Thursday, May 04, 2006


Will Dollar Decline End Asias' 'Big Party'?

A round of metals and currency news. "Gold futures closed Thursday at their highest level since September 1980, with the June contract up $8 to close at $676.50 an ounce. July silver also gained 3 cents to close at $13.825 an ounce after falling 2.9% in the previous session."

The Globe and Mail. "Barrick Gold Corp. is concerned about the leftward political shift among some countries in Latin America, but the company is confident that widespread nationalization won't happen, Greg Wilkins, the company's president chief executive officer said Thursday."

"In the past six years, seven Latin American countries have elected leftist leaders and there are strong left wing contenders in at least three others. Recently elected Bolivian President, Evo Morales, has pledged to nationalize the country's oil and gas operations and this week he sent troops to occupy foreign run gas installations."

"'I am concerned,' Mr. Wilkins told reporters. This week, Barrick reported a first-quarter profit of $224-million, 24 cents a share, up from a profit of $66-million, 12 cents, a year earlier. The rise was generally due to soaring gold prices."

"The US dollar stemmed its losses against Asian currencies in early London trading on Thursday after Japanese and Chinese officials in India reiterated their opposition to an immediate currency realignment. But a tough statement by Jean-Claude Trichet, president of the European Central Bank, warning that eurozone interest rates would almost certainly rise next month, sent the dollar to a new one-year low against the euro later in the London day, leading to further dollar weakness against all leading currencies."

"Yong Li, China's vice-minister of finance, emphasised China's weak internal position and the huge challenges it faced in creating 13m new jobs each year, reforming the financial system and its public services. 'I heard rumours that the US dollar might depreciate by 25 per cent,' he said. 'This would have a big impact on countries like China because it would not only affect the value of assets invested in the US.'"

"At the end of trading in London on Thursday, the US dollar was barely changed from the previous day's close of ¥113.6, but it had risen to ¥114.17 in earlier trading. Against the euro, the dollar ended the day down almost another cent at $1.2680."

"Sightings of Westerners in pinstriped suits tapping away on a Blackberry are becoming more frequent at Asian gatherings, a reminder that the region is hot again. So is the fact that, in U.S. dollar terms, the Morgan Stanley Capital International Asia- Pacific Index, excluding Japan, this week returned to levels not seen since the days before the 1997 financial crisis."

"In 1996, speculative capital pumped up economies. A year later, it helped touch off the worst financial crisis the world had seen in decades. Even faster than it flowed into Asia, the money fled, slamming asset prices and living standards from South Korea to Indonesia."

"'Asia is having a big party,' said Andy Xie, Hong Kong- based chief economist at Morgan Stanley. 'With China, India and fast growth in Southeast Asia, the world's spotlight is on Asia again.'"

"For all the capital that's rushing toward Asia, the region lacks confidence. Insecurity can be seen in how quickly finance ministries from Tokyo to Bangkok have begun fretting over rising currencies. The dollar has weakened about 2.6 percent against the yen since the April 21 Group of Seven meeting."

"Asia can't afford to let investors down again. It's incumbent upon leaders to use the window of opportunity afforded by today's growth to stabilize economies and markets. Investors may be willing to forgive Asia for 1997. They're unlikely to forgive again if Asia can't keep its party going."

And from the Foreclosure report. "The scale of the Chinese bad loans that have been created by reckless lending could now reach $900bn in total, the E&Y report concludes the level of bad loans (is) larger than China's total volume of foreign exchange reserves."

'The scale of the Chinese bad loans that have been created by reckless lending could now reach $900bn in total, the E&Y report concludes the level of bad loans (is) larger than China's total volume of foreign exchange reserves.'

This adds much light to the notion of an all powerful China.
Especially when you find out about the environmental degradation in the cities and the "see-through buildings" in nearly every city, by the hundreds apiece. The buildings are called that because there is no one in them. Just sitting there, idle.

Stephanie Ellison
most of asia has been in a bear market for as long as japan has. I think they have one more crisis before they begin their new bull market.
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