Euro to replace dollar? - SciForums.com

Stryder

09-19-07, 09:37 AM

Not quite, but I suspect it won't be long now..

It would be difficult to get rid of the pound currently. Since England no longer is really known for any manufacturing and most of it's industries are Financial in a nature. (Insurance companies, banks etc)

In 1993 Great Britain departed from the European Exchange Rate Mechanism to stand on it's own two feet and hasn't looked back. (In fact it created a finance boom from leaving, along with the Taurus projects completion of the Dematerialisation of Stock/Bonds for the London Stock Exchange in 1994 [The project itself is used as a Failed Business Project model because of the number of reattempts at creating it for the 13 years prior to it's completion].)

It's also suggested that many people in Great Britain (Thats England, Wales, Scotland.) wouldn't want to change to a Euro because they prefer the 'British' pound (As it's identifiably British) This could be however manipulated further by certain Media protagonists because of the pounds exchange rate in regards to Euro. (They make more money keeping the pound alive rather than just moving all to one currency.)

As for the Euro being used as a 'Reserve fund', well that's understandable considering the number of countries that now use it as their currency. It has greater stability for that reason.

Enmos

09-19-07, 11:30 AM

It would be difficult to get rid of the pound currently. Since England no longer is really known for any manufacturing and most of it's industries are Financial in a nature. (Insurance companies, banks etc)

In 1993 Great Britain departed from the European Exchange Rate Mechanism to stand on it's own two feet and hasn't looked back. (In fact it created a finance boom from leaving, along with the Taurus projects completion of the Dematerialisation of Stock/Bonds for the London Stock Exchange in 1994 [The project itself is used as a Failed Business Project model because of the number of reattempts at creating it for the 13 years prior to it's completion].)

It's also suggested that many people in Great Britain (Thats England, Wales, Scotland.) wouldn't want to change to a Euro because they prefer the 'British' pound (As it's identifiably British) This could be however manipulated further by certain Media protagonists because of the pounds exchange rate in regards to Euro. (They make more money keeping the pound alive rather than just moving all to one currency.)

As for the Euro being used as a 'Reserve fund', well that's understandable considering the number of countries that now use it as their currency. It has greater stability for that reason.

I guess you are right. But you must not forget that a lot of countries that now have the Euro didnt want it. Like the British, the Dutch were largely against it because they wanted to hold on the their Gulden. Obviously the Dutch got screwed over by their government once again..

wanneszinnig

09-19-07, 11:39 AM

Well I guess it is time to stop dreaming...don't forget that for instance the oilmarket is still runned in $$$...Still I agree dollars realy stink...have you smelled them yet...it is a juky smell...maybe the old guys depicted on them are farting all the time...yee bastards!

Baron Max

09-19-07, 12:58 PM

You need a base standard to measure the amount of money in the world, otherwise you cannot track inflation, since that is the difference between the amount of money in the market and the goods produced. At least that is what I think is the reason

Of course, Sam, but that measure can be in any or all currency. And the rate of exchange is just that ....a rate of exchange. It ain't got shit to do with someone pricing oil in Euros or Dollars or horseshit!

Sam, it's prestige, nothing more, nothing less. But it ain't got nothin' to do with the US economy or anyone else's economy or who buys oil or who doesn't buy oil.

Baron Max

Baron Max

09-19-07, 12:59 PM

...Still I agree dollars realy stink...have you smelled them yet...it is a juky smell...maybe the old guys depicted on them are farting all the time...yee bastards!

So exchange them for a currency that you like. Ain't no big deal, ya' know?

Baron Max

quadraphonics

09-19-07, 01:37 PM

Sam, it's prestige, nothing more, nothing less. But it ain't got nothin' to do with the US economy or anyone else's economy or who buys oil or who doesn't buy oil.

I'd agree that the reason people on this forum get worked up about it is simply prestige and nationalism (and confusion about what the thread title refers to), but there are economic implications to reserve currency status. Basically, the external demand for your currency puts downward pressure on inflation. This happens because people are simply stockpiling your currency, so it's not showing up as demand for actual goods and services, which would drive up prices. This means that you can run lower interest rates than you otherwise would be able to, translating into higher growth and an easier time financing deficits. The potential downside is that, eventually, people don't want to hoard so much of your currency any more, and so they buy other things with it. At that point, all of the "deferred demand" that was stored up in those currency reserves hits you all at once.

s0meguy

09-19-07, 02:26 PM

so, what will this do? a lot of inflation for the dollar and deflation for the euro? how would the american and european economies be effected?

S.A.M.

09-19-07, 02:38 PM

I'd agree that the reason people on this forum get worked up about it is simply prestige and nationalism (and confusion about what the thread title refers to), but there are economic implications to reserve currency status. Basically, the external demand for your currency puts downward pressure on inflation. This happens because people are simply stockpiling your currency, so it's not showing up as demand for actual goods and services, which would drive up prices. This means that you can run lower interest rates than you otherwise would be able to, translating into higher growth and an easier time financing deficits. The potential downside is that, eventually, people don't want to hoard so much of your currency any more, and so they buy other things with it. At that point, all of the "deferred demand" that was stored up in those currency reserves hits you all at once.

How does it affect the inflation rates and purchasing power for the the other currencies? The ones that are hoarding the dollars (China, Japan for example)?

quadraphonics

09-19-07, 03:17 PM

so, what will this do? a lot of inflation for the dollar and deflation for the euro? how would the american and european economies be effected?

It would depend on how quickly a transition from dollars to Euros occurred, and how the various reserve-holders went about making the switch. In the simplest case, they'd simply be buying Euros with their dollars, which would tend to drive the Euro-dollar exchange rate farther apart. But, yeah, the general effect would be inflation in the dollar and deflation in the Euro. Note that those pressures only apply during *changes* in reserve composition. In steady-state situations, the reserve currencies don't affect the source country all that much.

quadraphonics

09-19-07, 03:50 PM

How does it affect the inflation rates and purchasing power for the the other currencies? The ones that are hoarding the dollars (China, Japan for example)?

Again, this depends on exactly how such a transition takes place, and also the roles that the reserve currencies play in the economies in question. In the case of China, the holdings of extensive dollar reserves is driven mainly by monetary policy. I.e. it's used to maintain a certain exchange rate between the yuan and the dollar (formerly a hard peg, now a tight band). So for them to significantly reduce their dollar reserves would be equivalent to abandoning their exchange rate policy. Which would mean that the yuan would appreciate dramatically with respect to the dollar, and China's trade surplus would likely disappear. Basically, such a move would be very risky for any economy that depends on the export sector for growth. The situation would be similar, if not as extreme, in Japan and South Korea, as they also rely on their export sectors fairly heavily.

Some good information is available here:

http://www.frbsf.org/publications/economics/letter/2005/el2005-17.html

Another effect is that the governments in question will see sizable losses in their portfolios, both in terms of the depreciation of their foreign reserves, and in their US assets (which are sizable).

However, what I've said so far really only covers the effects of moving away from dollar reserves; to really answer the question, we also have to consider what happens if Euro reserves increase at the same time. If there's large-scale purchasing of Euros, the effect will be opposite of the selling of dollars. That is, the currencies in question will depreciate with respect to the Euro. While this will help the exports sectors in question, I very much doubt that the EU is capable of providing enough demand to compensate for the loss of the United States as a customer (particularly when we consider that the effects on the dollar-Euro exchange rate will turn the United States into a much more competitive exporter to the European market than these other countries).

So, I think the thing to remember is that a change in reserve currency status would essentially require China and Japan (and others) to make very significant alterations in their reserve portfolios. There's no chance of them doing this in any sort of rapid way, as they'd be shooting themselves in the feet if they did. Any change is likely to happen in a very gradual way, with the dollar reserves not so much being sold off but simply growing at a much slower rate than Euro reserves. It'll come down to a question of to what extent the governments wish to continue to pursue export-led growth, how the EU's economy and fiscal policies work out, and also how America does. However, it's unlikely there will be any fireworks, as too many people (basically, everyone) stand to get burnt in a rapid changeover.

Billy T

09-19-07, 05:58 PM

I agree with all in Quad's post 56, but want to point out that the gradual shift by China (away from selling to the US / financing the US debt, etc) is well under way.

Already China sells more to Europe than to the US. In part because more people live there, but more because of the exchange rate changes. Relative to the Yuan the dollar has grown weaker but the Euro has grown stronger wrt the Yuan. (In both cases nearly a 10% change, ~8% in last two years.) Thus with weaker dollar, US can not buy as much and with stronger Euro, europeans are buing more. This is a global trend - for example, Brazil exports to and imports from China are rapidly growing but trade with US is falling, at least as a percent of the total and as I recall, even in absolute terms.

Also, China's new sovern funds agency is shifting the dollar surplus away from US Treasury bonds. (In August China, Japan and S. Korea were net sellers!)

In more direct answer to thread's question:
I think that the dollar will continue for many years as an "accounting unit" for expressing the value of comodities, but for contracts with future delivery dates, it will be indexed to correct for the dropping value of the dollar or the seller will have option of specified number of Euros instead (right to refuse payment in dollars). Trade contracts between Brazil and Argintina have already switched. - Even stating the contracts in Real instead of dollars as Real is more stable or appreciating.

As Baron noted if you do not like dollars you simply switch to what you do like - most middle East countries selling oil are already doing this to avoid holding dollars. (Part of reason why Euro is rising and dollar is dropping in value. $100/ barrel oil is much closer than many think. - Oil hit $82.51 today, but price in Euros is not rising so rapidly.)

quadraphonics

09-19-07, 06:26 PM

Also, China's new sovern funds agency is shifting the dollar surplus away from US Treasury bonds. (In August China, Japan and S. Korea were net sellers!)

In any particular month, lots of countries are net sellers, so this doesn't tell us much. There have been plenty of months during which China was a net seller of T-bonds over the past few years, even as the overall trend was upward. Indeed, it makes sense that the net sellers in a given month would be countries that did a lot of net buying in previous months.

In more direct answer to thread's question:
I think that the dollar will continue for many years as an "accounting unit" for expressing the value of comodities, but for contracts with future delivery dates, it will be indexed to correct for the dropping value of the dollar or the seller will have option of specified number of Euros instead (right to refuse payment in dollars).

The question was about reserve currency status, not accounting units. In fact, the dollar's share of world reserve currencies peaked back in 2001 and stabilized back in 2005, even as China and the various oil states have been sucking up dollars at a fantastic rate. Much of the adjustment in the share of reserve currencies has been driven by revaluation, rather than actual sales and purchases of currency. That is, a portfolio containing X dollars and Y Euros will change composition over time because the exchange rate changes, even if X and Y remain constant.

Also, a rising oil price means MORE dollars headed for the oil states, which means a boost for the dollar's share of reserve currencies.

In fact, despite all of the talk of changes in foreign reserves, dollar reserves have continued to accumulate, if not as quickly as in previous years. The changes in composition are driven largely by exchange rate fluctations:

http://www.reuters.com/article/reutersEdge/idUSN2959669920070630?pageNumber=1

Klippymitch

09-20-07, 03:45 AM

The United States will go to war before changing the dollar to euro. The country is stubborn and will never admit that it is weaker.

Billy T

09-20-07, 07:51 AM

The United States will go to war before changing the dollar to euro. The country is stubborn and will never admit that it is weaker.Yes, but no admission is required for a current fact. Euro set ALL TIME HIGH today (Takes slightly more than US$1.40 to buy one.)* Oil priced in steadly weakening dollars also set ALL TIME HIGH yesterday ($82.51/ barrel)

US does not need to admit many things that are well know facts, such as fact moon shines by relected sunlight.

BTW IMHO, Asia will, in less than a decade, create an Asian union currency and that, instead of the dollar, will in two decades be the accepted international currency of reserves, contracts etc. (by then US will be a "has been," trying to find some way to escape from the deep depression it has been in for years.)
----------------------
*http://www.nytimes.com/aponline/business/AP-Dollar.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1190285723-dNjOlAjAltG5TDG2apIvzQ

S.A.M.

09-20-07, 08:49 AM

Yes, but no admission is required for a current fact. Euro set ALL TIME HIGH today (Takes slightly more than US$1.40 to buy one.)* Oil priced in steadly weakening dollars also set ALL TIME HIGH yesterday ($82.51/ barrel)

US does not need to admit many things that are well know facts, such as fact moon shines by relected sunlight.

BTW IMHO, Asia will, in less than a decade, create an Asian union currency and that, instead of the dollar, will in two decades be the accepted international currency of reserves, contracts etc. (by then US will be a "has been," trying to find some way to escape from the deep depression it has been in for years.)
----------------------
*http://www.nytimes.com/aponline/business/AP-Dollar.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1190285723-dNjOlAjAltG5TDG2apIvzQ

An Asian Union currency?

Who do you see as the members?

Billy T

09-20-07, 09:14 AM

An Asian Union currency? Who do you see as the members?Most of the discussion has been between Iran*, China, and your India with Japan as an interested, but not active, observer. I no longer have reference for you, but I did post one about a year ago when I first learned of these talks.

BTW what is the RAM bridge myth causing all the stir in India? What sort of god was RAM? Do you have photo of the (NATURAL?) bridge he is reported to have made?
----------------
*Iran is hardly "Asian" but they do get a lot of dollar income that they want to convert. Note if India does support an All Asian currency (perhaps only for foreign trade, not domestic use) Japan may be drug into it also as Japan is making strong efforts to increase trade with India and is investing heavily in India (to develope infrastructure, mainly but also to make and sell aforadable cars, at more comfort and price than Tara's "1 Laka" car (which goes on display at start of 2008)

S.A.M.

09-20-07, 09:46 AM

Most of the discussion has been between Iran*, China, and your India with Japan as an interested, but not active, observer. I no longer have reference for you, but I did post one about a year ago when I first learned of these talks.

BTW what is the RAM bridge myth causing all the stir in India? What sort of god was RAM? Do you have photo of the (NATURAL?) bridge he is reported to have made?
----------------
*Iran is hardly "Asian" but they do get a lot of dollar income that they want to convert. Note if India does support an All Asian currency (perhaps only for foreign trade, not domestic use) Japan may be drug into it also as Japan is making strong efforts to increase trade with India and is investing heavily in India (to develope infrastructure, mainly but also to make and sell aforadable cars, at more comfort and price than Tara's "1 Laka" car (which goes on display at start of 2008)

I haven't heard of any Ram bridge stir, but there is a very old myth of a bridge between Sri lanka and India built by Ram.:)

madanthonywayne

09-20-07, 10:59 AM

The Euro is better looking money anyway.. :p
What? No way. US money has pictures of great men. The founding fathers. What's on the Euros? A bunch of buildings? WTF?

Enmos

09-20-07, 11:04 AM

What? No way. US money has pictures of great men. The founding fathers. What's on the Euros? A bunch of buildings? WTF?

So you think those guys are good looking ? :p
I am talking about aesthetics, not meaning.

quadraphonics

09-20-07, 12:12 PM

The United States will go to war before changing the dollar to euro. The country is stubborn and will never admit that it is weaker.

I'm thinking the title of this thread should have been more specific...

Billy T

09-20-07, 12:48 PM

I haven't heard of any Ram bridge stir, but there is a very old myth of a bridge between Sri lanka and India built by Ram.:)About a week ago, even in one of the Indian fiancial papers (The Financail Times?) I frequently read via the net for free, there was an article about how the congress party had to "back down" - they had declared that the bridge was only a myth, but some of RAM's believers became so upset that the congress party had to reverse it self and effectively say: "No, we do belive in the existance of RAM and his bridge." Check some of you week old press. - Strange I should be telling you this from Brazil, but the world really is flat now days.

madanthonywayne

09-20-07, 01:24 PM

So you think those guys are good looking ? :p
I am talking about aesthetics, not meaning.I think they're better looking than a building. And it's nice that the money has some meaning too.

Billy T

09-20-07, 01:43 PM

I think they're better looking than a building. And it's nice that the money has some meaning too.This is a silly argument about taste, but I can be silly too:
Brazil has large pictures of wild life on the back of its bills (some of which are plastic, not paper to be more durable and harder to counterfit as some clear spots have half of the print on one side and half on the other (in perfect registration), magnetic stipes, micro printing, holograms, etc. - best in the world - and because of the high technical quality, (and lower production cost)Brazil's mint prints the money of more than a dozen other coutries for them -at least one Eruopean nation, but I forget which.)

The back of the one Real has a humming bird feeding two babies in nest, the two has a green sea turtle,...etc.
The front of all bills is the same- a large human face of a "ancient greek - like person of godess"

draqon

09-20-07, 01:44 PM

euro will replace dollar and ruble will replace euro, ruble was already once a great currency in 1800's and it shall rise again

Enmos

09-20-07, 04:19 PM

I think they're better looking than a building. And it's nice that the money has some meaning too.

Sigh to each his own man ;)

madanthonywayne

09-20-07, 10:42 PM

Brazil has large pictures of wild life on the back of its bills (some of which are plastic, not paper to be more durable and harder to counterfit as some clear spots have half of the print on one side and half on the other (in perfect registration), magnetic stipes, micro printing, holograms, etc. - best in the world -

The back of the one Real has a humming bird feeding two babies in nest, the two has a green sea turtle,...etc.
The front of all bills is the same- a large human face of a "ancient greek - like person of godess"
That does sound pretty cool. Especially since you've got the headshot on there. Money just doesn't look right without a picture of somebody on it. I mean, what kind of culture has no one significant enough to put on their currency? I really can't take a country seriously when they have no great men to put on their money.

spuriousmonkey

09-21-07, 02:56 AM

That does sound pretty cool. Especially since you've got the headshot on there. Money just doesn't look right without a picture of somebody on it. I mean, what kind of culture has no one significant enough to put on their currency? I really can't take a country seriously when they have no great men to put on their money.

Vice versa: I can't take a country seriously when they put a man on their money.

1970 dutch 100 guilders
http://home.hccnet.nl/k.otten/Oudgeld/images/100-gulden-1970.jpg
Modernized one in 1977:
http://home.hccnet.nl/k.otten/Oudgeld/images/100-gulden-1977.jpg
Unfortunately once more modernized in 1992:
http://home.hccnet.nl/k.otten/Oudgeld/images/100-gulden-1992.jpg
Money needs to evolve.

spuriousmonkey

09-21-07, 02:57 AM

This one will be my favourite old dutch money forever though:

http://home.hccnet.nl/k.otten/Oudgeld/images/50-gulden-1982.jpg

weep!

With this one as a good second:

http://home.hccnet.nl/k.otten/Oudgeld/images/250-gulden-1985.jpg

Now we have the Euro of course:
http://home.wanadoo.nl/ongering/Euro/briefgeld.htm

Not as good as the 70s series of Dutch money but still 10 lightyears ahead of the dollar.

spuriousmonkey

09-21-07, 03:04 AM

And of course there is no need to put great men on your money. If you are civilized you can also put small girls on it.

http://home.hccnet.nl/k.otten/Oudgeld/images/25-gulden-1945.jpg

s0meguy

09-21-07, 04:44 AM

euro will replace dollar and ruble will replace euro, ruble was already once a great currency in 1800's and it shall rise again
naive wishful thinking

Baron Max

09-21-07, 07:08 AM

And of course there is no need to put great men on your money. If you are civilized you can also put small girls on it.

Hmm, for the pedophiles of the civilized nation to admire and desire??

Baron Max

spuriousmonkey

09-21-07, 08:15 AM

Hmm, for the pedophiles of the civilized nation to admire and desire??

Baron Max

It is remarkable how the average American mind as represented by yourself manages to link a picture of a child to peadophilia.

2inquisitive

09-21-07, 01:42 PM

http://img247.imageshack.us/img247/7541/500eurorle6.jpg

I like this one. Just look at all those zeros!

madanthonywayne

09-21-07, 02:20 PM

And of course there is no need to put great men on your money. If you are civilized you can also put small girls on it.

Animals and little girls? Absurd. Seems to be you're regressing, not evolving.

We have great men on our money. Men of accomplishment. Men to inspire anyone intellegent enough to know who they are. You have birds and little girls? Sounds like a box of cereal.

Nikelodeon

09-21-07, 03:19 PM

Ohh your money is soooo lame! We have the Queen on our money.

2inquisitive

09-21-07, 03:27 PM

Animals and little girls? Absurd. Seems to be you're regressing, not evolving.

We have great men on our money. Men of accomplishment. Men to inspire anyone intellegent enough to know who they are. You have birds and little girls? Sounds like a box of cereal.
Great men of accomplishment. Hmmmm..... Hey Spurious, maybe the Dutch could use that boy with his finger in the dike? :)

S.A.M.

09-21-07, 04:00 PM

You are all pwned; we have Gandhi on ours :worship:

http://upload.wikimedia.org/wikipedia/en/3/3e/Rupees1000.jpg

spuriousmonkey

09-21-07, 04:01 PM

Great men of accomplishment. Hmmmm..... Hey Spurious, maybe the Dutch could use that boy with his finger in the dike? :)

no, they can't. They have the euro now.

Still have the Queen though on the coins.

http://www.nrc.nl/W2/Lab/Euro/euromunt.jpg

madanthonywayne

09-21-07, 06:37 PM

You are all pwned; we have Gandhi on ours :worship:

http://upload.wikimedia.org/wikipedia/en/3/3e/Rupees1000.jpg
How come you always see pictures of old Gandhi? I'd think that would be like fat Elvis. How about young Gandhi:
http://poorwilliam.net/pix/gandhi-young-lawyer.jpg

draqon

09-21-07, 06:43 PM

How come we always see middle aged Gandhi,

here is Gandhi as a child:

http://img222.imageshack.us/img222/7933/464pxyounggandhiix8.jpg

Billy T

09-22-07, 09:24 AM

back in post 60 I said:
"IMHO, Asia will, in less than a decade, create an Asian union currency and that, instead of the dollar, will in two decades be the accepted international currency of reserves, contracts etc."
and gave more details in post 62.

In other posts I have noted the flood of dollars fleeing USA and coming to Brazil (About $32 billion FDI in 2007 expected. Already at end of August, a 41% increase over ALL of 2006 and a 161% increase over all of 2005)

India is also a favorate destination, forcing the value of the rupee up (less than 40 to the dollar now) and making it hard for India's exporters:

" ... With inflation falling to nearly five-year low of 3.32 per cent, analysts said the central bank can afford to intervene in the forex market without fears of the extra money supply stoking price rise.* There is also a strong demand for a cut in interest rates by RBI on the lines of Federal Reserves rate reduction.
Federation of Indian Export Organisations (FIEO) said the RBI should not only intervene directly in the foreign exchange market to support the falling dollar but also cut the interest rates to check the foreign fund flows.
..."
FROM:
http://www.indianexpress.com/story/219752.html

In both India and Brazil, the central banks are huge buyers of the dollars streaming into the country as if they did not the local currency would become even stronger and kill the exporters. In Brazil the central government has not yet created a "sovern fund" but surely will soon as it has added about 100 billion to the reserves in the last year. (Total exceeds any rational need as is greater than total of all external debts!) Most of it is invested in US Treasury bonds, but that too will change soon. (Even world's dumbest central bankers are learning by experience that holding Treasury bonds is a losing investment as dollar is dropping in value more than the interest paid.)

What I do not know, and would like to, is how is India's central bank investing the flood of dollars into India, which it is forced to buy up to keep the rupee from growing even stronger (perhaps on 30 to the dollar?) Has India created its sovern fund yet? If yes, what is its name?

SAM - if you still have any dollars tucked away - sell them for rupees now. Don't get stuck holding the bag when dollar collapses.
--------------------
*Unless you have some better than average understanding of all this you may not see the connections so I will explain: The way the central bank gets the funds to soak up most of the flood of dollars entering the country is to issue (sell) locally bonds to the natives. This puts money in their pockets and they tend to spend much of it. This adds to demand for goods and services and that is a strong driver of inflation. Fortunately the "other side of the same coin" is that the strong local currency permits the importers to import more goods with the same amount of money and that tends to keep the inflation in check. It is a "balancing act art" of the central bank to know how much to the flood of dollars to buy.
For example:
" ... India's edible oil imports rose 10 percent to 3.76 million tons in the 10 months ended August from a year ago, according to the Solvent Extractors Association of India, which represents about 800 oilseed processors. Crude palm oil imports rose 24 percent in August to 276,151 tons from a year earlier, while imports of crude soybean oil climbed 39 percent to 159,324 tons. ..." (good news for Malasia & Indonesia - world's main suppliers of palm oil, which is not a very healthy oil to eat. I.e. the price of palm oil is up 72% YoY! The 39% increase in soy oil prioce is good news for Brazil. I doubt if US will export any despite being the world's largest exporter of soy products a few years ago. Chikens in US must be eating a lot more soy now that GWB's stupid "alcohol from corn" has driven price of corn up so much >100% YoY, I think. Wheat is almost as bad as can make it into alcohol also and get the 50cents per gallon tax money bonus that way too.)
FROM:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2nTPK8c16pE&refer=home

S.A.M.

09-22-07, 09:52 AM

Thanks Billy, I moved most of my dollar assets to rupees over a year ago.

The only changes I know in Indian investments is that we are going to hit the gulf food markets.

Billy T

09-22-07, 10:08 AM

Thanks Billy, I moved most of my dollar assets to rupees over a year ago. Good for you! You must have about 20% profit already. I bought Brazilain four years ago, getting 4 R$/ US$ - Now for a dollar you only get 1.85 R$ - more than 100% profit for me, but I see things coming long before most do.

The only changes I know in Indian investments is that we are going to hit the gulf food markets.Brazil already is selling chickens and other food stocks there. Welcome to the competition. Brazil got a big contract for busses from Saudis. - The buses have no top! - It seems that one is not supposed to have their head covered during part of the Hadge. Brazil's trade with the mid East is rapidly growing but not anything yet compared to that with China, which is even more rapidly expanding.

S.A.M.

09-22-07, 10:11 AM

I bought Brazilain four years ago, getting 4 R$/ US$ - Now for a dollar you only get 1.85 R$ - more than 100% profit for me, but I see things coming long before most do.

Brazil already is selling chickens and other food stocks there. Welcome to the competition. Brazil got a big contract for busses from Saudis. - The buses have no top! - It seems that one is not supposed to have their head covered during part of the Hadge. Brazil's trade with the mid East is rapidly growing but not anything yet compared to that with China, which is even more rapidly expanding.

Yeah, my dad is also a play by ear investor and right now he is grinning from ear to ear. :D

http://economictimes.indiatimes.com/Market_News/BSE_mkt_cap_crosses_Rs_50_trillion/articleshow/2391001.cms

Baron Max

09-22-07, 12:12 PM

Yeah, my dad is also a play by ear investor and right now he is grinning from ear to ear. :D

Is he using that wealth to help the billions of starving Indians? Or is he hoarding it for himself and you?

Baron Max

2inquisitive

09-22-07, 02:08 PM

Billy T,
The 39% increase in soy oil prioce is good news for Brazil. I doubt if US will export any despite being the world's largest exporter of soy products a few years ago.
Now for the other side of the coin. You might want to rethink your 'hoped for' scenario. The increased value of the Real on the global market will make Brazil's soy products cost more on the global market. That will drive up the global price price of soybeans and drive down Brazil's pricing advantage. As the US dollar declines in global value, that makes the soy products sold by the US more competive on the global market, increasing the amount the US will grow and export. Not this year, but in a year or two when the US will again become extremely competative due to the lowered value of the dollar.
Chikens in US must be eating a lot more soy now that GWB's stupid "alcohol from corn" has driven price of corn up so much >100% YoY, I think.
Yes, the farmers that are capable of growing corn can now to do so as they can make a profit on their crops. My friend, who has a few thousand acres of farmland, stopped growing corn several years ago because the money he received for his crops didn't exceed his cost of growing. He made no profit on his corn crops. You do realize that all corn is not grown by large corporations in 'Iowa' don't you Billy T? Or is that fact just inconvenient for your argument? You do realize that the vast majority of the cost for corn products that humans eat (not animal feed) is due to the processing and distribution chain, don't you?
You do realize that Brazil's 'alcohol from sugarcane' program could have been seen as stupid some 29 years ago when it first began with all those government encouragements and guarantees? Did it not drive up the cost of sugar? The US is promoting the establishment of an alcohol infrastructure in the US, just as Brazil did. US farmers already have the machinery and equipment to grow and harvest corn. Corn can be grown practically anywhere in the US, so it was chosen as the first crop to began building the infrastructure around. I do know varieties of sugarcane can easily be grown here in the US. It used to be grown extensively for making sorghum molasses as a sugar substitute during the depression and the leaner years in the south. It is still widely grown and sold as 'Blackstrap molasses' here in the US. Here is one excerpt and link:
Sweet Sorghum is a syrup made from the juice of Sorghum Cane. In years past it was an important source of sweetener. It came into prominence during the 1850's in the United States. By 1888 total US production was 20,000,000 gallons. An 1896 encyclopedia listed the main states that produced sorghum were Indiana, Ohio, Illinois, Kentucky, and Missouri. It was something that many farms grew to some extent. Many just planted enough for their own use while others grew it as a cash crop. Most neighborhoods had at least one farmer that had a mill and evaporating pan. The farmers in the area would bring their cane to them to be squeezed and cooked into syrup. With the decline of the family farm and the easy access to other sweeteners most of these operations have ceased to exist and only a few die-hards still produce this delicious syrup.
http://www.herculesengines.com/sorghum/default.html
When I was a kid, my dad loved molasses and always bought several gallons from local makers. He and my mother knew several dessert recipies that used the syrup. I bring this up because I know the cane can be grown in the US, it is just that the farmers do not have the equipment to harvest the cane itself. If the harvesting can be mechanized easily, I would expect the equipment to be eventually manufactured and sold to the farmers if that seems the best route for OUR alcohol program. Many different options are being studied and evaluated. But as I said, the farmers already have the equipment to harvest the corn grains themselves, so that was chosen as the beginning of the alcohol program.

The Devil Inside

09-22-07, 04:08 PM

Is he using that wealth to help the billions of starving Indians? Or is he hoarding it for himself and you?

Baron Max

what the fuck does this have to do with the thread?
reported.

Billy T

09-22-07, 06:45 PM

....
Now for the other side of the coin. You might want to rethink your 'hoped for' scenario. The increased value of the Real on the global market will make Brazil's soy products cost more on the global market. That will drive up the global price price of soybeans and drive down Brazil's pricing advantage. As the US dollar declines in global value, that makes the soy products sold by the US more competive on the global market, increasing the amount the US will grow and export. Not this year, but in a year or two when the US will again become extremely competative due to the lowered value of the dollar. I think you are quite confused here, but not sure I understand any logic that may be here. So I will take it slow, sentence by sentence in my reply:

The "black cloud is approaching" warnings I have been posting here for a few years and the book I wrote were my feeble efforts to try to prevent the approach of what will be a very bad, if not the worse disaster ever, for US and EU. I certainly do not hope for it - All my children and grand-childern live in the USA. About 6 months ago, I concluded that it was now inevitable so change the tone of my posts from warning to simply chronicaling the approach and explaining how the various factors are interacting. The great ship USA is sinking and can not be saved. I am very sad about that, not hoping for it.

Second sentence has confused cause and effect. The international demand (for all commodities, but I stick with soy to explain) is in large part do to the rapid growth and increase of wealth, living standards in China. The Chinese peasants who moved from the farms (at about a million per month) to work in the factories and previously subsisted on rice is now eating chickens. Those chickens are eating soy grow in Brazil etc. The correct cause and effect starts in this Chinese transformation; that causes a surge in demand for soy, which casues the price paid to Brazil for each ton shipped to rise. That means the importer of soy had to buy more Brazilian Real to pay for his boat load of soy. That make the cost of buying Real (the value of the Real) go up -I.e. the rise in the value of the Real is the "final effect", not the "cause" as you seem to think.

Third sentence suffers from this same erroneous reversal of cause and effect and also seems to conclude illogically. I.e. if world market price of product "S" increases all produces of "S" benefit, but their relative advantages do not significantly change. If Brazil now has an increased advantage relative to US in soy production, it is probably related to the fact that some of best land previously used for soy production in the US is now growing corn and with the higher price of soy, some of the poorer land that required too much fertilizer etc to be profitable in the past is now growing soy at a slight profit. I am not saying this is the case, but if it is then Brazil's advantage would certainly not decrease; however, I suspect that "a rising tide lifts all ships" applies and the relative advantages are not significantly changed by the increase in soy prices.

There is nothing illogical or confused in your fourth sentence, but it does ASSUME that there may be some soy left over for export and this is likely wrong. The US has very little agricultural land not already in production. Probably the fraction planted in soy is actually decreasing, not increasing as you assume it will in response to the higher price. (Corn acerage is certainly expanding.) Also with corn too expensive now to feed to chickens, I expect the domestic demand for soy is increasing so US has no soy for export. (Selling it domestically avoids the cost of shipping to Asia, so that is the more profitable market if there is a tight supply. Only when domestic market would have the price depressed by a surplus is the shipping trans-oceanic shipping justified.)

Your last sentence is true in general, but probably inaplicable to soy if there is none for export. I.e.Yes, some US products with production capacity in excess of domestic demand will sell more over seas.

.... You do realize that all corn is not grown by large corporations in 'Iowa' don't you Billy T? Or is that fact just inconvenient for your argument? You do realize that the vast majority of the cost for corn products that humans eat (not animal feed) is due to the processing and distribution chain, don't you? Yes, but small producers do not have much impact on the price. BTW first money I ever earned, at about age 8, was growing corn. An old depleted field, (reached only by foot as old road was full of trees) was loaned to me for my use. I only got 3 bushels of shucked kernals, but had a local buyer who paid well. - A moonshiner also up in the mountains between West Virginia and Viginia (I am not sure which state "my field" was in. Our house had neither electricity nor running water. I was "home taught" the year we lived there as horseback ride to nearest one room school was 7 miles, round trip.) Also Yes. - The small producer can not live on corn if all the "middle men" take their cut. That is why he sells fresh sweet corn from his stand by side of road, direct to the final consumer.

Thanks for the molasses link - I never likes the stuff. - too sweet and sticky. If I must eat it, please convert it into rum first. :D

madanthonywayne

09-22-07, 10:46 PM

About 6 months ago, I concluded that it was now inevitable so change the tone of my posts from warning to simply chronicaling the approach and explaining how the various factors are interacting. The great ship USA is sinking and can not be saved. I am very sad about that, not hoping for it.
Billy,

I'm hearing ideas like your hopefully nutjob theories from other places these days. I don't personally subscribe to them. I have faith in the American people and our system of government. Sure, we may not retain our position as a colosus bestriding the world; but I think we'll hold our own. Do you really think the authoritarian model is superior?

But regardless, I'm curious as to your ideas on good investments and strategies for the Mad Max world you envision.

I moved not long ago and didn't find a house I liked by the time I sold my old one. So I'm presently renting a house. Now I'm ready to buy. But I'm afraid housing prices are going to drop and leave me holding an overpriced morgage. How much do you think housing prices will drop? What would you suggest?

As far as investments, what do you suggest? Gold? Perhaps companies that make weapons? Or should we all move to Brazil?

iceaura

09-22-07, 11:23 PM

Do you really think the authoritarian model is superior? The authoritarian model is what the US is tending toward.

At some point, damage done to the US economy by these holdovers from Reaganomics will be irreparable - Billy simply thinks that point is passed.

madanthonywayne

09-22-07, 11:55 PM

The authoritarian model is what the US is tending toward.

Maybe, but China, who Billy thinks will soon take over the world, is already there.

2inquisitive

09-23-07, 02:57 AM

Billy T,
I think you are quite confused here, but not sure I understand any logic that may be here. So I will take it slow, sentence by sentence in my reply:
No, I am not confused, and it makes no difference how slowly you reply, I read at my own speed. ;)
The great ship USA is sinking and can not be saved. I am very sad about that, not hoping for it.
You are confused here. I did not respond to your overall 'America is sinking and cannot be saved' scenario as what you 'hoped for'. I quoted your statement that 'I doubt that the US will export any despite being the world's largest exporter of soy products a few years ago'. You are 'hoping'the US will not resume producing and exporting large quantities of soy products so Brazil will have a virtual 'monopoly' in the world market, dominated by China & asian nations. You seem to naively think that American farmers have all their farmland already planted in either corn or soybeans. Not true. Do you not know that the US government places an 'alotment' on most cash crops, such as corn, soybeans and cotton, that each farmer cannot exceed? For instance, my friend has over well 3,000 acres of good farmland suitable for growing soybeans, I don't know the exact acerage. His alotment for soybeans has always been around 1,000 acres. That means he can plant 1,000 acres, or less than 1,000 acres, but not all the 3,000+ acres he owns. If he plants much less than 1,000 acres over two years in a row, his alotment decreases for the next year. It is a governmental means of controlling supply, so that the market is not flooded by more soybeans (or whatever) than can be sold without driving the per bushel price of beans down to a level that they are unprofitible for the farmer to grow. Same with corn. At present, much of this good farmland with level fields and good drainage is planted in alfafa and other grasses for cattle grazing. He could use other land that he owns, such as unlevel land where water tends to make large puddles after large rainfalls, for planting the grasses. And he can also spend money to improve those unlevel plots of land that are now not good for cash crops. So you see Billy T, American farmers can grow much more of any of the cash crops if the government raises their alotments and there is enough demand for those crops that the farmer can make a profit. China will buy their soy products at the world market price. They are not 'locked in' to buying from Brazil or the US. If the Brazilian Real becomes too strong and the US dollar loses value compared to their yuan, they will buy from the US instead of Brazil. Right now, it only takes about 4 Chinese yuan to purchase one Brazilian Real. It takes about 7.5 yuan to purchase one American dollar. If the rates move to where the dollar and the Real are priced evenly wrt the yuan, Brazil loses its advantage over the US. That will happen if the Real keeps increasing in value and the dollar keeps dropping. At present, China pegs their yuan to the US dollar. If the dollar props in value, so does the yuan. The Real then increases in value. China wants to keep their yuan low compared to the dollar so they have a large export market. The low yuan to dollar ratio hurts the US exporter, helps the US importer. Do you understand now, Billy T? :D

Third sentence suffers from this same erroneous reversal of cause and effect and also seems to conclude illogically. I.e. if world market price of product "S" increases all produces of "S" benefit, but their relative advantages do not significantly change.
No Billy T, I did not state anything like that. I stated if the US dollar falls relative to the yuan, it makes the US exports more affordable to the Chinese. If the Real increase in value relative to the yuan, it makes Brazilian exports more expensive to the Chinese. Duh. :rolleyes:
If Brazil now has an increased advantage relative to US in soy production, it is probably related to the fact that some of best land previously used for soy production in the US is now growing corn and with the higher price of soy, some of the poorer land that required too much fertilizer etc to be profitable in the past is now growing soy at a slight profit.
Again, you show a lack of knowledge in land usage. Soybeans require better land than corn. Crops are rotated these days Billy T, not the same crop is grown on the same land year after year. Those large Iowa corporations may deplete their lands, but the individual farmers take better care of their farmland. The US Soil Conservation Service has offices located in all farming states. They will come to the farmer's fields and do a soil analysis to determine the best course of action for the farmer to take. They may recommend a crop rotation if the land is being depleted of some essential nutrient. In any case, they will recommend the best fertilizer to use for a particular crop and patch of land. Fertilizers have varying amounts of nutrients, such as nitrogen content, and the farmer neither wants to 'burn up' his crop with too much fertilizer or use too little of some particular neutrient if it is needed for a certain crop. Farming is much more scientific these days than when you were a child. Did you know much of the equipment has air conditioning, stereos, power steering, and GPS units?

spuriousmonkey

09-23-07, 04:16 AM

No Billy T, I did not state anything like that. I stated if the US dollar falls relative to the yuan, it makes the US exports more affordable to the Chinese. If the Real increase in value relative to the yuan, it makes Brazilian exports more expensive to the Chinese. Duh. :rolleyes:

Maybe, but most raw resources are sold in dollars. If the dollar is low than maybe the Euro countries have a disadantage in export, but at the same time this is diminished by the fact that the companies get their resources in the cheap Euro.

or whatever

2inquisitive

09-23-07, 06:00 AM

Maybe, but most raw resources are sold in dollars. If the dollar is low than maybe the Euro countries have a disadantage in export, but at the same time this is diminished by the fact that the companies get their resources in the cheap Euro.

or whatever
Yes, that's true spurious, except that the Euro is becomming more valuable rather than cheap. One Euro will buy more imported resources, and products, than it used to. Europe will have to be careful not to fall into the same trap that the US did, deciding it is cheaper to import products from China and other countries than it is to manufactor it themselves. The wealth then goes to the 'brokers', the importers and the retail supply channels. The jobs in the manufactoring sector will dry up, as much of them have in the US. It will be harder for the European farmer to export his produce. But the price of imported shoes, clothing, small electronic items and non-essential junk will be so cheap it will be hard to resist. Then you have just became another consumerist nation like the US is now. :( And don't forget, even though the Euro buys more US dollars, the price of a barrel of oil increases in dollars as the dollar falls to effectively offset the increased purchasing power of the Euro in the necessary energy sector. But Billy T is stating that Brazil refuses to accept US dollars for their exports. As the gap between the Real and the dollar closes, the US produce will effectively become a better bargin on the world market.

spuriousmonkey

09-23-07, 07:34 AM

I live in Finland and if possible I always buy the Finnish product or produce.

It's luckily easy to do so here because everything that is made in Finland gets a special sign.

And the criteria for it are quite strict.

I think it is the only way to safeguard the foundations for our own society. By purchasing local stuff, even though it means that you pay more.

Just need to convince everybody, although here in Finland people are very patriotic regarding this issue. They will pay thrice as much for tomatoes just because they come from Finland for instance.

Billy T

09-23-07, 07:55 AM

To 2 inqusitive:

Not reproducing your post as I agree with most and you make some good points, especially the "acreage control" effects on the production volume of different crops. Yes that is keeping the price from being depressed by over production but is not the reason for it, as you state. There is a federal price floor for some 13 or 14 different crops and the acreage is controlled to limit how much this "minimum price support" will cost the government. This control of acrage is easier to administer, but has the preverse effect of increasing the use of fertilizer etc. to grow more on each acre than free market economics would cause.

I knew all about the acreage control but had forgotten about it. Thanks for reminding me. Next time I launch my tirade against the US's "central planning" of the economy, I will point my finger at the Dept. of Agriculture as well as the IRS. - The US is far from the free market economy that most think it has. the special interest tax laws and farm supports, controls, alcohol's 50cents /gallon bonus etc. are just a few of the most glaring examples few see as a form of "central planning" even the old USSR's planners could envy for its effectiveness! In some ways China has more "free market" capitalism than the US at the lower decision levels. Their high level of corruption also makes most of the few detailed rules they do have avoidable, for a small, well-placed fee, paid "under the table."

For example, madanthonywayne and many others believe the myth that US has a "free market" and China does not. I think the actual facts (China is less centrally controlled at the detailed level) is part of the reason China is growing more than three times faster than the US. For one who is quite liberal (ex-civil rights leader etc.) I am an unusually strong support of free market capitalism. I only wish it existed in the US instead of the very detailed IRS and farm interference in economic decisions. The "IRS factor" DOMINATES most major business and even personal (buy or rent for example) economic decisions in the US but few see clearly enough to recognize that is is very strong "central planning" in disguise.
---------------------
I was gald to learn that you were not thinking I was happy / hoping for/ the approaching "black cloud." I.e. you though I was hoping for Brazil to dominate the soy market. I have a mixed POV on this. I think of my self as an American still and have a strong personal financial interest in wanting Brazil to fail. (I could live like a king on ONLY my social security income a few years ago when the dollar would buy 4 Real, but not now that it only buys 1.85R$. - That barely covers my expenses.) Yet there is much I admire about Brazil and liberal that I am, I hate to see so many in real poverty. So I am also "rooting for Brazil" even if the strong Real is hurting me economically. (I own stocks, via ADRs, in several Brazilian companies -and they have risen greatly so my net worth, on paper, not my income, increases with the Real gaining on the dollar even though the value of my Social Secrity checks in Brazil is now less than half what it was.) I am "rooting for the US" also as all my children and grand children live there. Both could mutually advance, but GWB's war and economic policies have IMHO, doomed the USA and Brazil is doomed to be at least economically a "colony of China" shipping raw materials, food stocks, and perhaps energy (alcohol and a little oil) to China.
---------------------------
You had said: "That will drive up the global price price of soybeans and drive down Brazil's pricing advantage."
My reply may have misunderstood you. I thought you were falsely stating that the rising price of soy would drive down Brazil's price advantage, but now understand that you were were stating two effects stimming from the same cause.

SUMMARY: we basically agree.

Billy T

09-23-07, 08:37 AM

...I have faith in the American people and our system of government. Sure, we may not retain our position as a colosus bestriding the world; but I think we'll hold our own. Do you really think the authoritarian model is superior?Please look at my comment to 2inqusitive where your name is bold. - I was only guessing at your POV so perhaps you will give some details about what is the "American system" AS IT IMPACTS ECONOIMICS. Certainly US is emensely better politically than China's, but I am not sure it is economically for reason stated in my post to 2inquesitive. In fact US's economy is very "centrally directed/ planned" and at the working, low-level decision making China's is quite "free market."

But regardless, I'm curious as to your ideas on good investments and strategies for the Mad Max world you envision.
I moved not long ago and didn't find a house I liked by the time I sold my old one. So I'm presently renting a house. Now I'm ready to buy. But I'm afraid housing prices are going to drop and leave me holding an overpriced morgage. How much do you think housing prices will drop? What would you suggest?
As far as investments, what do you suggest? Gold? Perhaps companies that make weapons? Or should we all move to Brazil?OK. in order:
Buy ADRs (If you have dollars, GDRs if you have Euros) or if you insist on staying in dollars, TIPs.

Selling house when you did was good move. I do not know how much rents will go up or how important the IRS factor (deductable mortage interests) is in your case and area, but in general, as more people lose their homes or sell at depressed price, there will be an increased demand of both price extemes in the housing market (at the high end, this is because GWB is boosting the incomes of the rich so much - for example only billionaries made Forbes' richest 400 list this year. 100 million is now "just chicken feed.") Also those who can not even "down size" to buy house at low end will be new renters, so rents are going up. Hence, I would tend to sign fixed-rent multi-year rental contract if only economics is the decision (rarely is) and the IRS factor does not over ride all (will if you are high income, needing the deduction - US's central planning in action) I expect a drop overn next two years in average house price of about 10 to 15% (more) but that is very regionally variable.

Gold is now at or near all time high, and central banks will be selling to finance part of their bail-out so do not like it at all now (never have -dangerous to keep at home, earns nothing, costly to safely store in bank box, & if only a paper certificate - there is a good chance it does not even exist in volume equal to all certificates sold.).

If young, single, English speaker living in the USA, I would serious consider moving to India. Perhaps, if you were more nice to her, SAM could fix you up with one of her friends. ;) I think you are an MD, are you not? If true, I would at the very least learn what would be required for you to practice in India. Living in a foreign country is very interesting. India has a culture that you will never fully understand - I would like to live there, just to learn more of it. (Beautiful girls too.)

S.A.M.

09-23-07, 08:40 AM

Arrgh Billy, we have a huge young population already, for heavens sake don't send the Americans here!! :D

Billy T

09-23-07, 09:02 AM

...Billy T is stating that Brazil refuses to accept US dollars for their exports. ...NO, not true. I wish that were true as it would stem the rise in the Real (my SS income would stop dropping when converted to Reals) and if China paid in Yuan, instead of its surplus dollars then Brazil could hold them and gain as they appreciate, instead of own US Treasury bonds, which are dropping in value.

At the very least, Brazil needs to create a sovern fund to buy something real (instead of Treasury printed paper) with it dollars. The Brazilain central bank has been forced to buy about 100 billion dollars in last year to support the dollar and reserves now stand at about 165 Billion - more than all the external debt! "De-industralization" in the high labor cost manufacturing is occurring, throwing voters out of jobs. - Why central bank, not independant of political pressure, is trying to prop up the dollar.

Much better (as would help both me and Brazil) would be simple to insist China pay in Yuan.

Billy T

09-23-07, 09:17 AM

Arrgh Billy, we have a huge young population already, for heavens sake don't send the Americans here!! :DYes, but not enough in smaller (few million at most) cities. There was full page in my local paper on India's population today. Three of the top ten largest cities are Indian. (second only to Toyko is Mumbai, 21.9e6; New Deli, 18.6e6; Calcuta,17.0e6). Sao Paulo is number 4, with20.5e6, just ahead of New York,19.9e6 and Mexico City is third largest with21.6e6.

The really surprizing thing is how rural India is -70% live on agricultural basis in rural areas. In Brazil it is the other way around - more than 70% live in cities! Farming in Brazil is very industralized - I have seen photos of at least 20 large, air -conditioned, combines proceeding side-by-side across fields that strech to the horizon. Even sugar cane is now more than 40% machine cut but expanding so rapidly that it sill is requiring more cutters annually despite the rapid converison to machine harvesting. (Many of the cutters work on land too steep for machine cutting.)

S.A.M.

09-23-07, 09:29 AM

Yes, but not enough in smaller (few million at most) cities. There was full page in my local paper on India's population today. Three of the top ten largest cities are Indian. (second only to Toyko is Mumbai, 21.9e6; New Deli, 18.6e6; Calcuta,17.0e6). Sao Paulo is number 4, with20.5e6, just ahead of New York,19.9e6 and Mexico City is third largest with21.6e6.

The really surprizing thing is how rural India is -70% live on agricultural basis in rural areas. In Brazil it is the other way around - more than 70% live in cities! Farming in Brazil is very industralized - I have seen photos of at least 20 large, air -conditioned, combines proceeding side-by-side across fields that strech to the horizon. Even sugar cane is now more than 40% machine cut but expanding so rapidly that it sill is requiring more cutters annually despite the rapid converison to machine harvesting. (Many of the cutters work on land too steep for machine cutting.)

Indians are very "land loving" people; even people in the cities have rural retreats.:)

Billy T

09-23-07, 09:58 AM

Indians are very "land loving" people; even people in the cities have rural retreats.:)Then a good investment for you is to buy some farm not more than two hour's drive (when the roads are "cow and hole" free, from your city.):D BTW, Where do you live? I have always liked this near city growth path farm land as it will greatly appreciate and as farm land will not be taxed too heavly (I at least nominally raised bees* on some I sold at 10 fold or more profits, to keep the "farm tax status" - I did all the surveying subdivision into individual lots myself self also, but the urban planners, regulators now make you pay a registered civil engineer for that now in Maryland where I did this.)
--------------------------
*Very small investment "farming" and less than 1 hour/month in summer only labor required! (Mainly open hive and kill any queen cells being developed for a swarm.) I even paid a few dollars in taxes on my false "honey profits." - what little honey I got with so little effort, I actually ate of gave to friends. I never really sold any.

madanthonywayne

09-23-07, 04:37 PM

For example, madanthonywayne and many others believe the myth that US has a "free market" and China does not. I think the actual facts (China is less centrally controlled at the detailed level) is part of the reason China is growing more than three times faster than the US. For one who is quite liberal (ex-civil rights leader etc.) I am an unusually strong support of free market capitalism. I only wish it existed in the US instead of the very detailed IRS and farm interference in economic decisions. The "IRS factor" DOMINATES most major business and even personal (buy or rent for example) economic decisions in the US but few see clearly enough to recognize that is is very strong "central planning" in disguise.I'm aware the US has a "mixed" economy. I'd love to see a flat tax with no deductions. Simple, and it would cut way back on government interference in the economy. I'd also like to see a balanced budget ammendment. I really hope congress doesn't pass some kind of socialized healthcare plan, as it would just push our government into debt even faster.

Why do you think the problems in the US can not be corrected? China is now growing like crazy after being outright communists. Georgia (the country) nowadays seems more American than America, after decades under Soviet domination. How is our situtation worse than theirs? We faced the great depression and WW2 and emerged stronger than ever.

Personally, I've done pretty well. I'm forty. An OD (Optometrist, not sure if they even have those in India?), and have four kids. Where we live we have great schools. Pretty low cost of living. My oldest son is 17. He's planning to go to Purdue or Rose Hulman to become some kind of engineer next year. Other kids still in grade school Anyway, I'm not really in the market for a move to India. But I too find Indian girls hot.

Who do you favor in the next election? What would you do if you were president? In other words, what does the US need to do, in your opinion, to get back on the right track?

PS The other day as I was driving down I69 to one of my satelite offices, Glen Beck came on the radio and started talking about the economy. He mentioned the housing bubble, the weak dollar, and then argued that Brazil has a stronger economy than the US. This brought you to mind.

Billy T

09-23-07, 05:37 PM

...Who do you favor in the next election?...I would really like to reelect GWB as then the depression that is coming would be recognized as his. I do not think anything can be done to prevent it from being the termination of next "6Lcycle" which is just now begining again with step 1 (the "Expand Liquidity to solve current problem" phase) See my thread in world forum, "Is today start of perfect financial storm? (caused by "6L cycle")" the six "L"s (phases or steps) are definde in post one of that thread.

OK too late for you to go to India. but not for the 17 year old son. - suggest he study civil engineering if he likes working out doors. India's need is fantastic in this field (especially if he has an "urban minor"). For example, the roads are terrrible but greatly expanding and improving. Approximately 50 elevated highways to get traffic thru cites are on the drawing boards now! - Transport is an unbeleivable problem in India. India has worl'd most rapid growth in air traffic, needs many new airports etc. also. To make matters worse, in January 2008 Tata motors will unveil its "1 lakh" (100,000 RUPEES) car (originally when anounced only US$2000 but now takes 2500 dollars to buy a lakh and will take at least $3000 due to continued drop in dollar value when actually on sale in India. Probably will cost $6 or 7 thousand dollars when it kills Detroit.)*

On taxing I favor a progressive not flat tax with essentailly no deductions but a few may be good for society, such as for education and in countries not repoducing them selves, for babies and children. That much "social enginnering/ central planning is OK with me, but I am sure I could write the entrie tax code on a single 3by5 index card (perhaps using both sides after I tried to keep to one)

BTW did you see that in some parts of Russia they just had their third "Make a baby day" ? All recently married couples were instructed to take the dayoff. Any that have a baby exaclty 9 months later get big monitary prize and one extra lucky couple gets a new house in a drawing of all with new babies, I think. Some European countries are givening bonus for babies now also.
----------------
*Tata is one of my oldest India ADRs. Thus, I have heard most of the rumors about it. (I routinely read Indian financial papers via the internet and even go occasionaly to the Indian councilate here in Sao Paulo - a few blocks from my apartment to read old magazines, etc.) It will probably have automatic contiuous shift gears (Tata sign contract from their maker about a year ago. A good selling point for first time drivers). About 30 to 50 hp motor with top speed of 50 or 60 mph. An all plastic body, color molded in - never rust, no expense to paint, easy to repair if damaged. Seats 4 American easy up to 6 smaller Indians. to get 50 to 80mp gallon. A great city car to own, not bad on the highway. Every imaginable fuel has been rummored, but I bet it is gasoline, perhaps tolerating high percent of alcohol or 100% of benzine etc. (Like the old original 36 HP VW bettles with low compression could. low compression is not as efficient, but permits lower temperatures, perhaps air cooling, and less stressed metal also makes less weight - a good choic I think.)

madanthonywayne

09-23-07, 07:23 PM

To make matters worse, in January 2008 Tata motors will unveil its "1 lakh" (100,000 RUPEES) car (originally when anounced only US$2000 but now takes 2500 dollars to buy a lakh and will take at least $3000 due to continued drop in dollar value when actually on sale in India. Probably will cost $6 or 7 thousand dollars when it kills Detroit.)*
That car sounds a lot like the old Geo Metro I bought in the early nineties brand new for just under six grand. It got over 50 mpg. Really a great little car. Sadly, it didn't seem to hold its value and I was offered only $250 on it for a trade in. I ended up just giving it to my sister who proceeded to immediately wreck it!

Clockwood

09-23-07, 11:00 PM

The Euro's use is spreading mainly because it has little real competition. Just about every local currency currently in existence is so unstable that nobody will touch them. That leaves only two real choices: The Euro or the American dollar... and anything even vaguely associated with America is believed to cause everything from AIDS to hurricanes by a lot of people.

Its more of a cultural choice than an economic one. I expect both will continue to be used in their respective circles until some suitably unpleasant set of events knocks the source of one or the other down. Personally, I like to think it will be Europe which which takes a header... but that is grounded in pride more than anything else.

In America, however, you can be assured that the citizenry will accept nothing less than the American dollar: again, for cultural reasons. Accepting the Euro into common circulation would be seen as, quite simply, making our nation their bitch. Any politician who seriously tries to get a change like that passed would, if he is not marginalized first, have to flee for his life from a mob with guns and torches. It would be taken as treason in many circles.

S.A.M.

09-23-07, 11:12 PM

Billy T:

The Economic Times (http://economictimes.indiatimes.com/) is the staple for Indian economic news.

Billy T

09-24-07, 12:11 PM

The Economic Times (http://economictimes.indiatimes.com/) is the staple for Indian economic news.Thanks I will read it more often. I also read:
http://www.thehindubusinessline.com/
http://www.financialexpress.com/

I had a total of about 5 in my old computer's "favorites" but the hard drive crashed and I have not bothered to reconstruct them as these three seem to cover India well.

madanthonywayne

09-24-07, 01:05 PM

On taxing I favor a progressive not flat tax with essentailly no deductions but a few may be good for society, such as for education and in countries not repoducing them selves, for babies and children. That much "social enginnering/ central planning is OK with me, but I am sure I could write the entrie tax code on a single 3by5 index card (perhaps using both sides after I tried to keep to one)
That surprises me for a self professed captitalist. I view higher rates on higher earners as "punishing" success. I'd bet a single low rate (say 15% with no taxes on the first 15 or 20 k, that results in many of the poor paying no taxes. Progressive enough for me) would get the wealthy to actually pay more taxes as it would no longer be worth their while to go to great lengths to avoid paying taxes. And while I agree the deductions you mention are worthy causes, I think any deductions leaves to door open to all deductions. So get rid of them all.
BTW did you see that in some parts of Russia they just had their third "Make a baby day" ? All recently married couples were instructed to take the dayoff. Any that have a baby exaclty 9 months later get big monitary prize and one extra lucky couple gets a new house in a drawing of all with new babies, I think. Some European countries are givening bonus for babies now also.
Yes. I started a thread on it called "Day off for sex". It's funny that so many people still think overpopulation is a problem when most Western nations are experiencing negative growth.

Billy T

09-24-07, 04:20 PM

That surprises me for a self professed captitalist. I view higher rates on higher earners as "punishing" success. I'd bet a single low rate (say 15% with no taxes on the first 15 or 20 k, that results in many of the poor paying no taxes. Progressive enough for me)....I would not object much to a simple flat tax as that may be the only way the tax code could be made less destructive (central planning in disguise), However, I do not like "discontinuties" that by their very nature distore the economic decision for those near the "break ponts" Thus I would tax even the poor at a very low rate* of course, but as even with computer filling, which they may not have ability to do, I would have a threshold on filing being required. (Back years ago Maryland had this - the state had figured out how much it cost MD to process (BY CLERKS READING ETC) each tax return and if your taxes due were less than they asked you not to file. (essentially forgave the tax due) My childerned form birth, always had CDs that provided a few pennies income in their names just below that amount. One year a saving and loan declared a small unexpected Christmas bonus - I was pissed I had to file MD return and pay more than that bonus for them.

I was very poor as child. I am still very "annal retentive" or frugal (I prefer that to the "cheap" my children call me) when there is no need for this (I am in some sense insane, but do not feel comfortable doing other wise. I gain totally irrational pleasure if I can get a good discount on something I had to buy anyway.) Because I know directly how unfair the accident of birth is, I have always tried to help those who have been seriously hurt by it. This is entirely consistent with being a "capitalist." Capitalism, despite its many faults, when combined with democaracy, is by far the best system for advancing benefits to the poor. I do not know if it is true now, but not too many years ago, the "poverty line" in the USA was above the average wage in most countries, even Canada!

---------------------------
*there are no "break points" in the current IRS code after the first and it is progressive at about the right rate, I think. Perhaps the top brackets should be a little higher - hurts to suggest that. Despite my being one and supporting "capitalism" there is a touch of red in me - I think there is much social merit in "From each according to his means and to each according to his needs," but oppose that if it destroys incentives also. - Where the brake is is a "judgement call," tough to make. I think US was (and to some extent still is) very lucky to have some of the very rich quite socially oriented. As I love libraries, Carnegy is my hero in this area. The social good he did is beyond measure. I read many books in one of his as a youth, too poor to buy a book.

dixonmassey

09-24-07, 04:49 PM

economy. I'd love to see a flat tax with no deductions. Simple, and it would cut way back on government interference in the economy. Unfortunately, without government interference modern economy is hardly possible. The less interference, the more chances you might get trouble with keeping your lavish lifestyle intact (that includes machine gun in every window).

I'd also like to see a balanced budget ammendment. I really hope congress doesn't pass some kind of socialized healthcare plan, as it would just push our government into debt even faster. That's impossible too, since imbalances of a budget ballance the imballances of capitalism.

Why do you think the problems in the US can not be corrected? Yes, they can, IF, the way to forfeit debt (i.e. steal) will be found. Megainflation would work just fine.

China is now growing like crazy after being outright communists. Georgia (the country) nowadays seems more American than America, after decades under Soviet domination. You might not know but Georgia today is 100 times (not much exaggeration there) poorer than under Soviet domination and there is no hope in sight. If Russia will choose to kick all illegals back to Georgia, it's going to be genocide there.

How is our situtation worse than theirs? We faced the great depression and WW2 and emerged stronger than ever. WW2 and destruction of enemies (and allies) helped to get over depression. Today, all potential competitors are NOT in ruins like 60 years ago, which leads to interesting thoughts.

Personally, I've done pretty well. thank AMA. Whitecolor union (de facto) ain't that bad, if it benefits you. That's poorer slobs unions are a danger to economy and American way of life.

dixonmassey

09-24-07, 05:05 PM

I don't get why flat tax is so attractive to obviously not so rich people whose very livelyhood depends on the proportional taxing. Flat tax = no middle, simple as that. Punishing success? Common, money make money, we all know about it, money = power, we know about that too. It's Canadian mega millionaire's words that making a first million is hard, the rest is certainty. Some people have gift in $ accumulating, it's just another skill, like piano playing, there is no reason whatsoever letting these people rule/ruin the lives of the rest. Besides, proportional taxing does nothing to continuously growing income gap (money, not labor, make money in this world, after all). Ever growing income gap + limited resources = certain explosion & revaluation of societary goals in the future. Since feeding people with promises of science miracles and rising tide contradicts reality of the closed Earth system.

madanthonywayne

09-24-07, 05:12 PM

I would not object much to a simple flat tax as that may be the only way the tax code could be made less destructive (central planning in disguise), However, I do not like "discontinuties" that by their very nature distore the economic decision for those near the "break ponts" This I would tax even the poor at a very low rate of course, butas even with computer filling, which they may not have ability to do, I would have a threshold on filing being required.
I see your point here. But, as with deductions, having different rates leaves the door open to recreate the mess we have now. I say no deductions, one rate only.

Billy T

09-24-07, 05:43 PM

I see your point here. But, as with deductions, having different rates leaves the door open to recreate the mess we have now....I do not think that is necessarily true. The main prevention of the mess we have now is the simple concept that "income is income" I.e. income does not come in a thousand different "flavors" like capital gains, rent from depressed area housing, dividens, etc. oil depletions exemptions, all with special rules and offsets different.

BTW I had to leave for an hour or so and only now edited my last post expanding it with footnotes etc. - you may want to look at it again.

Billy T

10-22-07, 12:47 PM

Perhaps the "YED" will, but probably not as the YED was invented by Billy T. One YED has value of (0.01 Yen+1 Euro+1 Dollars)/3 = 1.1868$* at close of busness Monday 21Oct07.
(The YED's symbol is $*.) Thus, a dollar buys about 0.84$* now and Oil costs approximately 75$*/ barrel now. No government can print YED so it is not as prone to run-away inflation as its components are. In fact, printed YEDs do not exist.

The YED is only an accounting tool, intended to make life hell for big drug dealers and bank robbers etc, as all YED transactions leave records for the police. YEDs can not stolen with guns, etc. Thus no one will be killed in a liquor store holdup if its customers pay on their YED card account. etc. However, for a long time some Dollars, Euros and Yen still circulate, but ever more rarely as the safer YED use spreads and cash registers are replaced by YED card swipe terminals in stores etc. Some store may keep an old cash register in the back for occasional use, but that invites robbers so few will do so eventually. No government needs to do anything to make the switch to YEDs. (Which is good as they are generally only able to screw things up. :mad: :p :D )

Note $* can be pronounced "dollar star" (or "star dollar" depending on relative positon of adjactive and noun in your native language) or one can say "YED," which rhymes with "Bed." Also *$, star dollar, is an acceptible symbol for the YED. English (and adjective first languages in general) may prefer that. Also note the "YED card swipe machine" is just the regular charge card swipe machine, with some slight conversion software added somewhere in the data stream. Banks may charge slight fee to convert your charge card to both dollar and YEDs, but I doubt they will. (Competive advantage to the ones that do not is too big.) If you prefer you can transfer dollars to YED accounts whenever you want some protection against the continued drop in the value of the dollar. (Not as good as buying ADRs, but better than nothing.) Banks may limit the number of free dollar to YED and YED to dollar transactions each month to limit excessive speculative activity. Any bank chosing to offer a YED account can do so now. (No fee to the YED inventor.) I would like to open one now for my US children's protection against dollar falling more as almost all think will certainly be the case.

Any comments on my idea / invention?

Dollar falls to six-week low after G7 meeting
By Steve Goldstein
"... LONDON (MarketWatch) -- The U.S. dollar fell to a six-week low on Monday vs. the Japanese yen as investors continued to shun equities and as a meeting of leading industrialized nations failed to rally support for the greenback.
The dollar fell to as low as 113.23 yen and in European trading was at 113.91 yen vs. 115.10 yen on Friday.
The euro hit a new high of $1.4348 against the dollar, and was up to $1.4310 from $1.4281 late Friday.

The Group of Seven leading industrialized nations over the weekend called for China to accelerate the pace of the yuan's appreciation, ... The G7 statement does not mention the weak dollar or the strong euro, dashing the hopes held by some in Europe that the group would say something to stop the slide in the dollar against the euro. ... The analysts suggested this was a "green light" to push the dollar lower.

Risk aversion was also a theme after Friday's big fall in U.S. stocks carried over to Asia and Europe on Monday, with declines in stock markets in Tokyo, Hong Kong, London and Frankfurt. Risk aversion tends to help the Japanese yen, as traders cancel so-called carry trades in which they borrow the low-yielding yen to reinvest elsewhere. ..."

FROM:
MarketWatch, 4:37 AM ET Oct 22, 2007

2inquisitive

10-22-07, 02:07 PM

Why do you believe the sliding dollar is catastrophic for the US, Billy T? The US is letting the dollar fall intentionally because it has been too strong, leading to the huge US trade imbalances. The primary concern is China's undervalued yuan, which gives them a huge advantage in international exports. China has refused to increase the value of the yuan, pegging it to the dollar. A squeeze-play is going on, to force China to revalue its yuan. Most other currencies of the world are also dropping as this unfolds, including the Brazilian Real.
Oct. 22 (Bloomberg) -- The yen rose the most against the euro in almost seven weeks on speculation slowing economic growth will encourage carry-trade investors to reduce investments financed by borrowing in Japan.

Japan's yen increased versus all but three of the 16 most actively traded currencies after the Group of Seven nations said in a statement on Oct. 19 that the rising cost of credit, record oil prices and the U.S. housing slump will sap global expansion. European and Asian equities fell on the G-7 outlook.

``There is only one game in town, risk aversion,'' said Alan Ruskin, head of international currency strategy in North America in Greenwich, Connecticut, at RBS Greenwich Capital Markets Inc. ``The credit issue is back in the front of people's minds.''

The yen rose 1.1 percent to 161.99 per euro at 1:38 p.m. in New York after touching 160.48, the highest since Sept. 18. Japan's currency was little changed at 114.39 per dollar after touching 113.26, the strongest since Sept. 10.

In the carry trade, investors borrow in countries with low interest rates, such as Japan, and invest the proceeds where rates are higher. Overnight lending rates in Japan average 0.5 percent, compared with 6.5 percent in Australia and 8.25 percent in New Zealand.

The yen rose more than 1 percent against the Australian and New Zealand dollars, two beneficiaries of the carry trade. Japan's currency also increased 1.3 percent against Brazil's real and 1 percent versus the South African rand.
The currency also dropped as the nation's current account surplus narrowed, said Marcelo Voss, chief economist in Sao Paulo at Liquidez DTVM, a Brazilian brokerage. A smaller surplus suggests there will be less need for Brazilian exporters to convert foreign proceeds into reais.

Brazil's current account surplus narrowed to $471 million in September from a surplus of $1.34 billion in August, the central bank said.
http://www.bloomberg.com/apps/news?pid=20602081&sid=aKKpWmmV9LS0&refer=benchmark_currency_rates

Billy T

10-22-07, 02:55 PM

Why do you believe the sliding dollar is catastrophic for the US, Billy T? ...If it remains only a slow slide down, that will help the US economy (boost some exports, cut some imports, even perhaps keep a few jobs from being "outsourced"); however as you well know nothing in economics is isolated from many other facts.

A very ugly fact is that most, if not all, holders of US Treasury paper gained nothing in recent years. - In fact, lost about 5 or 6% of their purchasing power as measured by the number of dollars required to buy their local currency. (They would have been better off to have sold dollars than to have bought them buy far.)* For example, in Brazil's case averaged over the last three years The dollar has bought about 15% fewer Real EVERY YEAR for three years and the Treasury interest paid has been less than 6%. Few have been losing 9% a year as Brazilians holding US Treasury paper ("matress dollars" included) have, but eveyone (with Turkey as current possible exception because a probable civil war does make even a dropping dollar look good) has lost significantly on their holdings of Treasury paper. Even the dumbest (except possibly Brazil's) central banks are setting up "sovern funds" to buy real assets instead of US Treasury paper. (Brazil and 6 other South American nations are setting up the "Bank of the South" which will invest in productive developments linited to South America - much like a multi -national sovern fund. Noone really likes US paper long term now, except a few insurance companies with matching long term obbligations in dollars. - why the yield curve keeps "going flat.")

Yet, US is going deeper into debt every year and at least on average, for a long time, more Treasury paper will mature every year. Some of it will not "roll" now. The percentage of the maturing Treasury paper that must be paid off is growing. Thus in some sense, the Treasury must finance not only the current deficits, but also some of the old debt that will not role, at current interest rates.

You know the two choices the US has as well as I do. (1)Raise interest rates. or (2) Run the mints presses more to print the money required.

Neither choice is very attractive. (1) will just slow the economy more. (2) will rapidly increase the drop in dollar's value and the "unrollable percentage" of Treasury paper maturing. Probably some combination of (1)&(2) will be used and "stagflation" will be the result.

At some point the possibly benfical slide of the dollar becomes a run to get out. That is why I thought it imperative to more than zero both of the "twin deficits" (as Clinton did, at least their total!) - Show US has the guts to take a little economic pain, but unfortunately, under GWB it does not. - US now prefers to invent causes for making wars where there is oil not being sold to the US or at least only sold for US dollars.

I know and understand that strickly and logically speaking one does not need to even balance the budget or zero the current accounts/ trade deficits, but their is a lot more to economics than rationality. (You seem to forget that.) Rationally the US housing stock is worth more today than it was a year ago. - that is just one current example of why I pay no attention to you telling me that eveything will be ok if the twin deficits are growing more slowly than the GDP. I.e. Economics is not rational.

A depresion is coming to US. Recession first, probably starting in first half of 2008. My long standing prediction is that the run on the dollar will occur in the 6 years between Oct2008 and Oct2014 and currently as things are going, I think there is more than a 50% chance it will be in the first three years of that "window."

I also note that the GDP is now growing slower on average every year for the last few years, (In part because many of the higher paid jobs have been / are being outsourced and the population bulge, called "baby boomers," is less productive every year.) To remain competive with rest of the world, US needs to invest at least at half the rate it is, but US is "negatively investing" as it sells the productive assets to foreigners to pay its current living expenses. Dropping dollar just makes it easier for the foreigners to buy up the US faster.

Hell, for the first time in history, even Brazil's foreign investsments exceeded foreign investments in Brazil - this despite "half the world" trying to buy up sugar cane producing land and build or buy alcohol refineries! - The very strong Real is why.

I am really sad that it is now so easy to answer your question. I tried to change this future years ago, when it was still possible. (Warnings here, my book etc.)
----------------------
*To use myself as an example; I sold dollars and got slightly more that 4R$ for each about 3 years ago (I forget just when, but am sure you know or can find out.) This was done on the very tollerated "grey market,"** not the official rate. Now I can buy all those dollars back (if I were crazy) 2.3 times over! Many others are learning that buying dollars in any form (including Treasury paper) has been and still is STUPID. ("Materess dollars" are even coming out of the matresses where some have been for 40+years and being dumped now for very small values compared to what they were worth when they went into the matress for protection against rampent local inflation back then.)

**Every newspaper gives the rates and most have adds tellingthe locations of the "Cambios," which are all very public on the main business streets and even usually have police stationed near by to discourage robberies. From my home I can walk to 4 different ones in five minutes! - Brazil is strange, interesting place to live. Laws are are many, but few are enforced. The "constitution" is a book. One section prohibits interest rates above 12%, but that has never been the case. A few years ago, when infaltion was about 12%, the official rate. (corresponding to the FED's 4.75% discount rate) was 29%! Until just a month or so ago Brazil had the highest real rates in the world, but Turkey does now.