Dear comrades, believe it or not, I hit it again: Iceland is pegging the slumping krona to a basket of currencies. Well, they are doing this just after I sent my prediction out a couple of hours ago!
The world has now officially entered into the era of currency competition by devaluation and pegging! So don't blame China for maintaining its present RMB policy. We now realize how important it is to peg your currency so as to control financial and credit crisis.
However, the most risky thing is when you peg your currency to the wrong dollar! This is what happened to us in Hong Kong. After our reunification with our motherland, China, the Hong Kong dollar is still pegged to the US dollar and as a result, our economy is now suffering from very bad hyperinflation and contraction! What a terrible world when the Hong Kong dollar can't peg to our own country's currency, RMB! This is politically and economically unwise and unsafe!
Many people in Hong Kong just don't realize that they are actually being exploited by the HKD and USD peg. We are using our Hong Kong assets to back up a falling US dollar in the first place. The real benefit of such peg is that it may enable Hong Kong to export cheap or cheaper goods. But that is a pretty unrealistic view mainly because Hong Kong has nothing or very little to export. Yes, we have transshipment but that is not really export. I don't want to tell you who the real beneficiaries are under this crazy currency peg. Look who and where the fat cats are and you can get the answer.
By the way, what do you think the DOW end up today? Over or still below 10,000?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment