The $ is getting K I L L E D

[touchring]

Re: The $ is getting K I L L E D

I think it will be when real estate prices in Shanghai starts to resemble Tokyo in the late 80's. That is an economy that is no longer driven by production, export and a cheap currency, but rather domestic speculation running in high gear, while other cheaper countries like Vietnam and Cambodia are taking over the low end production, and the cheap currency have been replaced with an expensive currency. Then Chinese tourists will be spending like crazy, giving huge tips in cheap dollars when they come to the US, just like Japanese tourists in the late 80-s after the plaza accord in 85.

Nice, but the problem is that the mid-range Shanghai apartments already cost $200k. Cheap? Now, try to figure buying that on a $500 a month (before taxes) managerial job.

[nero3]

Re: The $ is getting K I L L E D

Hmmm....I'm thinking of that old phrase, lies, damn lies -- and statistics.

Not denying the correlation, looks interesting, but what on earth ties silver and rails together?

They are both hard assets, and respond very directly to inflation. things like DBA, agricultural commodities, followed the same pattern.


the USDCHF pair, followed the identical pattern as rails. The same does gold. and the same does the commodity coffee. It's all about inflation.

I have calculated if around 2000-2001, when the dollar was peaking is like 1971 , then, we around a level similar to 1975-1977, in regards to how devalued the dollar is vs the swiss franc in the seventies.

[nero3]

Re: The $ is getting K I L L E D

Nice, but the problem is that the mid-range Shanghai apartments already cost $200k. Cheap? Now, try to figure buying that on a $500 a month (before taxes) managerial job.

The thing is, it is cheap, even it cost more than that. In 20 years these apartments in the good locations will cost million of dollars. And most certainly just as much as they do in HK today.

[nero3]

Re: The $ is getting K I L L E D

Let's say you have 200 000 dollars in a money market fund or even worse in treasuries today. In my opinion in 20 years, these money will be worth at least less than 1/4 of today. A good apartment in Shanghai will probably in time provide a rental income it's possible to live on in the US.

[sunskyfan]

Re: The $ is getting K I L L E D

I am old enough to remember the last inflation "surge" in the late seventies. The hole in the idea that wages will be part of the feedback loop that help drives inflation is the fact that no one belongs to a union anymore. "Workers" will not have the collecting bargaining power to demand higher wages.

Also, I think that a more correct way of stating your thesis with respect to the stock market is that with deflation the companies that survive will be more profitable and their relative stock price will rise. The punishment in a deflationary will not be a lower stock price but a sudden collapse to non-existence. How that will be measured in the DOW or the S&P averages is hard to see. What would the DOW be if the players that went to zero and the players that should have gone to zero (sans the bail outs) were still part of the average calculation?

[WildspitzE]

Re: The $ is getting K I L L E D

how do you do that when there are hundreds of millions of them earning less than $2 a day?

How do you do what?

[touchring]

Re: The $ is getting K I L L E D

Let's say you have 200 000 dollars in a money market fund or even worse in treasuries today. In my opinion in 20 years, these money will be worth at least less than 1/4 of today. A good apartment in Shanghai will probably in time provide a rental income it's possible to live on in the US.

200,000 dollars is for 1000 sq ft apartments 15 miles from the city. Those in the prime districts will cost 1 million dollars.

How do you do what?

I mean how to transform into a consumer driven economy that actually imports rather than exports, when you got a few hundred million people earning just $2 a day.

http://www.telegraph.co.uk/news/worl...age-claim.html

Chinese worker blows himself up over unpaid wage claim
A disgruntled Chinese worker who said he was owed £450 in unpaid wages blew himself up in an office building in protest at having his claim rejected.

By Peter Foster in Beijing
Published: 3:45PM BST 03 Apr 2009

Han Wushun, a migrant worker from Sichuan Province, said he was owed the money after working for a road and bridge construction company in the western province of Xinjiang for three months in 2007.

Two other office workers were injured when the man detonated explosives he was carrying in a black satchel after entering an office building in Urumqi the regional capital of Xinjiang, according to China's state-run news agency Xinhua.

The injured workers were trying to negotiate a solution with the man when he threatened to detonate his explosives, according to a local police source.

"When the two people tried to flee the office, the man set off the explosives and died at the scene, wounding the two people," the policewoman added.

The report said that Mr Han had sued the Xinjiang Beixin Road and Bridge Construction Company last July but had lost his case after management said he had been paid out his contract in full.

Suicide bombing are extremely rare in China, however there was a spate of incidents in the late 1990s when millions of workers were laid off in the wake of the Asian financial crisis.

The Chinese government estimates that 23 million migrants workers are now without work as a result of the global financial crisis which has seen demand for China's exports plummeting in the last six months.

[flintlock]

Re: The $ is getting K I L L E D

What would the DOW be if the players that went to zero and the players that should have gone to zero (sans the bail outs) were still part of the average calculation?

Excellent question.

[nero3]

Re: The $ is getting K I L L E D

Excellent question.

Without the big mess I think it would be around the level of the nikkei, as they was pretty similar into this situation.

[metalman]

Re: The $ is getting K I L L E D

Without the big mess I think it would be around the level of the nikkei, as they was pretty similar into this situation.

you saying japan 1989 = china 2009?

both export economies
both running stock/property bubbles?

what else?

[nero3]

Re: The $ is getting K I L L E D

No, I am thinking about where the dow would be in old money, if you don't add the weight of all those companies that took large hits. Fannie Mae, AIG, Lehman, Bear

I guess somewhere around 10000 or quite similar to the nikkei.


Just about China and Japan.

Japan was at a 4 % growth rate, in the eighties, then they was having a bubble in domestic consumption and speculation replacing the more fundamental drivers in the 60-70-s of a cheap currency , cheap labor and even a high growth rate. If you want to compare them, I think the Shanghai now, could be like the nikkei in the mid seventies. However, it's also possible that there is quite some similarities to south korea, in the early 90-s, then people thought the Won was undervalued, and you had this huge inflow of capital, only to have the currency and economy crash later on. Anyhow: my main idea, is that the China bubble will just keep growing as long as there is a bear market in US treasury bonds. The Chinese market might seem expensive, but if there is a long bear market in treasuries coming, there might be possible for the bubble to extend quite a lot. When the chinese currency is no longer cheap, and undervalued, and China have had a long period of consumtion growth, then they will be more like japan in 89.