The US Dollar sucks!

[Guest]

The US Supreme Court hasn't helped with its recent decision that essentially means the end of private proprty rights in the US.

The strongest private property rights in the world is what made the US the investment jewel for much of the world for a long time. There was no safer place for the Japanese, the Germans, the Arabs, and many others to place their money than in US real estate.

Now the Supreme Court has determined that if a big corporate entity can convince your local city council that it is a better interest for them to have that land, then a private person has no chance. That means they effectively have no private property rights anymore.

So far this is mostly a "little old granny" versus Wal-Mart issue. But foreign investors are analytical and predictive. They see the writing on the wall. Once the Supreme Court of the land determines that the US constitution does not guarantee private property rights- hold on to your hat. The dollar, following US investment is going to really go down the toilet.

And that's bad for the world economy. Once real estate has been crossed off the list, people start turning to other investment concepts, all of which are more risky. Hang on for a bumpy ride- world wide.

[moe666]

I doubt if that ruling will affect to many people, most states are inacting laws to prevent your private property from being condemed without due process just because of that ruling.
The local government has always been able to condemn your property if it was in public need and for the good of the community.

The rising Thai baht is starting to affect prices in the US a friend who owns a Thai restraurant tels me that a case of coconut milke has went from $20dollars a case to $28dollars a case also Thai rice has increase about 10 percent per bag. The new menus with price increases are on order.

[newwriter]

Gents, you over-complicate matters. I was a currency trader for an investment bank for 15 years and long term trends almost always defy explanation until after the fact. Even then, the finest economic minds don't always agree on what actually moved the market.

In simple terms it is down to cash flows. For whatever the reason, if money is going into a country, that currency inevitably gets stronger. In the early 90's the Japan Post Office (a government-run superannuation fund with the equivalent of trillions of dollars of funds under management) sought and received permission to invest outside Japan for the first time.

I think the number was something like 15% of the money was allowed to be invested outside Japan. Given that Japanese long term rates were zero or below anything looked good as an alternative. AUD/JPY, USD/JPY, GBP/JPY and EUR/JPY (and others) went up strongly for two or three years based on these flows of capital.

Some of that money has been returning to Japan over the last few years as interest rates increase and the Nikkei actually has a pulse. It is this sort of thing that drives the long term dollar trend.

It is convenient to blame GWB but in fact the Iraq War is just part of the story.

As for China destroying the US economy by squeezing the debt they hold - Mardhi, ask yourself why would they do that? Who would then buy their goods and drive their internal economy? What would be the motivation? There is none and the Chinese are the most practical race on earth when it comes to money.

No, things will turn naturally. The Chinese middle class will grow and they will want to spend all of their new found wealth on US software, electricals, German cars (presumably nobody outside Texas wants American cars) etc. The Chinese goods will no longer be as cheap as they were (and will thus probably be made in America by sophisticated machinery for less than in China) and there will be a shift in the balance of trade.

This balance of trade would be fixed faster if China would float the RMB and allow it to strengthen and thus force up the cost of their exports but the market will adapt sooner or later without this anyway.

Outside of a cataclysmic change in world structure (history would say it's never entirely out of the question but it's hard to see) the current imbalances will be amended by the market naturally.

Have faith gents. In the meantime, if you live in US and want to travel - bad luck. If you work overseas and are paid in something other than USD - great news.

[PigDogg]

(ziggystardust @ Jul. 09 2007,10:01) If there was logic, it would be predictable, and we could all be rich.

Absolutely.

If it's that obvious then just load up on non-USA currency.

But it's not that obvious.

But it's prudent for Americans planning to live overseas in the near future to diversify out of dollars.

[Guest]

I echo newwriters sentiments.

For me, I invested in the Thai stock market a few weeks before the ruling and am very happy I did. My worst stock is up 10% and I have one up over 50%. There is a lot of foreign money flowing into the Thai stock market. The massive amount of liquidity that is sloshing around the world is finally making its way to Thailand. There is a tremendous amount of value in the market even with the weak economic numbers.

I have been watching the fund flow numbers and locals are still big net sellers with foreigners huge buyers.

One thing to keep in mind is that Thailand and Taiwan are Asian laggards, which means they move last in Asian equity rallies. Japan leads and the rest of Asia follows with Thailand and Taiwan bringing up the rear.

Remember that the market is always looking forward.

[azza33]

(grunyen @ Jul. 12 2007,06:26) The US Supreme Court hasn't helped with its recent decision that essentially means the end of private proprty rights in the US.

Are you for real??

Is this going to be tested in a higher court??

That sounds absurd~~

I know in Australia, the government can acquire your property at "fair" price for public use. ie. freeways, etc ... this i can understand

But to let the court acquire your land because they deem to someone can use your land to better use...

Sounds ridiculous and IMHO the most arrogant stance one could take

How dare someone else tell you that how you run or conduct yourself on YOUR property is less valuable than some other proposition.

[newwriter]

(waldo @ Jul. 15 2007,10:01) I echo newwriters sentiments.

For me, I invested in the Thai stock market a few weeks before the ruling and am very happy I did. My worst stock is up 10% and I have one up over 50%. There is a lot of foreign money flowing into the Thai stock market. The massive amount of liquidity that is sloshing around the world is finally making its way to Thailand. There is a tremendous amount of value in the market even with the weak economic numbers.

I have been watching the fund flow numbers and locals are still big net sellers with foreigners huge buyers.

One thing to keep in mind is that Thailand and Taiwan are Asian laggards, which means they move last in Asian equity rallies. Japan leads and the rest of Asia follows with Thailand and Taiwan bringing up the rear.

Remember that the market is always looking forward.

I hope we are not seen to be just pissing in each other's pockets waldo but you are spot on with Thailand being a laggard.

When I was in HK we were heavily (like most banks and many funds) invested in carry plays throughout the region but predominantly in Thailand. Local rates around 14% and a central bank that pegged the currency to the US$ meant easy pickings.

Borrow in USD/JPY and a mix of the then European currencies and lend THB. People were locking in 8-10% carries. Those with good contacts could actually get the precise balance of the currency basket the That Central Bank used to peg the currency and thus map the carry perfectly.

When we realised that this shit could not continue and the rest of the world caught on also we had the Asian economic crisis of 1998/99. Thailand led the way and the rest of Asia followed it down a deep hole.

Investors have been very wary of coming back and so we are now playing catch up. Trips to Thailand will continue to get more expensive for the foreseeable future.

Although that could turn out to be wrong. We were paid a lot of money to work out which way currencies were going and it ain't easy.

[Guest]

(azza33 @ Jul. 15 2007,10:26)

(grunyen @ Jul. 12 2007,06:26) The US Supreme Court hasn't helped with its recent decision that essentially means the end of private proprty rights in the US.

Are you for real??

Is this going to be tested in a higher court??

That sounds absurd~~

You are correct. It is absurd. And yes, unfortunately I am "for real".

The plus side of US economics is the stock market just keeps hitting record highs.

[azza33]

(grunyen @ Jul. 15 2007,12:22) The plus side of US economics is the stock market just keeps hitting record highs.

Yeah the markets are going very nicely

Aussie market is also going along nicely too
~~ along with our currency

For those who like to follow markets (ignoring China which shows nonsensical behaviour)

South Korea gone up 6 times since the Asia economic crisis of late 90's ~~ wish had all my cash there

And as for picking currencies.... thats in the too hard basket

So just plan your holidays and don't worry about cash $$$
~~ you're on holidays after all!!!

[Guest]

(newwriter @ Jul. 15 2007,10:59) I hope we are not seen to be just pissing in each other's pockets waldo but you are spot on with Thailand being a laggard.

When I was in HK we were heavily (like most banks and many funds) invested in carry plays throughout the region but predominantly in Thailand. Local rates around 14% and a central bank that pegged the currency to the US$ meant easy pickings.

Borrow in USD/JPY and a mix of the then European currencies and lend THB. People were locking in 8-10% carries. Those with good contacts could actually get the precise balance of the currency basket the That Central Bank used to peg the currency and thus map the carry perfectly.

When we realised that this shit could not continue and the rest of the world caught on also we had the Asian economic crisis of 1998/99. Thailand led the way and the rest of Asia followed it down a deep hole.

Investors have been very wary of coming back and so we are now playing catch up. Trips to Thailand will continue to get more expensive for the foreseeable future.

Although that could turn out to be wrong. We were paid a lot of money to work out which way currencies were going and it ain't easy.

I never got involved directly in carry trades but worked them out on a couple of occaisions. Easy money if you can work it out.

I agree with you on the currencies. That is not easy at all.

IMO, the whole carry trade scenario is just going to get worse over the next few years as Japan just flushes its currency down the toilet. The Japanese are paranoid of China's rising economic power and are afraid they will be relegated to #2 in Asia.

I know of a few Fund of Funds who have just up and moved out of Tokyo to Hong Kong because of no growth, high expenses in Tokyo, and Hong Kong's growth.

Companies used to IPO in New York first and do secondary offerings in Tokyo and Hong Kong but now are doing the IPO in Hong Kong because the market is so strong. I am going to stop myself before I go off on a rant.

[moe666]

Azza33, the court ruling being talked about involved some water front property in Conn. the city condemed it for a developer to build a high end development which the city reconded would bring in more taxes. The supreme court found in favor of the city that they had the right to do this because of the community good.
Since this has happened many states have passed laws giving private property owners more power and protection. To think this will keep foreign money out of the US is a stretch since we are probly the one country with easy investment rules about foreign ownership of property.
Suprised this even appeared it is a old case about 2 years old, I haven't seem anything in the news about this in a long time.

[azza33]

(moe666 @ Jul. 16 2007,05:38) Azza33, the court ruling being talked about involved some water front property in Conn. the city condemed it for a developer to build a high end development which the city reconded would bring in more taxes. The supreme court found in favor of the city that they had the right to do this because of the community good.
Since this has happened many states have passed laws giving private property owners more power and protection. To think this will keep foreign money out of the US is a stretch since we are probly the one country with easy investment rules about foreign ownership of property.
Suprised this even appeared it is a old case about 2 years old, I haven't seem anything in the news about this in a long time.

Thanks for the update....

I am still surprised a court would have the audacity to make such a judgment

Good to see the other states coming to their senses...