Greece is broke. Ireland is broke. Spain is on life support. Italy
and France are about to have a cardiac arrest. And Finland wants out.
Only Germany is doing well. But it is very surprise, Europe is
still running a trade surplus, mainly due to Germany, it means any one
can by EURO but who will be dare or ready to bring pain at home????
The World Currencies :====
During this slow down/recession of the world, we have noted that......
money goes to where it feels safest.
Greece people have vacant the banks and Spain are doing.......
And hence, smaller currencies like the Swiss franc and Australian dollar rose.
But there is a limit to how much small economies like
Switzerland and Australia can absorb.The major currencies of the world
are the US dollar, the euro, the Japanese yen and the British pound.
The
joker is the Chinese renminbi. China has the second largest economy in
the world but the renminbi is a closed currency. It doesn't trade on the
international exchange in the same way yet. It is keeping their money
loosely to hold the US dollar down.
At present which currency is better ?
The US has big budget and trade deficit. The
Federal Reserve is trying to devalue the dollar to increase American
exports. But the US dollar has become strong lately. US is on road to
print the dollar or note? Last Friday Govt can not announced and the
issue is kept open in next meeting of Sept 2nd week. They want to pass
the time till US President election......., thereafter lot of tax will
increase and expesnes will curtail.
Japan has a debt to GDP ratio of over 200% and in 2011 ran an annual trade deficit for the first time in thirty years. Due
to the huge burden of government debt, I believe, Japanese Central Bank
will print huge amounts of yen and will keep the interest rates down.
What about the British pound then?
The Bank of
England, has printed an enormous £375 billion since the financial crisis
in 2008.In percentage terms, this is the most of any central bank in
the world. That's hardly better form than the US or Japan. So what we can buy? The pound? The yen? The dollar?
I
says none of those. I am backing the EURO. It can rise anytime because
it falls too much. Moreover their trade deficit is still positive, so
one day it will rise sudden.
If America makes its dollar cheaper
further, then China won't allow the renminbi to appreciate. It will
cheapen the renminbi to match the falling dollar. China have lot of
dollar on cash hand.
And if those two currencies fall, the euro
should rise. Relative to each other, for one currency to fall, another
must rise. Of course, they can all fall when valued against gold.
And if US dollar is falling, then China will try to invest in European assets as they have US $ foreign |
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