CHina revalues Yuan

[Flagg]

China Loosens Yuan Peg, Shifts to Currency Basket (Update1)

July 21 (Bloomberg) -- China loosened its fixed-exchange rate against the dollar for the first time in a decade, letting the yuan fluctuate versus a basket of currencies, the People's Bank of China said on its Web site.

Valuing the yuan against more than one currency will allow it to appreciate or decline as the dollar gains or drops versus other currencies. Until now, it has been pegged at about 8.3 per dollar, earning criticism from U.S. Treasury Secretary John Snow, Federal Reserve Chairman Alan Greenspan, German Finance Minister Hans Eichel and his Japanese counterpart, Sadakazu Tanigaki.

``This will be a small, but symbolic first step in a long road,'' said Marios Maratheftis, a currency strategist in London at Standard Chartered Plc, a U.K. bank that gets two-thirds of its profit from Asia. ``If there is any flexibility allowed, and until there has been none, then the yuan will strengthen against the dollar. It won't be a huge move, though.'' He spoke in an interview on June 24.

Letting the yuan strengthen may help President Hu Jintao control inflation by reducing the cost of imported products such as oil and copper, which are priced in dollars. It also gives the central bank, which has sold yuan to prevent the currency from appreciating, more scope to increase interest rates to cool an economy that expanded 9.5 percent in the first quarter.

From 7 p.m., China time, the yuan will be valued at 8.1 per dollar. The yen gained against the dollar after China's decision, strengthening to 111.81. The Singapore dollar also gained and Treasury notes declined.

``Without moving the exchange rate, it looks like the Chinese authorities are struggling to slow the economy,'' said Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. in London. ``The only way to deal with that and get better control over monetary policy is to change the currency regime.'' O'Neill, who spoke in an interview last month, has predicted for a year that a yuan shift may come at any time.

Pressure From U.S.

Permitting the yuan to trade more freely would also answer criticism from the Bush administration and some members of the U.S. Congress that blame China's currency policy for a record trade deficit and the loss of 2.8 million manufacturing jobs.

The Treasury Department's twice-yearly review of exchange rate policies said last month that China needs to make the yuan more flexible or risk being branded a currency manipulator.

``China is now ready and should move without delay in a manner and magnitude that is sufficiently reflective of underlying market conditions,'' Snow told the Senate Finance Committee in Washington on June 23. ``Implementation of trade sanctions would lead to retaliatory policies against our exports, damaging the U.S. and global economy.''

The U.S. trade gap with China rose to a record $162 billion last year and the National Association of Manufacturers, a lobby group, expects it to grow to $225 billion this year.

Indiana Democratic Senator Evan Bayh and Maine Republican Senator Susan Collins presented legislation on June 23 that would let companies petition for duties on Chinese goods to compensate for government subsidies. The bill is one of more than a half- dozen in Congress that address what some lawmakers call China's unfair trade practices.

Currency Basket

Linking the yuan to a basket of currencies means China's currency wouldn't be tied so closely to swings in the dollar, said Adam Cole, a currency strategist at RBC Capital Markets Ltd. in London. The basket will probably be composed of the euro, yen and other Asian currencies as well as the dollar, he said in an interview on June 24.

``For instance, if we went through a prolonged period of dollar downward pressure then the yuan would feel all the pressure of that, but if it was using basket, then the move would be offset by other currencies doing better,'' said Cole. ``It's an easier way to manage a currency target.''

Singapore manages its currency by allowing it to fluctuate against a group of the nation's major trading partners. The Monetary Authority of Singapore, which reviews its policy every six months, hasn't disclosed the composition of the basket.

`One Clear Direction'

Investors have bet on a change in China's currency since 2002.

``If you let the exchange rate become more flexible, there is one clear direction it's going,'' said Marvin Barth, a currency strategist in London at Citigroup Inc., the world's largest bank. He spoke in an interview last month.

China's $1.6 trillion economy, which accounted for a 10th of world growth last year, has trebled in size since the yuan peg was introduced. Foreign direct investment jumped 14 percent to a record $60.6 billion in 2004, according to government figures. A year earlier, China surpassed the U.S. as the biggest recipient.

The People's Bank of China has to buy dollars that flow into the country to maintain the currency peg, adding yuan to the economy and diluting the impact of state lending curbs. The central bank spent $193 billion buying foreign currency in 2004, a 41 percent increase from a year earlier, it said on Feb. 28.

Interest Rates, Inflation

The central bank raised its lending and deposit rates on Oct. 28, the first increase in a decade, to complement limits on investment in property, steel and autos that have driven prices higher and strained power supplies.

``Clearly, it will be more effective if you combine currency and interest-rate policies,'' Uwe Parpart, Bank of America Corp.'s senior market strategist in Hong Kong, said before today's announcement. ``China wants to slow down inflation and growth. Raising rates and the value of the currency both push things in that direction.'' He predicted China would change the peg in the second half.

China is seeking to cap inflation at 4 percent this year from a peak of 5.3 percent in August. Inflation in 2005 is likely to slow to between 3.0 percent and 3.5 percent, the People's Bank of China said on June 14. The consumer price index climbed 1.8 percent in May from a year earlier, the National Bureau of Statistics said on June 13.

About bloody time!

Currency cross-rates went absolutely haywire just before 23:00 local when the announcement was made.

[Igor01]

Malaysia and Singapour announced that they will follow suit shortly. The Asians just couldn't go on financing the US government and consumers forever.

Greenspan's cheerleaders will of course say that it's good for the US economy since it will supposedly reduce deficit, however things will get worse since the deficit can only be reduced through curbing consumption and tightening credit which won't happen as it would be a political suicide for the US government.

We'll see falling US dollar, growing interest rates in the US to slow down its inevitable collapse and panicing investors fleeing the US equities and assets. This is the beginning of the end for the US dollar as world's primary reserve currency which for so long was the foundation of the American economical influence of the world.

[Turhapuro]

http://news.bbc.co.uk/1/hi/business/4703471.stm

However, China is protected by having huge currency reserves of $750bn (£400bn), built up by its years of trade surpluses.

But many of these are in US Treasury bonds, which will become less valuable to China after its revaluation.

So China may start to switch from holding dollars to holding other types of currency, for example the euro, which could lead to a sharp fall in the value of the dollar.

It could also make it more difficult (or expensive) for the US government to finance its massive budget deficit.

[Igor01]

Who Says No One Rings a Bell?
by Peter Schiff


The old saying "no one rings a bell," certainly doesn't apply today, as China rang the "mother of all bells." So deafening was its sound, that its vibrations will be felt around the world. Nowhere will the amplitude of these waves be more ****ounced than in the United States.

China's decision to change the nature of its currency peg means that it will no longer be in the dollar buying business, or by extension, the U.S. Treasury buying business. That means that America will be losing its biggest benefactor. China will no longer act as the principal enabler of America's irresponsible extravagance, ending its subsidies to American consumers and borrowers.

Changing the nature of the yuan peg is a first step in the ultimate direction of either allowing the Yuan to float freely or possibly pegging it to gold. In the meantime the Yuan will remain undervalued, as it will likely be pegged to a basket of other currencies using current exchange rates that clearly undervalue the Yuan. Chinese imbalances will continue to grow, along with all the domestic inflationary implications that result.

However, the pressure on China to prop up the dollar will be greatly diminished. To maintain the peg against its new basket, Chinese monetary authorities will most likely now be buyers of those other currencies likely to be included in its basket, such as the Euro or Yen. Since its reserves are already disproportionately held in dollars, it will likely rebalance those reserves to more accurately mirror the basket to which the Yuan will be pegged. Such a rebalancing will only exacerbate the dollar's decline. However, a declining dollar will not automatically require offsetting dollar buying by the Chinese as it has during the period of the yuan-dollar peg. As long as dollar weakness is offset by strength in others currencies in its basket, the peg can be maintained.

The implications for America are enormous. Far from being the panacea that American politicians proclaim, China's decision to alter its peg could be the pin that finally pricks America's bubble economy. For America, the direct result of this action will be the following:

Higher consumer prices.
Higher interest rates.
Reduced profits for American companies, particularly those dependent on domestic consumption and consumer debt.
Lower stock prices, as earnings decline and multiples contract.
The busting of the housing bubble, as tighter credit standards and higher interest rates squeeze current home prices.
Rising unemployment, as higher interest rates and vanishing home equity slow consumer spending and reduce jobs dependant on that spending.
A severe recession as a result of all of the above.
Rising federal budget deficits, as recession reduces tax revenue, while higher interest rates and escalating outlays increase expenditures.
In conclusion, July 21, 2005 will be another date likely to live in infamy. This time the aggressor is China not Japan, and the bombs are purely economic. Though there will be no immediate loss of life, and no American retaliation, the financial damages will be devastating. History will remember this date as the beginning of Chinese independence, and the beginning of the end of America's ability to depend on China.

For those of you still holding onto portfolios heavily weighted in U.S. dollars, time is running out to protect your self. To learn about specific strategies specifically design to benefit from China's action, please contact my office directly, visit my web site www.europac.net, or download my free research report "The Powerful Case for Investing in Foreign Equities" available at www.researchreport1.com.



Peter Schiff C.E.O. and Chief Global Strategist

[fdt]

Revaluation ............. 2,1%. Definitely, not a radical move... as You consider the fact that it was fixed at the same level for ....10 years :lol: .



http://www.asianresearch.org/articles/2623.html

What’s the Reality Behind the Fixed Yuan?
Shang Nong
5/24/2005

Speculation on the revaluation of the yuan remains one of the hottest topics in modern economics and commerce. Yet much of the discussion is based on flawed understandings of Chinese economics. Indeed, why does the Chinese regime appear so reluctant to bend to international pressure?
The story begins back in 1995 when the exchange rate for the yuan was fixed at 8.28 to 1 US dollar. As Chinese exports began to create trade imbalances in the world’s trading blocs, the economic powerhouses of the US, Europe and Japan began to lose patience with the Chinese economic stance. They accused China of pursuing an unfair competitive advantage in exports by not allowing the value of the yuan to appreciate against the US dollar.

Last year, China’s exports increased 35 percent to 593.4 billion dollars. Its trade surplus reached 32 billion dollars, the highest since 1998. Also last year, the Unites States’ trade deficit with China reached a record high of 62 billion dollars.

Meanwhile, American manufacturers have long complained that the yuan is undervalued by about 40 percent. This year, US trade representatives have exerted sustained pressure on China to appreciate the yuan, or face import tariffs on Chinese goods entering the US market.

The benefits of a more powerful yuan would be felt immediately by Chinese people. They would, for example pay less for McDonald burgers, US-made Buick cars and Sony sound systems from Japan. Chinese tourists in South Asia or European countries would be able to buy more foreign goods with their more powerful currency.

An appreciated yuan will, almost certainly, have a negative impact on exports. But by encouraging imports, it will flatten the current trade imbalance and will help to form long-term mutually beneficial trade relations with other countries. Trading relationships that are one-sided is unreasonable and unsustainable. If China wants to be seen as a respected player in the international community, it should place great value on mutually beneficial trade.

What are the possible effects of a stronger yuan? Goldman Sachs predicted last month that if the yuan appreciates by 5 percent, the current trade surplus would shrink by more than half. If the value of the yuan goes up by 10 percent, exports would shrink by 15 percent and the current trade surplus would turn into a small trade deficit.

According to an official Chinese study, a 3 to 5 percent appreciation of the yuan would slow the growth of exports to less than 10 percent. An appreciation of more than 15 percent would see a decline in exports.

All predictions on when the Chinese would move on appreciation have been proven wrong. The most recent are the Morgan-Chase bet on 8 May, which passed without incident. And the Goldman Sachs prediction of 18 May, the day the foreign exchange system expanded its trading volume, also fell flat.

But the question still remains. Why is there simply no movement whatsoever by the regime on the exchange rate? Surely a piecemeal approach to revaluation could be adopted to minimize the export pain? There must be a deeper reason.

According to electronic media reports from Hong Kong, the Chinese National Bureau of Statistics has issued articles warnings that if RMB’s value rises by too much, there will be an outflow of cash off shore seeking interest rate returns. This could trigger a short-term weakness in the yuan.

At an annual Asian banking meeting in Istanbul last week Chinese Treasury Secretary Jin Renqing said the increasing speculation on the revaluation made the actual revaluation too difficult. This has led some to think that Chinese intransigence is aimed at profit-taking by currency speculators.

But such thinking does not really hold water. As long as any trade or exchange occurs with China, no mater what the value of the yuan, there is always the danger of money going off shore to profit from interest rates. But that is true for every single country in the world, China is no different.

The facts of a stronger yuan, especially where the rise is controlled incrementally by the government, are not such that the regime should continue to resist the move. The real facts may have already been stated by Professor Lui Zuenyi of Hong Kong University who thinks that the yuan, and the economy itself, just doesn’t have the right fundamentals to allow it to appreciate.

Much of the current attraction to China is the promise of huge profits to be made. The population in the cities and country are expected to become wealthy and massively upscale their purchasing power. But any cursory review of the bad debt crisis facing banks, over investment in stocks, a wide array of deep social crises and the fact a huge majority of the population actually faces poverty, will highlight that the promised bright economic future for China is not backed reality. A slowdown in exports will lead to a reduction in foreign investment and economic growth will slow.

Despite the fact that the reported growth numbers are probably not real anyway, the illusion of growth, built up by the government and foreigners it has managed to win over, will disappear. This is what really scares the government. This is what it can’t face. It cannot bear the cold light of reality dispelling the fog of illusion it has managed to create. Given the real problems in China, a stronger yuan may be some way off.

[2Sheds_Jackson]

Malaysia and Singapour announced that they will follow suit shortly. The Asians just couldn't go on financing the US government and consumers forever.

Greenspan's cheerleaders will of course say that it's good for the US economy since it will supposedly reduce deficit, however things will get worse since the deficit can only be reduced through curbing consumption and tightening credit which won't happen as it would be a political suicide for the US government.

We'll see falling US dollar, growing interest rates in the US to slow down its inevitable collapse and panicing investors fleeing the US equities and assets. This is the beginning of the end for the US dollar as world's primary reserve currency which for so long was the foundation of the American economical influence of the world.

rofl And the band played on.

[Hiroshima]

Malaysia and Singapour announced that they will follow suit shortly. The Asians just couldn't go on financing the US government and consumers forever.

Greenspan's cheerleaders will of course say that it's good for the US economy since it will supposedly reduce deficit, however things will get worse since the deficit can only be reduced through curbing consumption and tightening credit which won't happen as it would be a political suicide for the US government.

We'll see falling US dollar, growing interest rates in the US to slow down its inevitable collapse and panicing investors fleeing the US equities and assets. This is the beginning of the end for the US dollar as world's primary reserve currency which for so long was the foundation of the American economical influence of the world.

rofl And the band played on.

Indeed...course, our money is still pretty strong, and if China makes a boneheaded decision and somehow the countryside reaches, ohh, three times the temperature of the sun (Oops!), it won't matter. Also, those who point to the Euro and say 'See?' in the differences in exchange rates, remember that the Euro is supported by several countries' economies, while we only have one.

[Kilgor]

Malaysia and Singapour announced that they will follow suit shortly. The Asians just couldn't go on financing the US government and consumers forever.

.

And who are they going to sell to when they wont sell to the US anymore ?

The whole reason they keep this inbalanced trade up because the US is their best customer. The US-China is a relationship made in heaven.

Without each other they would be screwed.

[ViktorNavorski]

This is some fun stuffs, two biggest motivators for this move, China's state-owned "Big Four" banks getting ready to go up against the big boys from Europe and U.S. in 06's and the increase in better relationship between India and the U.S.

[Igor01]

Malaysia and Singapour announced that they will follow suit shortly. The Asians just couldn't go on financing the US government and consumers forever.

.

And who are they going to sell to when they wont sell to the US anymore ?

The whole reason they keep this inbalanced trade up because the US is their best customer. The US-China is a relationship made in heaven.

Without each other they would be screwed.

Consider this - the Chinese are selling their products and getting truckloads of US dollars that they need to do something with so they buy US Treasury Notes. Those are basically just IOU's, they have no inherent value unless they are paid back. The IOU's keep piling up while two things are happening: A. due to liquidity emission by the Fed the US dollar is inflating relative to other currencies but what's more important - relative to commodities and energy, the very things the Chinese need to continue feeding their production-oriented economy, and B. the US is adding debt at such an alarming debt that its ability to repay it has been deteriorating at an increasingly alarming rate.

So in essense the Chinese by keeping an artificailly low exchange rate peg are forcing their industry to buy resources at higher prices, get less for the products and suppress internal consumption which is the biggest driving factor for any country's economic development. This just couldn't go on forever.

Of course Chinese exporters will be hurt when their products become less affordable to the US markets, however they will still be the cheapest guys on the block and they will begin the restructuring move to stimulate internal consumption since real disposable income in China will go up. They also will diversify out of US holdings to minimize their exposure to bad debt, this considering the fact that they are one of the largest US debtors can spark a massive capital flight from US assets and complete the US dollar fall from the status of the world reserve currency.

The US debt problem will not be solved by a revaluing yuan, the majority of the US debt is comprised of government debt, its social and medicare obligations as well as consumer credit, mostly in real estate and automotive (40% each), these of course will be largely unaffected by the $/RMB exchange rate.

So the great US "borrow your way to prosperity" bonanza will continue blowing up the debt bubble until it will burst and cause a world-wide depression which will hurt everybody, whether one likes it or not.

[2Sheds_Jackson]

I hadn't considered that economic predictions provide just another thing to blame America for. It's especially clever, because it's something that hasn't happened yet. But honestly, is there anything you can't blame America for, if you put a bit of effort into it? Global warming? Bush. Terrorism? Oppressive America. Widespread unemployment in Europe? Aggressive and short-sighted economic policies pioneered in the US entice European companies to move jobs elsewhere in order to improve profits. Erectile dysfunction? Media-centric US culture produces unrealistic body expectations that normal females cannot achieve, coupled with systemic toxins in the environment produced by decades of US industrial waste combine to render the human wang useless when it is needed most.

Feh.

[Igor01]

I hadn't considered that economic predictions provide just another thing to blame America for. It's especially clever, because it's something that hasn't happened yet. But honestly, is there anything you can't blame America for, if you put a bit of effort into it? Global warming? Bush. Terrorism? Oppressive America. Widespread unemployment in Europe? Aggressive and short-sighted economic policies pioneered in the US entice European companies to move jobs elsewhere in order to improve profits. Erectile dysfunction? Media-centric US culture produces unrealistic body expectations that normal females cannot achieve, coupled with systemic toxins in the environment produced by decades of US industrial waste combine to render the human wang useless when it is needed most.

Feh.

You don't need to take this personally, nobody is crying for jihad, the coming crisis is just something that's going to happen and we're all gonna go down the same crapper. Bubbles have occured and burst before with similar results, this time will be different only because the US dollar is the foundation of the world economy being the universal store of value and exchange means.

Besides, America is a pretty big and diverse entity, it would be pointless of blaming "America" when it's not only Bush, Greenspan and Co. but also millions of hard working citizens that are only trying to make the best of their lives. But when the curtain is drawn and the "normalcy" will be redefined every day (I've lived through one collapse already, it's not pretty but you adapt to it quickly and find new ways of getting by).

Instead of taking offence to a non-existent "accusation" you could use the time while things are still chugging along nicely to inform yourself and prepare the best you can for the crisis that lies ahead. If I had been paying more attention to "sam-izdat" (underground self published) economical analysis in 1987 my family would have probably fared much better during the desinegration of everything that we took as much for granted as we now take the air we breathe. I hope you and all other americans do better than what we had to go through, that however doesn't change the fact that the crisis will come and rather sooner than later.

I've posted an article written by a Russian residing in the US on the lessons derived from the Soviet collapse that may be valualbe to get through the future US crisis: http://www.militaryphotos.net/forums/viewtopic.php?t=54922&highlight=

The current Chinese move is not is not going to destroy the US economy, far from it. The Yuan has not really been depegged, more like repegged as it's not a fully floating currency. Yet.

Even the biggest and deadliest of avalanches start with a minute motion that in and of itself is very easy to disregard unless one knows of the tremendous imbalances that that are ready to set the whole thing tumbling down.

[ViktorNavorski]

The obvious part to all of this is the fundamental imbalance in the world today, Americans spend too much and save too little, Asians, mainly the Chinese and Japanese, save too much and spend too little. China since it integrated itself into the global economy have reached a point where their investment focus needs to shift to allow domestic spending designed to create domestic markets and domestic demand. The last thing globalization need is for its two top performers currently to get lock into a perverted sort of specialization where U.S. consumes and China produces.

To break the cycle, China need to revalue the yuan. The problem is that if China does not and continue to acquire large trade surpluses, especially with the U.S. Those surpluses will generate political pressure in Chinas' trading partners for protectionsim vis-a-vis China. The bad thing about that is protectionism will decrease the surpluses which right now is greatly needed to maintain China's banking industry with it outstanding loans (almost a trillion).

The importance of that is in accordance with WTO regulation, by 2006 (right around the cornder), China have to open up its banking industry to foreign competition. At it stand right now, when that happen, China's "Big Four" state-owned banks will be, literally, crush by the competitors. Over the last five years, more than $200 billion garner from the trade surpluses have been injected into the Big Four to keep it heads above the flood of bad loans. Even with all that, they are still acquiring bad debts every year and China continue, on average, inject $40 billion into their lenders every year.

The relevance of all this can be observed by Japan in the past. Japanese banks pumped capital into their companies without regard to risk or competitiveness to a point that capital in Japan was very misallocated. When Japan open up its financial service sector and international finance started pouring in, Japanese banks had a hell of a day and that bubble bust and hello to recession. The same trend is happening with China (banking sub-branch losing about RMB $10 billion in deposits regularly, simply astounding and inexcusable). If foreign banks are allowed to take deposits from Chinese citizens, the first chance they get, every Chinese person who understands that the state banks don't have enough cash to pay out all deposits will try to be first in line to get their money out of the state banks. When a billion of the biggest savers in the world find out their savings are gone, they'll be angry and bad thing happen.

While this revaluing of the yuan may be a significant step toward something positive. For now, it is nothing more than an offering to get Congress off China's back with the whole protectionism thing (they wouldn't want U.S. consumers to start checking tag for Made in _____) while it try to prepare it banking industry for the onslaught. Of course, getting banking up to standard is a key component to have the yuan float more in the future and to get that banking going, they are going to need the U.S. to be less afraid, continue to spend while China continue to save.

So I doubt we will see any more important changes in this matter, the Chinese need time to have a floating currency be good rather than bad. Good being another mechanism to control the economy in a macro-sense, by not letting the currency get too strong or too weak and bad would be allowing pressures to infiltrate the economy that might overwhelm it if there aren't other mechanisms that allow adjustments. The U.S. lets its dollar float, but it have a lot of other mature mechanisms that allow the government to steer the economy in a rough sense, like restricting or expanding the money supply, the Fed raising or lowering interest rates, the Treasury selling bonds or buying them back by reducing the debt, etc. China doesn't have all those mechanisms yet, and until they do have a critical mass of them, it's not in their best interest to let the yuan do anything big for a while.

The other factor in the equation is India which everyone seem to be forgetting. The simple thing around investors these now a day is, why invest and outsource to China, which potentially faces political and eventually regulatory restriction which translate into reduce profits when you can just invest and outsource to India. A billion population, cheap labor sources, improving and getter closer politically to Washington and a country where you'll never hear the word "national security matter" in Congress with any takeover deal. Japan corporate world have already implemented a policy of "China-plus-one" policy. Most Japanese companies that setup manufacturing sites in China also do likewise in another third world country as a matter of contingency, hear about the one where Uniden cutting its payroll in China and moving most of their operation to Phillipines where labor cost is cheaper! than some part of China.

All this revaluing smokescreen is to reassure China trade partners, mainly the U.S., to maintain the status quo and not change anything. China domestic markets will be force to be flooded with foreign firms soon and they need the extra time, the surpluses without any political pressure to get ready to play with the big boys from Europe and U.S. The drama is far from over and the whole "U.S. dollar going down the drain" gloom and doom prediction is still a long, long, long, long, long and long way off.

[Baltic]

We'll see falling US dollar, growing interest rates in the US to slow down its inevitable collapse and panicing investors fleeing the US equities and assets. This is the beginning of the end for the US dollar as world's primary reserve currency which for so long was the foundation of the American economical influence of the world.

I remember reading something like this in one USSR paper called "za rubezhom". It was issued every week and in every issue there were news about economical apocalypsis that is comming into the biggest imperealist pig dogs country - US. All articles there were written by profesional economists with perfect arguments and scientific evidence. :)

[2Sheds_Jackson]

Igor01 -I think you misunderstood my comments - it's not that I'm taking it personally - I'm just not taking it at all. I don't buy into your theories of impending doom. They require too many things to go wrong in just the right way, and that nobody be at the helm. Your treading into tinfoil hat territory, and using uncertainty and the unknown as a means to validate your otherwise unsupportable predictions. But hey, be my guest- even a stopped clock is right twice a day - you may yet be proven right.

[Igor01]

I remember reading something like this in one USSR paper called "za rubezhom". It was issued every week and in every issue there were news about economical apocalypsis that is comming into the biggest imperealist pig dogs country - US. All articles there were written by profesional economists with perfect arguments and scientific evidence. :)

If you are trying to sound sarcastic, the punch of your post is largely lost on me because:

A. I was an avid reader of everything and anything political from 1983 and while I saw many reports of various crises and things like economic uncertaintly, unemployment and social inequality in the West, there was not a single article I saw that professed of an "economical apocalypsis that is coming into the biggest imperialist pig dog country". I also distinctly remember that the overall tone of the official publications was a lot more civil and decidedly not as arrogant and aggressive as you would have a less informed reader believe.

B. Even if one completely disregard point A, stating that "X cannot happen because Y didn't happen" is a severely flawed logical argument that simply doesn't hold any water. A lot of people much smarter than you or me spend decades analysing the economy and write articles and books on the topic which I happen to base my conclusions upon, so your mad cavalry dash to debase my points without proving yours or at least disproving mine looks half-assed at the very least.

Why not elaborate on your understanding of the situation, who knows you may have a point or two worth discussing?

[Igor01]

I don't buy into your theories of impending doom. They require too many things to go wrong in just the right way, and that nobody be at the helm. Your treading into tinfoil hat territory, and using uncertainty and the unknown as a means to validate your otherwise unsupportable predictions. But hey, be my guest- even a stopped clock is right twice a day - you may yet be proven right.

Nobody wants bad things to come but the difference between us is that I no longer think that the order of things we are used to is immutable and eternal just because it's been that way "forever", I learned this lesson the hard way. You country may or may not have to go through a similar experience, how you go about this possibility is entirely your choice. I do wish you good luck though.

[Turhapuro]

The obvious part to all of this is the fundamental imbalance in the world today...
Holy Heaven, Viktor! What an article! Are you economist or did you just copy/paste something?

[2Sheds_Jackson]

I understand that you went through an economic collapse, but that does not doom the rest of us to the same fate. Using your preconceptions as supporting evidence for a future US collapse is nothing more than saying "it could happen". A lot of things could happen. I never said that things will be fine "just because it's been that way "forever". In fact, one of the things I pointed out to you was that having nobody at the helm is one of the factors that can lead to problems. These things take constant management, give and take - and they certainly will not be fine just because we want them to be fine. But in reading your posts - one could argue that you think things will turn down because you want them to turn down. ;)