World economy talk

**warp** · February 27th, 2008 10:20 PM

http://www.pse.com.ph/html/MarketInf...utualfunds.jsp
http://www.icap.com.ph/factsfignavps.asp

May mga Euro bond funds na available:

ALFM Euro Bond Fund
MAA Privilege Euro Fixed Income Fund,

**mark_t** · February 28th, 2008 04:24 AM

kakalunglot naman magbasa dito, my life insurance is in dollars.

**uls** · February 28th, 2008 09:48 AM

nagsalita si Helicopter Ben kagabi sa US Congress - House Financial Services Committee...

He gave signals that the Fed will cut rates again...

there goes the USD...

**creepy** · February 28th, 2008 11:57 AM

Originally Posted by empy

one main reason why they do that is to "subsidize" the Chinese export industry (the lifeblood of their economy) - the pegged x-rate allows Chinese exporters to take in artificially high revenues with artificially low expenses.

You probably read too much of the China-bashing literature that comes out from the States.

The renminbi-USD peg has been there a loooong time -- well before this issue of undervaluation (vs USD) was an issue. In the late 1990s, the US-run institutions (multi-laterals like the IMF) were all applauding China for keeping the peg steady to keep the Asian crisis from becoming worse.

Now, the peg is being portrayed (by US companies/workers hurt by competition) as an unfair manipulation of exchange rates.

**empy** · February 28th, 2008 12:08 PM

^you misunderstand why i bring this up. i do know that China is being made a scapegoat for the US economic crisis, and i know that this is not completely true.

but it is still true that the peg undervalues the Chinese currency. are you arguing the point that China's currency would be much much stronger if their government didnt keep the x-rate locked down? i don't think that's disputable, but feel free to take a shot if you believe otherwise.

since this is an investment discussion, the question is - what will the Chinese government do to balance their favorable trade situation with internal inflation? (i.e. will they stop pegging and make buy-low investors like tidus rich overnight?). the topic of who's at fault for the US economic crisis/trade imbalance is a topic for another thread.

**m_ron** · March 1st, 2008 05:52 AM

If you live outside the US this is the time to buy and hold greenback.The dollar cant be down forever.It's a cycle thing.What goes down must come up.You just need to be patience.Most of the stocks in US are bargain.Time to load them up.

**tidus1203** · March 1st, 2008 07:08 AM

Well this is very very different there are huge structural problems in the US Dollar that never existed before. Before the US was a creditor nation, now its debtor nation. Yes market fluctuates, but those structural problems in the USD will severely debase the currency. I remember the British Pound was trading 4USD in the early 20th century when it was still the world's reserve currency. The USD is going to eventually lose that status (its only a matter of time when the world realizes that all the inflationary pressures we have in the world like high oil prices is because of the continuous effort of the US government to debase the currency by printing more money to pay of debts and to increase more debts) and if the British Pound is any indication we could see the USD lose 60%-80% of its value from top to bottom.

As for stocks, they are only as good as the currency that it is based on. If the stock market goes up 10% but the dollar falls 10% its useless. We should invest in REAL TERMS (factoring inflation) rather than NOMINAL TERMS (base purely on numbers) that Wall Street wants Main Street to continue believing in. Buy GOLD, buy AGRICULTURAL COMMODITIES, buy things that can't be re-produced indefinitely. Stocks and paper money can be re-produced endlessly thus eroding their worth....

**empy** · March 1st, 2008 10:02 AM

Originally Posted by tidus1203

As for stocks, they are only as good as the currency that it is based on. If the stock market goes up 10% but the dollar falls 10% its useless. We should invest in REAL TERMS (factoring inflation) rather than NOMINAL TERMS (base purely on numbers) that Wall Street wants Main Street to continue believing in. Buy GOLD, buy AGRICULTURAL COMMODITIES, buy things that can't be re-produced indefinitely. Stocks and paper money can be re-produced endlessly thus eroding their worth....

keep in mind though, that most large US companies have earnings diversity. there are quite a few US based companies that make more than 50% of their revenues in foreign currencies, and those companies (and others) usually have a diversified cost base as well - meaning that they incur their costs in yuan, rupees and pesos.

there are bargains to be had. do just a little bit of research and you will find plenty of US companies that have growing income and market shares, but have stock prices that are still falling, or are trading below their comparables. or, you can skip the facts and just trade on gut feel or market hysteria, it doesn't matter to me

btw, the statement "stocks and paper money can be reproduced endlessly, eroding their worth" is totally misleading. because -

(a) the only way you can reproduce a stock is through a split, where yes, the per-share value is cut in half (or more), but the number of shares you own is doubled (or more) - so the value of your investment doesn't change. or you can issue new stock, which has to come directly out of the unissued equity base of the company, and it doesn't impact any existing owners. so how the heck can you erode the value of a share of stock by reproducing?

(b) the US Fed can only issue new currency by issuing new debt (TBills) to private banks. over a given week they may issue new debt (and increase the money supply) and buy back old debt (reducing the money supply) to the tune of hundreds of millions of dollars. there is a system of checks and balances, and if "Helicopter" Ben was truly printing money like crazy, don't you think the banks would start getting concerned. not to mention every time a country printed money to boost its economy, the resulting hyperinflation absolutely killed that economy. i would like to think that Bernanke and the Fed governors are not complete morons and at least took Econ 101 sometime in college or grad school.

finally - i won't argue that gold and commodities have better rates of return than US stocks these days. but the right time to get into gold was somewhere around 2000 - 2003. look at how high their prices are now? are they really going to continue that trend? maybe, maybe not

**tidus1203** · March 1st, 2008 10:27 AM

Originally Posted by empy

keep in mind though, that most large US companies have earnings diversity. there are quite a few US based companies that make more than 50% of their revenues in foreign currencies, and those companies (and others) usually have a diversified cost base as well - meaning that they incur their costs in yuan, rupees and pesos.

there are bargains to be had. do just a little bit of research and you will find plenty of US companies that have growing income and market shares, but have stock prices that are still falling, or are trading below their comparables. or, you can skip the facts and just trade on gut feel or market hysteria, it doesn't matter to me

btw, the statement "stocks and paper money can be reproduced endlessly, eroding their worth" is totally misleading. because -

(a) the only way you can reproduce a stock is through a split, where yes, the per-share value is cut in half (or more), but the number of shares you own is doubled (or more) - so the value of your investment doesn't change. or you can issue new stock, which has to come directly out of the unissued equity base of the company, and it doesn't impact any existing owners. so how the heck can you erode the value of a share of stock by reproducing?

(b) the US Fed can only issue new currency by issuing new debt (TBills) to private banks. over a given week they may issue new debt (and increase the money supply) and buy back old debt (reducing the money supply) to the tune of hundreds of millions of dollars. there is a system of checks and balances, and if "Helicopter" Ben was truly printing money like crazy, don't you think the banks would start getting concerned. not to mention every time a country printed money to boost its economy, the resulting hyperinflation absolutely killed that economy. i would like to think that Bernanke and the Fed governors are not complete morons and at least took Econ 101 sometime in college or grad school.

finally - i won't argue that gold and commodities have better rates of return than US stocks these days. but the right time to get into gold was somewhere around 2000 - 2003. look at how high their prices are now? are they really going to continue that trend? maybe, maybe not

Well you put to much trust with Bernanke and Co. The US has no other alternative to pay its debt but by printing money so its not about that they have a choice, but they are cornered into printing more money cause thats their only alternative. Where is the US getting the money to pay the debts, the answer is nowhere but the printing presses so the debt will just grow and grow. The only real way I see to cure this growing debt (politically unpopular so I am saying it won't happen) is to cut Social Securtiy all together and every single kind of social benefits, create a smaller government, raise taxes, go back to asset backed money and start repaying those debts gradually....

The commodity markets are nowhere near a all time top. Cause the supply is getting smaller (there has been no major oil discovery for almost 30 years and even if there is they are usually hard to access) while demand from rising economies of China and India will push these commodities demand and supply out of whack. Who would thought $1000 gold is probable like 5 years ago now we are near there, $2000 is just another figure we might probably dismiss too at this time. Fact is all these things are just numbers we should be more concerned on the demand and supply of these things.

Regarding stocks, yes siguro I over exaggerated on the claim that it can erode its value. However, stocks just like paper money can be created by the investment banks day in and day out while commodities like Gold, assets like Land cannot be created day in and day out they are truly limited. Earth is limited we only have a X number of square kilometers and it will never grow. And my point is we should be divesting out of something that can be made everyday with ease for something that can't be reproduced out of thin air and is definitely limited and more likely supply getting even more limited.

Basta bahala kayo if you wanna stay in the paper dollars its not my lose. Ako I don't wanna own ANY US DOLLARS. In fact I don't own any nor plan to own any. As for US stocks I also don't want it cause its based in US Dollars and as I discussed previously a stock is only as good as its currency. I prefer foreign stocks based on strong currencies giving out foreign currency dividends.

**empy** · March 1st, 2008 11:23 AM

Originally Posted by tidus1203

Well you put to much trust with Bernanke and Co. The US has no other alternative to pay its debt but by printing money so its not about that they have a choice, but they are cornered into printing more money cause thats their only alternative. Where is the US getting the money to pay the debts, the answer is nowhere but the printing presses so the debt will just grow and grow. The only real way I see to cure this growing debt (politically unpopular so I am saying it won't happen) is to cut Social Securtiy all together and every single kind of social benefits, create a smaller government, raise taxes, go back to asset backed money and start repaying those debts gradually....

The commodity markets are nowhere near a all time top. Cause the supply is getting smaller (there has been no major oil discovery for almost 30 years and even if there is they are usually hard to access) while demand from rising economies of China and India will push these commodities demand and supply out of whack. Who would thought $1000 gold is probable like 5 years ago now we are near there, $2000 is just another figure we might probably dismiss too at this time. Fact is all these things are just numbers we should be more concerned on the demand and supply of these things.

Regarding stocks, yes siguro I over exaggerated on the claim that it can erode its value. However, stocks just like paper money can be created by the investment banks day in and day out while commodities like Gold, assets like Land cannot be created day in and day out they are truly limited. Earth is limited we only have a X number of square kilometers and it will never grow. And my point is we should be divesting out of something that can be made everyday with ease for something that can't be reproduced out of thin air and is definitely limited and more likely supply getting even more limited.

Basta bahala kayo if you wanna stay in the paper dollars its not my lose. Ako I don't wanna own ANY US DOLLARS. In fact I don't own any nor plan to own any. As for US stocks I also don't want it cause its based in US Dollars and as I discussed previously a stock is only as good as its currency. I prefer foreign stocks based on strong currencies giving out foreign currency dividends.

let me explain the way the US Fed works, then. the only way the Fed can create new money (increase the money supply) is TO ISSUE NEW DEBT - in the form of new T-Bills to be sold to banks. so, how can you "pay down debt" by creating new debt? :hihihi:

the Fed cannot simply print money and throw it out of a helicopter, as those talking heads and bloggers allege.

if the Fed is printing money like crazy, then the value of the USD will decrease, right? which means the US economy will see a really high inflation rate. Econ 101, right? well, i looked up the January inflation rate (US CPI), and came up with....2.2%. i looked up the full year inflation for 2007 and got...2.8%. a bit high for my taste, but hardly hyperinflation, no?

btw, dont get me wrong - i agree with you about gold and commodities being a better place than stocks right now (especially oil). i just don't agree that you cannot make money on the US market this year. i also agree that the dollar will continue to weaken this year, but that's because of US economic weakness and the balance of trade deficits, not because the Fed's printing money...