Wednesday, May 11, 2005

Waiting, Waiting

It seems like everybody who follows events in Asia is waiting for the next shoe to fall, or to be more accurate, the next two shoes to fall. The first shoe is the much-anticipated revaluation of the Chinese currency, the renminbi. The second is North Korea testing an atomic bomb. Let’s take them one at a time.

Speculation over revaluation of the renminbi reached a fever pitch at the beginning of the month. It was rumored that Beijing would begin its much-anticipated move during the series of holidays following May 1 known as “Golden Week.” Speculators piled on, renminbi forwards went to the moon, but the week passed with no announcement.

About ten days ago The New York Times reported that the renminbi had actually been allowed to float against the dollar 20 minutes in late April. The writer did not know if this was a deliberate testing of the waters or just a technical glitch. Lo, the yuan did rise from 8.29 to 8.20 during those 20 minutes.

The story started on the front page of the business section and then jumped inside, running on and on. It’s extraordinary that this newspaper would devote so much ink to a 20-minute revaluation. One wonders how the Times will play the story when the Beijing finally acts – banner headlines on the front page? Tell me this isn’t going to be the Chinese Century.

It seems as if the entire financial community is paralyzed, waiting for Beijing to make its move. Some analysts say it is one reason why the dollar seems to have stalled as opposed to continuing its downward path like it is supposed to do. China should get the thing out of the way for no other reason than to put the market out of its collective misery.

Meanwhile, China stands accused of being a serial manipulator of its currency, deviously plotting to give itself a trade advantage. The U.S. Senate voted a month ago to impose a 27.5% tariff on Chinese goods across the board if it did not do something to raise the price of its currency, and presumably the price of its exports

Manipulation is a strange word to apply in this case . We are after all talking about a currency peg. The renminibi doesn’t budge from a benchmark that was set years ago. If it is undervalued, it is because it is hitched to a currency, the dollar, that has been steadily weakening for reasons that have little to do with China.

The other shoe yet to fall may come in the form of a big thump in the northeast corner of North Korea, where, it is widely reported, Pyongyang is thought to be planning to conduct a nuclear test. North Korea claims to have such weapons. The only thing left is for them to prove it.

Before that happens, if it happens, Washington wants Pyongyang to return to the six-party talks, although it is hard to imagine what it hopes will be accomplished. Defending its strategy, President George W. Bush said at his press conference on April 28, “It’s better to have more than one voice sending the same message to Kim Jong Il.”

Same message? Maybe the president thinks the six nations (North and South Korea, Japan, China, Russia and the U.S.) have the same message discipline as his own political message machine. In fact, the reason why the six party talks are failing is because none of the six is “on message.”

All the parties have different, sometimes conflicting aims. Washington, basically, wants to see Kim Jong Il and his regime disappear. South Korea’s long-term goal is reconciliation, and it doesn’t want to do anything that might make North Korea into more of a basket case than it already is. Japan wants an honest accounting of its citizens kidnapped in the 1970s.

And China, supposedly the linchpin? Beijing wants to be seen as being helpful, cooperative and a good world citizen by hosting the talks. But I doubt that its leaders worry very much about North Korea getting a couple pop-gun atomic bombs, and they certainly don’t want to have to be put in a position of vetoing a sanctions bill in the U.N.

Indeed, ignoring repeated appeals from Washington, Beijing served notice Monday [May 9] that it has no intention of imposing any serious economic sanctions on its neighbor. “Normal trade should not be linked with the nuclear issue,” said a foreign ministry spokesman. So much for China. Back to you, Mr. Bush.

21 Comments:

Blogger IJ said...

Should the world have monetary discipline? It was thought so after WW2. Currency pegs to the dollar were introduced globally to help prevent the economic competition that led up to WW2.

However this monetary discipline, worldwide, was scrapped by the US in the early 1970's because the nation needed somehow to fund both the Vietnam war and LBJ's social programmes (printing huge amounts of money was the solution chosen).

China is really returning to this discipline by pegging the renmimbi to the dollar - but the US is threatening China with huge tariffs as a reprisal. Monetary discipline is also being reintroduced by the European Union, with the euro.

Floating or fixed exchange rates is an important issue for this year's G8 in Scotland to discuss. The banking industry isn't too keen on fixed exchange rates; they mauled the UK taxpayer in 1992 when that nation tried to join the euro. The events surrounding 'Black Wednesday', when the UK Treasury used up $40bn in reserves in the failed attempt to prop up the pound, hobbled progress in moving to fixed rates in order to protect taxpayers.

May 13, 2005 at 2:32 AM  
Blogger Interad said...

Hi, I really like your blog. There is this outstanding website regarding south korea flag. You better check it out some time.

October 23, 2005 at 6:41 AM  
Blogger Johnny said...

hello, your blog is interesting to read, I have a currency trading website, it is informative and provides many currency charts and real time currency quote. It should be helpful to your trading.

October 27, 2005 at 5:12 AM  
Blogger Josh said...

Good people with disability post. I'll be sure to stop by often. Also check out people with disability

October 27, 2005 at 2:15 PM  
Blogger Interad said...

Hello, I am a korean visitor, good to see you.
I am sure that your blog page looks great to me which mean looking crowded so, I would like to let everybodies know korea information official site korea.net same as Dynamic korea - contains all about korea news and informations, please let me introducel this cool site. Dynamic korea offer korea travel, culture, food, arts and government info exactly what you want to knowkorean nude. You better check it out some time.

October 28, 2005 at 1:07 AM  
Blogger Interad said...

Hello, I am a korean visitor, good to see you.
I am sure that your blog page looks great to me which mean looking crowded so, I would like to let everybodies know korea information official site korea.net same as Dynamic korea - contains all about korea news and informations, please let me introducel this cool site. Dynamic korea offer korea travel, culture, food, arts and government info exactly what you want to knowkorea drama full house. You better check it out some time.

October 28, 2005 at 10:57 AM  
Blogger Johnny said...

Hello, your blog is inmformative, I just found a brand new forex trading system using both Mathematical and psychlogical approch, hope you can visit and it will be useful to your trading life.

November 14, 2005 at 7:35 PM  
Blogger Bob said...

Check uot this site if you are thinking of online stock trading

November 29, 2005 at 8:46 PM  
Blogger Emini Day Trader said...

Hey ##NAME##. Nice blog. You may want to check out trader. It's got lots of info on trader.

December 16, 2005 at 6:50 AM  
Blogger Joe Berenguer said...

I just came across your blog and wanted to
drop you a note telling you, Friend, how impressed I was with it.
I give you my best wishes for your future endeavors.
If you have a moment, please visit my site:
world food market
It covers world food market related contents.
All the best!

January 23, 2006 at 8:30 AM  
Blogger Scott A. Edwards said...

Check this out for FREE...

This opportunity says:

"Your Ad" Will Be Instantly Displayed on Thousands of Websites and Read By Over 10 Million People Per Week For FREE, and It Only Takes 60 Seconds To Get Started!

To find out more visit: network marketing site. It successfully exposes FREE information covering Traffic and network marketing related stuff.

January 30, 2006 at 4:19 AM  
Blogger Scott A. Edwards said...

The brand NEW! Safelist Autosubmission software XP - blasts your ads to 3.6 Million Safelist recipients at the click of one button.

Automatic-Mailer XP! - 50,000 hits guaranteed to your website every month! - Posts unlimited number of ads - Create unlimited number of profiles - Posts whenever you want! 24/7 - Schedule autosubmission when you are not at home - Sends Html & Text Advertisements.

Order today. Our Software also includes: - Autovalidation feature that automatically validates all your Safelists validation codes - mailbox cleaner feature that automatically keeps your mailboxes clean!

NOW That's an incredible Deal, isn't it? Get Your Astonishing Automatic - Mailer XP Software today!
Click here: AUTO-MAILER

February 15, 2006 at 3:10 PM  
Blogger Scott A. Edwards said...

NOW, check this out for FREE...

There is a new, fully automated traffic-generation system that can send 1000's of targeted prospects to your website, for FREE! It only takes 5 minutes to set up to set your FREE account!

To find out more visit: financial freedom site. It successfully exposes FREE information covering Traffic and financial freedom related stuff.

February 19, 2006 at 9:35 PM  
Blogger Quickregister Guy said...

Todd Crowell,

We don't you put a link to your blog about safelists on our site
for free? We have a specific category for safelists related
sites. We get tons of visitors and your link will be permanent.
See: http://www.leadclub.net. Thank you.

John

Get 10,000 free opt in leads right now.

February 27, 2006 at 5:42 PM  
Blogger Paul Adams said...

Hello Friend! I just came across your blog and wanted to
drop you a note telling you how impressed I was with
the information you have posted here.
I also have a web site & blog about credit center so I know I'm talking
about when I say yours is top-notch! Keep up the
great work, you are providing a great resource on the Internet here!
If you have a moment, please visit my site credit center
Best success!

March 10, 2006 at 2:32 PM  
Blogger Joe Berenguer said...

I was searching blogs,and I found your site.Please,
accept my congratulations for your excellent work!
If you have a moment, please visit my site:
credit center
It pretty much covers credit center related issues.
Have a good day!

March 10, 2006 at 11:27 PM  
Blogger James Baker said...

I just came across your blog and wanted to
drop you a note telling you, Friend, how impressed I was with it.
I give you my best wishes for your future endeavors.
If you have a moment, please visit my site:
credit center
It covers credit center related contents.
All the best!

March 21, 2006 at 1:31 AM  
Blogger Rachel said...


travel hotel Travel Cheap! Travel Well! Outsmart The Multi-Billion Dollar Industry?

Travel Like The Rich and Famous. Discover How A Pauper Travels Like A King!

Is your travel experience measured by the limit on your credit card?
Is your family vacation yet another 2 weeks at the in-laws because they have a "pull-out" sofa?
Have you ever had to fly unexpectedly for an emergency and ended up spending the monthly food budget?

What if you could instantly have, all in one place right in front of your eyes: all the travel hot spots, unknown travel secrets and special travel industry deals? This is knowledge that would take you years to learn on your own. Travel Cheap travel hotel

April 11, 2006 at 6:35 AM  
Blogger Joe Berenguer said...

I was searching blogs,and I found yours.Please,
accept my congratulations for your excellent work!
If you have a moment, please visit my travel Minnesota site.
Have a good day!

September 20, 2006 at 4:54 AM  
Blogger Earn A LifeTime of Income From Anywhere! said...

Hi. Thanks for the insights. Visit us at Helping You Safelist

November 26, 2006 at 4:53 PM  
Blogger Earn A LifeTime of Income From Anywhere! said...

Appreciated your thoughts. Thanks and visit us at Helping You Safelist

November 27, 2006 at 6:15 PM  

Post a Comment

<< Home