000 high in 1980 -- it will fly past this and make 1-3k look like a walk in the park.

[PeaceBlondie]

But if there's anything that's 'too big to fail' it's got to be the USA. Even Japan didn't fail when the Nikei index and the Tokyo real estate market fell. Aren't those two Japanese markets still well below their all-time highs, decades later? And South Korea's oglilopolies weren't allowed to fall. Airlines and motor companies in the USA don't fall completely (some, not others).

Unless, of course, we're already at that point where the real people in power - the money - know the emperor's been naked for a decade, and they're doing everything possible to prop up the dollar no matter what.

For example: I see the exchange rate is battering the dollar, but the US stock market (oh, the S&P 500, anyway) is doing rather well. My mutual fund, even allowing for the currency devaluation, is still worth much more now than when I came to Thailand about 19 months ago.

I read a pre-1991 book that reviewed the fall of most of the empires throughout history. Author's point was that the empires decayed from within so rapidly that it was very easy to be conqured from outside. That's far more true today: look how the Soviet empire fell almost instantly.

And don't markets reach a breaking point where they fall much further than any good reason would say? Just as the bull markets are sometimes vastly overvalued, don't bear markets bring ridiculously low values to some commodities?

[LivinLOS]

Finally something we agree on (what happened to gold <250)..

I can see a fair bit of mental / psychological resistance around the 1k / ounce mark but if you simply compare gold / dow historically or gold / purchasing power (suits, other artisan labour intensive items) you are on a winner..

Add in that gold mines are at full production and not keeping up with supply.. Further add in that Chinese are now allowed to buy gold for savings (and like india both getting richer and love the yellow metal).. Further add in that there appears to be quite a bit of behind the scenes manipulation to keep gold prices down, this kind of manipulation can never last long (japanese buying billions dollars to prop up the price and thier exports)..

IMF rumbles in the last 48 hours via Gordon Brown are a risk.. 5000 odd tonnes valued at 40 USD / ounce that they would like to 'rebalance' would have an effect for sure..

Personally in a 3 - 5 year timeframe I can easily see gold at 1500 (given current dollar levels) or up to >3k is the dollar tumbles and just some of the external factors and specultion happens..

Watch silver, its use in commercial processes means it has a higher wastage of above ground stocks and for the short term (1 year) could well outperform gold.

[Harmonica]

But if there's anything that's 'too big to fail' it's got to be the USA.  Even Japan didn't fail when the Nikei index and the Tokyo real estate market fell.  Aren't those two Japanese markets still well below their all-time highs, decades later?  And South Korea's oglilopolies weren't allowed to fall.  Airlines and motor companies in the USA don't fall completely (some, not others). 

Unless, of course, we're already at that point where the real people in power - the money - know the emperor's been naked for a decade, and they're doing everything possible to prop up the dollar no matter what.

For example: I see the exchange rate is battering the dollar, but the US stock market (oh, the S&P 500, anyway) is doing rather well.  My mutual fund, even allowing for the currency devaluation, is still worth much more now than when I came to Thailand about 19 months ago. 

I read a pre-1991 book that reviewed the fall of most of the empires throughout history.  Author's point was that the empires decayed from within so rapidly that it was very easy to be conqured from outside.  That's far more true today: look how the Soviet empire fell almost instantly. 

And don't markets reach a breaking point where they fall much further than any good reason would say?  Just as the bull markets are sometimes vastly overvalued, don't bear markets bring ridiculously low values to some commodities?

Good observations, PB.

But a slighly larger perspective can clear things up quickly or suggest some structural weaknesses -- Nasdaq fell from 5400 to 1100 (=80% drop) and has been rallying since October 2002 to where? .. to a lousy 2200 (but =100%) .. and all this witha whopping 14 rate cuts by Easy Al -- this is what I find most revealing -- even with rocket fuel the markets just can really make up the ground lost -- and we are talking about thesame time span for both the drop and the rise.

Ditto logic for S&P500.

As for the Nikkei 225 -- note that the catastrophic drop occured quite rapidly from 1989 to August 1992 but thereafter the decline has been slow and gradual with lots of horizontal movements --the latest rally since April 25th, 2003 just can't seem to generate any real power.

This is one reason -- actually one big one -- that suggests that the LARGEST declines are yet to come -- and soon -- both for Tokyo and the US.

As for Deutschland, we'd just better not go there -- Govt. just announced a 12.1% unemployment rate.

No amigos, we've got to dive and dive deep! Nikkei down to 6,500 thereabouts, that's another 50% dive. Then its over.

[LivinLOS]

When no one (and I mean no one) is interested in stocks for investment again (like after the great depression and market crashes back then) and companies start paying real dividends and have PE's around 5:1 (8:1 is historical average I think.. 20:1 the norm for non tech indecies)..

But to get to that point will lead to such collapse of the american financial system, pensions, etc the world gets too unpredictable at that point (wars etc)..

[Harmonica]

When no one (and I mean no one) is interested in stocks for investment again (like after the great depression and market crashes back then) and companies start paying real dividends and have PE's around 5:1 (8:1 is historical average I think.. 20:1 the norm for non tech indecies)..

But to get to that point will lead to such collapse of the american financial system, pensions, etc the world gets too unpredictable at that point (wars etc)..

Nail on the head! that is what I'm expecting and then, at that bottom, will come a period of heavy Deflation.

[Harmonica]

>>>>>>I have little doubt in my mind that the economic war between the major players will only remain an economic war all the time there is some semblance of 'balance'... Once the USA starts loosing that war in a serious manner... something very nasty will happen... There will be a 'testing ground' during 2005 between the USA and China. Where that 'testing ground' will be I can only guess... but there will be one, of that I am quite sure. It will be interesting to see how the USA will react to that? With aggression, or with timidity? <<<<<<

>>>>once the USA starts losing that war in a serious manner <<<<<

You don't have too long to wait -- the slide is expected to start this year and then continue for several.  13 (14?) rate cuts Al -- and this is all we got??

>>>>It will be interesting to see how the USA will react to that? With aggression, or with timidity?<<<<

Timidity! -- China is not some pushover country like Afghanistan or Iraq -- the confrontation will come sooner than  later!!

Well, when it comes you'd better not be stuck with your "Fist Full of Dollars" and your finger in your arrse!

Buy Gold! Buy Gold!

When it comes I'll be long gone and yes, Gold is what I'll hold. Silver too!

[Blake7]

Before you all rush to buy gold you should first wait to see whether the IMF will start selling their gold reserves to finance debt relief - this may cause the price of gold to drop substantially possibly below the 400 mark. We should hear more about this after the G7 meeting...

Edited February 7, 2005 by Blake7

[LivinLOS]

Yes the IMF debt restructuring is one risk.. Essays I have read are argueing that it is highly unlikely they will put the gold directly on the market in bulk but its a variable to watch..

[LivinLOS]

Here is the text of that essay by an analyst on the topic of IMF liquidations..

IMF Gold Sales

February 04, 2004

The gold price has been weak of late, down ten dollars in the past seven days. Thursday’s decline was blamed on remarks made by the British Chancellor of the Exchequer, Gordon Brown, about a possible revaluation of the International Monetary Fund’s gold reserves, and the possibility that some of those reserves might be sold to provide debt relief to poor countries.

The IMF has about one hundred million ounces of gold which are valued on its books at between $40 and $50 an ounce. To keep the arithmetic simple, let’s say the IMF has one hundred million ounces valued at $40 an ounce. Revaluing that gold at $440 an ounce would instantaneously create $40 billion dollars on the IMF’s balance sheet.

The $40 billion dollars so “created” can then be used to offset some of the debt owed to the IMF by poor nations. Such a revaluation and cancellation of debt does not necessarily involve the sale of any gold -- it can be done with accounting entries.

Another possibility is that the IMF actually sells some, or all of its gold, and uses the proceeds to assist poor countries with their debt. If the IMF sold its gold it could, for instance, buy a basket of sovereign debt and use the interest earned on the portfolio for debt relief. This option could potentially be more detrimental to the gold market. We are talking about a lot of gold: the IMF has 103.4 million ounces, or 3,216 tonnes. If all that gold were dumped on the market at once it could have a negative impact on the gold price. However, it is highly unlikely that the IMF would do that.

It is far more likely that the IMF will use off-market transactions to assist poor countries with high debt burdens, as it did with Brazil and Mexico a few years ago when these countries’ debt payments to the IMF were coming due. Between December 1999 and April 2000 the IMF “sold” 12.9 million ounces of gold to Brazil and Mexico at prevailing market prices and the profit on the sales (market price for gold less approximately $40 an ounce) was placed in special accounts designated for debt relief. Brazil and Mexico then immediately sold the same gold back to the IMF, at the same price they paid for it, to settle their debt payments that were coming due. The net effect was that the IMF still had exactly the same amount of gold on its books. It’s not clear from the IMF’s website how, exactly, Mexico and Brazil’s overall debts were impacted. I assume that their debts were just re-financed in the process, although some of the money created on the IMF’s balance sheet by this revaluation of its gold reserves could have been used to offset the total amount of outstanding debt as well. It is clear, however, that the money created from the revaluation of the IMF’s gold is being used to provide debt relief to poor, and heavily indebted countries.

Such off-market transactions are similar to a pure revaluation of the IMF’s gold and do not involve any gold actually being sold on the market. Since many of the same poor countries that the IMF is trying to help are actually gold producers, and since in many cases these countries’ gold exports account for a large (sometimes very large) percentage of their foreign currency receipts, off-market transactions are far more palatable than actual gold sales.

If we assume that some of the IMF’s gold will hit the market, then we have to consider what impact that will have. For instance, if the IMF sells its gold over a period of five to ten years, the net impact on the gold price should be negligible. In a previous commentary (“Central Bank sales and the gold price”, December 5, 2003) I showed that Central Bank gold sales did not affect the gold price during the period from 1990 to 2003. During that time Central Banks sold roughly 5,500 tonnes of gold -- far more than the IMF has to sell -- and since that did not negatively impact the gold market, I have no reason to believe that IMF gold sales will negatively impact the market either.

The only impact that Central Bank sales did have on the gold market during the 1990s was that they caused speculative selling on the date of the announcement. But the announcements were all made in arrears and the gold price always recovered within a few weeks of the announcements. In other words, the actual Central Bank sales, themselves, did not affect the market. That is also exactly what we saw on Thursday: a comment by the British Chancellor of the Exchequer caused a speculative sell-off in gold -- without an ounce of IMF gold being sold. I expect the gold price will recover within a few weeks, unless something else, like a rally in the US dollar, occurs.

Another thing to keep in mind is that the G7 is split over how to deal with the debt of poor countries. To revalue or sell the IMF’s gold will require an 85 percent majority vote. The United States alone has a 17 percent vote, and could therefore block the IMF from selling its gold.

Given that the IMF needs an 85 percent majority to sell its gold, that actual gold sales would hurt the same countries (gold producers) the IMF is trying to help, and that more benign off-market transactions are also a way to help those countries, I doubt that we are going to see massive IMF gold liquidations in the near future.

What we are likely to see is a replay of the 1990s when Central Bank gold sales were attracting a lot of attention and were blamed for the decline in the gold price while, in fact, the gold price was merely mirroring the US dollar.

With the dollar now declining the gold price (in US dollars) will continue its upward trend and nervousness about IMF gold sales is likely to cause counter-trend corrections, which should turn out to be good buying opportunities.

So I am not worried about this week’s decline in the gold price.

Paul van Eeden

[Harmonica]

On Feb 9th (4days ago) the Baht gave its first signal of following some of the major currencies in their recent weakness against the USD.

It is highly likely (90% odds IMHO) that Baht will weaken.

Give it a few trading days to bite.

[aaaaaa]

interesting discussion. so, what's the latest developments?

now Baht is rated 38.22/38.82 as I can see :

http://www.thaivisa.com/exchange_rates.0.html

does that mean dollar's improved ?

[toastwars]

supposing Roachie is on the money this time. while Bush and Condi are out playing superheroes and freeing the world from itself, america continues to spend itself into such a level of debt that massive and continued devaluation is unavoidable.  the assumption then is that cheaper american products re-invigorate exports and the balance is regained.  but now that american productivity gains are low and labour is far more competitive from the Asian giants, will this correction actually occur?  america will never be able win a price war, because its workers drive SUVs and live in large houses with mortgages. 

not only that, but on the higher end of the value chain, you find the americans being challenged by a brave new Europe, whose top companies in aviation, energy, telecommunications, transportation, pharmaceuticals etc already give the americans a good run for the money.  front-end commercial application of technology is no longer dominated by american companies.  its no wonder that people see China as the new emerging superpower, not only do the Chinese have massive production capacity and the ability to absorb technologies fast, they have a really massive and comparatively debt free consumer market.  will america stand idly by, waiting to become China's b*tch?

and so the only question left is this - what happens when you leave an angry child with lots and lots of weapons?  at first its wars are fought on 'moral' grounds, but what if it just gives up pretending and turns into a giant bully, extortionist, angry that its losing its right to have the world feed its rampant and insatiable appetite for consumption?  its scary but maybe some of those fundamentalists were right in identifying america as the real terrorists.  okay maybe they have already been bullying the smaller and more helpless fringe nations, but what if they were to turn against the mainstream of the global community?

Do you really imagine that it is Bush and Condi alone, that make these enormous decisisions? Bush is just a figurehead. He does not control the USA economy, or military... alone.

I see where you are going on this... and I agree, it is 'scarey'. There are USA 'plans' that the rest of the world knows nothing about... as yet. I do not see the USA becoming anybody's b*tch... not without all-out atomic war. America will not disintegrate as the USSR did... without a fight. It is not in the American nature to do so. If the USA cannot win this economic war, I think it will take the military option.

Just my thoughts.

The "figurehead" is the one who decides economic policy, GB took on a healthy budget surplus, high employment and steady economic growth and incredably quickly; through rabid deregulation of mainly financial and accountacy markets, a massive increase in arms spending, produced the largest budget deficit in decades. He is the one who decides which direction the government sets out in terms of regulation of key areas. America is now almost fully reliant on dollar oil sales as a method of falsly keeping its economy above water. Any change in the status quo will bring an economic crash unprecidented preportions. An embargo by opec countries could possibly bring this about, Bush is on thin ice if he keeps pushing his foreign policies on the middle east in this way, he will get a reactin that will leave him no choice but to launch another invasion of another oil producer country, so as to secure supplies for the future. This could be counterproductive for us all. Yeeeee Haw!!! is not a valid foreign policy

[Yangpuss]

moved to the finance, banking forum.

/moderator

<{POST_SNAPBACK}>

Forgive me, moderator, I have heard repeated reference to a new "Finance" forum but I have never seen it listed amongst the various forums on this site. Where is it?

[Bizz]

Indebted US consumers 'threaten world growth'

DAVOS (SWITZERLAND) - SELF-INDULGENT consumers in the United States could scuttle global growth if they persist in using their homes as giant cash dispensers to fund purchases, Morgan Stanley chief economist Stephen Roach warned yesterday.

Addressing a World Economic Forum update on the economy, the self-confessed 'Davos bear' said that indicators suggested continued growth, but that in the US, 'either I've got the math wrong or something just doesn't add up'.

One problem, Mr Roach said, was 'self-indulgent American consumers' who use the value of their homes to back credit.

A real-estate bubble is growing in the US, however, and threatens to bring on a credit crunch, he added.

'We are in the early stages of a residential property price bubble in the US. Consumers know this and that is why they are turning their homes into a massive ATM machine.'

Mr Roach slammed a cycle of US consumers going deeper into debt to fuel imports from Asia while governments there bought US dollars, keeping interest rates low and allowing consumers to borrow more.

'This is an utterly insane way to run the world economy. You know that, we know that, but the Federal Reserve is in denial about that.'

At a separate press conference, New York Stock Exchange chief executive John Thain said: 'The current account deficit is at least in part due to the fact that the US economy is growing substantially faster than many of its trading counterparts.' -- AGENCE FRANCE-PRESSE

How much stronger will the Baht go this year?  Any guesses?

<{POST_SNAPBACK}>

He was also quoted in Economic Armageddon -- recently.

Where will the Thai Baht go? Don't know where it was, but where it was, wasn't it!

closed today @ 38.515 .... but we's a-going to 50+ in the not too distant future. Last call to unload real estate .... hold dollars and tom yam! .. when Gold hits $250 buy it all.

<{POST_SNAPBACK}>

Wouldent it be nice if Harmonica was right.

"Wouldent it be nice" that reminds me of the words of a song ?