China's Emergence As A Global Superpower

[Billy T]

Impugning the accuracy of Wikipedia in general is not a terribly convcing rebuttal. That's not to say that errors don't creep in, but unless you can point to even one error in the article in question, it's a moot point. ...

I can only point to errors in cases where the facts are clear, such as, physics and sometimes historical facts (but as the "winners write" history, It is often distored. - I will soon go to see what wiki says about who was first to fly - idea to do this just occured to me now. It certainly was NOT the Wright Brothers - their plane is incapable of flight, even with modern fuels. Motor is too heavy for the HP it can develop.)

I did not intend to refute anything, except your blind acceptance of private polls and wiki articles on a very controvesal subject. I specifically noted that on this issue and the Israel/Palestine issue, one side is much more active in trying to keep wiki articles favorable to their POV than the other so the articles are at best distorted opinions.

Later by edit:
Just as I suspected, Wiki credits the Wrights, despite fact than only the US does so. The wiki article (found by "first flight" search and then first hit) does not even mention Santos Dumont, who is recognized by almost all other countries as the first to fly. It is true that the Wright plane was lifted off the ground by a strong gust of wind BEFORE it was even all the way DOWN the railway. Even then, it never was able to achive the elevation it started to roll DOWN HILL from. With that heavy weak motor the wright plane is at best a terrible glider (very rapid loss of altitude with horizontal advance). The 100th aniversry attempt also never could fly even with the advantage of modern fuel. More at the "wings" thread*:

http://www.sciforums.com/showpost.php?p=1280642&postcount=90 and also post 87 of that "wings" thread

Again, the only poll that counts is the election in Taiwan and that was very close last time. The pro peaceful reunion, with retention of their freedoms, pro businness party only lost to the anti-reunion, pro independance party because of the stagged assignation attempt two days before the election that angered the farmers so much that nearly 100% went to the polls to vote.
------------------------
* I do not know if you will believe me or not, but I have never looked at wiki's stories related to the Wright plane or flight before, despite being active in that thread at the time of the 100th anaversity celebrations in Sao Paulo.

The reproductions of Santos' plane of course flew - taking off from level ground and climbing to considerable altitude. One, however, crashed as Santos was much better pilot with years of prior powered ballon flights under his belt. He had to be as his design is inherently unstable. It turned by "rudders" out in front and if that forward canard gets significant to either side, the entire plane will be torqued 180 degrees rapidly - why one crashed during the celebration.

I am not "anti-Wright" - quite the contrary (as you can see in my posts in the wings thread). They were extremely advanced in their scientific methodology and understanding of aerodynamics, had a stable control system with "wing warping" - even discovered some errors in the published table of compressibility of the air during their wind tunnel testing of models. (Even to do that testing correctly with scale model is amazing display of mathematical and technical skill back then. I have been to the memoral at Kitty Hawk. As I was technically more knowledge than most visitors, and the only visitor there, I was allowed to examine some of their notebooks. Very very impressive! Way ahead of their times.) IMHO they deserve great credit for inventing the modern applications of the scientific method to technical problems of interest. - A much more important contribution than the one they are erroneously credited with in the US.

They just had a low HP/pound motor, several times worse than the one Santos had or they would have been the first to fly, could have taken off on the level and climbed as Santos did etc. Santos was both wealthy and had many rich friends who backed him - The ruler of (Algeria or Marroccos, I think, but NW Africa for sure.) built large hanger near Paris for him, mainly for his powered cigar-shapped airships, etc. (He had given the king a ride in one. It crashed on the African beach, while trying to land and was abandoned, but king was not hurt and became more enthusastic than ever.) He had the best motor money could buy. With a later one, of 12 cylinders, he was also the first to hydro-plane - achieveing slightly greater than 100 kilometers/ hour on the River Seine!

Curtis, a motor cycle nut/ developer had better motors but the Wright were very secretive and in competition with him. The US army claimed to have flown earlier, but their designers did not understand anything and had the wing airfoil upside down! When they finally understood that lift was not like a rock skimming over the water, they turned the curved side to the top and tried to denign any change, but unfortunately for them, a photo of the plane with "wrong side up" wings was found and their pattent claim was not allowed.

SUMMARY: Wiki is a collection of opinions - often correct ones, but still just opinions. I seldom search, but if I want facts, I do not go to wiki. The only fact about our disagreement is the past election poll, and that may have been rigged to keep the re-union side from winning.

 

[quadraphonics]

Again, the only poll that counts is the election in Taiwan and that was very close last time.

I don't accept that that's the only one that counts and, moreover, it wasn't a referendum on the independence issue. People are motivated by myriad issues when they vote.

The pro peaceful reunion, with retention of their freedoms, pro businness party only lost to the anti-reunion, pro independance party because of the stagged assignation attempt two days before the election that angered the farmers so much that nearly 100% went to the polls to vote.

You're misstating the position of the Pan-Green coalition. It's not an independence party vs. a reunification party. It's an independence party vs. a status quo party. And since the status quo is an effectively independent state, the choice is really between declaring independence formally or just continuing to enjoy it in practice. It is true that the status-quo party is pro-business, and so seeks expanded trade, transit and investment opportunities with the mainland, and so is wary of pissing off the CCP. For this reason, they support a "one China" policy but, again, this is not an endorsement of the CCP's one China policy, in that it does not countenance CCP rule over the island of Taiwan. I.e., the Pan-Green coalition emphatically does NOT support a Hong Kong style reunification. The idea is something closer to the EU or Commonwealth, where they'd have unrestricted trade and travel, but also complete political autonomy for the ROC.

Essentially, the difference between the two parties comes down to "Independence is important enough to piss of the CCP" vs. "Independence is better served by buttering up the CCP." Neither party represents the slightest support for reunification in the Hong Kong sense, with CCP party bosses taking over the city. To put it another way, your "reunification with rights" amounts to little more than a free trade agreement.

Also, your attitude towards Wikipedia (and searching for information in general) makes you sound like a complete loon. That bias might creep into articles on Israel/Palestine has no bearing on reporting the results of polls. Wikipedia didn't conduct the polls, and, if you'd so much as bothered to look at the page, you'd have seen that they have an entire section discussing critiques of said polls. The fact remains, however, that you're grossly misreading the political sentiments of Taiwanese people, and ignoring polls doesn't help the situation.

 

[Billy T]

To Quadrphonics:
As I basically agree with your post 642, I will only note that while it is (I assume) true that wiki does not conduct polls, that is not important. The polls sent to wiki are conducted mainly by the biased people whose views, if confirmed, are then inserted at wiki. The importance to attach to the poll results would be more informative, if who paid for them was also stated at wiki.

I am not just singling out wiki as "not reliable" (OFTEN EVEN IN SCIENTIFIC MATTERS), but almost all blogs (which I have never visited, even one) or any other source where I can put up what ever I like on a web page. I have accumulated a lot of fact (perhaps some wrong) over the years and usually just "remember" the "facts" I post. - I am not good at searching as a consequence of so seldom doing any. I do get current news, especailly financially related and do tend to trust it when from Bloomberg, usually Forbes, WSJ, or any of about 10 other financial newspapers I look at at least once each week, some every day. I read several in Brazil and India at least one each every day, as there is where 90% of my ADRs are. (I took some hits today as the sub-prime mess is spreading still.)

 

[Nickelodeon]

The sub-prime mess is affecting your ADRs?

 

[Billy T]

The sub-prime mess is affecting your ADRs?

Sure, for example my Indian bank, ICICI symbol IBN, dropped several percent today from it all time high of about 56 but when I bought it was in the range of 10 to 12 as I recal. It in another 5 years it will be above $200/ ADR if there is no stock split and dollar has not collapsed. If dollar collases it will be well above 1000 if not split.

I never try to "time the market" as I basically believe in the "efficient market" theory and am long term investor. I like ICICI bank as they know much more about the Indian economy than I do. I only know India has huge financing needs and ICICI is the leader in establishing out reach to meet them in rural areas as well as largest (or second?) private bank in India. (State bank of India is largest) I buy only if I am confident that I have foreseen something coming well before others. - Why my foresight of the comming collapse has me out of the dollar except for very small drug companies. (Dollar risk, currently still, I think. is small compared to drug failure risk.) Most of the 40 I own will not even exist in 5 years - more often than not because their drug failed, but the few that do develope a big market drug that "big pharma" badly needs (Most of their winner will be off patent by 2012.) will more than compensate. Sometimes it is frustrating to be "ahead of time" in small company that is doing well in their development program, but is so small that few notice it and stock bounces wildly or its ADR did not even trade every day two years ago.

For example, I have 10,000 ADR shairs in one like that in Austrailia (and each ADR is 10 shares on the AUX. Perhaps they will beging to move steadly upwards now. - They just yesterday announced a deal with world's largest condum maker, 30% of the global market, to mutually explore putting their product as coating on condums. It is an anti-conceptive, and inactivates almost all STD, including AID and herpies virus. They are testing a vaginal applcator that women can use without consent of the male. The NIH is paying for their tests as the third world woman is often powerless to refuse if partner does not like to use condom. Even the FDA risk is small as the agent does not enter the blood. It is a cream. They also now own most of the patents in an important new field of nanotec drugs ("dindrimers"). I really do not understand why they are "going nowhere" in their stock price for several years. I am just about even now. - I found them too early.) - - still only a "PINK SHEET" trader, but as number of ADRs is rapidly growing, they will get listed OTC soon, I expect, and then really take off. (I thought they would go OTC a year ago, but was wrong.)


{Perhaps more important, as I do not really need more money, is that I enjoy following the progress of inovative small drug developing companies and learning about the fantastic things that are being discovered.}

 

[quadraphonics]

The polls sent to wiki are conducted mainly by the biased people whose views, if confirmed, are then inserted at wiki. The importance to attach to the poll results would be more informative, if who paid for them was also stated at wiki.

All of that information is readily obtainable through links from the Wikipedia page. And, again, Wikipedia provides a much more thorough discussion on the potential problems with the polls in question than you have. You'd know this is you'd bothered to read it before dismissing it.

I am not just singling out wiki as "not reliable" (OFTEN EVEN IN SCIENTIFIC MATTERS), but almost all blogs (which I have never visited, even one) or any other source where I can put up what ever I like on a web page.

That's not how Wikipedia works, particularly when it comes to contentious issues.

I have accumulated a lot of fact (perhaps some wrong) over the years and usually just "remember" the "facts" I post.

Current public opinion in Taiwan is not a 'fact' that one can 'accumulate' over the course of years. You can measure it via polls, or you can be ignorant. The choice is yours, but don't expect anyone to take you seriously if you opt for the latter choice.

 

[Billy T]

...Current public opinion in Taiwan is not a 'fact' that one can 'accumulate' over the course of years. You can measure it via polls, or you can be ignorant. The choice is yours, but don't expect anyone to take you seriously if you opt for the latter choice.

I assume you misunderstood (not intentionally trying to distort or mis-represent me) when I said:

"I have accumulated a lot of fact (perhaps some wrong) over the years and usually just "remember" the "facts" I post."

I was giving second reason why I rarely search (ANYTHING BUT MY MEMORY.)
(First reason being that I have found serious errors at wiki often, even in science and history, which should not be as error prone as controversal political issues.)

Certainly that statement of mine you quote, as the context of it makes perfectly clear, is not a statement about current public opinion anywhere. What I expect on the Taiwan POV to be taken serious is not current (about a year old) is that the election was every close. - Other polls may be conducted by impartial news agencies, but others are done by interested groups with some adgenda.

I am glad to learn that wiki does let you know who paid for the polls your are citing.

Could you give an example of that for a poll of the type you say shows strong support for independance?

 

[Billy T]

"... If China simply stops buying U.S. Treasury bills at the same pace as it has been, it could damage the U.S. economy. That means Beijing has leverage over the United States that it could employ in the area, possibly with respect to Taiwan. ..."
FROM November 07 issue of Foreign Affairs:
http://www.foreignaffairs.org/20071...-james-laney/washington-s-eastern-sunset.html

Now they are saying what I said on 7 March 06 (more than year and half earlier!)* I said:

" ... I think the CP leadership is obsessed with the eventual return of Taiwan, and hoping it can be done peacefully, but at least does not want it impeded by the US, if some force is required. IMHO the CP leadership is accumulating dollars reserves, far beyond their economic needs, for these political reasons. They want the US to know they can destroy the dollar ..."
FROM my post at:
http://www.sciforums.com/showpost.php?p=998409&postcount=482

Not only has the The Economist, The National Geographic**, The New York Times but now even the prestegious The Foreign Affairs is reproducing points I posted here, years earlier!
--------------
*Actually I said that about 4 years ago when speaking of "China loading its economic gun (with dollar reserves) as they knew they could not win a military contest," but I can not find that older post.
**Cover story of last issue on how stupid the US's alcohol from corn program is for "Joe American" and how clever it is for the agro & oil industry "rich cats."

 

[quadraphonics]

Not only has the The Economist, The National Geographic**, The New York Times but now even the prestegious The Foreign Affairs is reproducing points I posted here, years earlier!

It's good to see that you've taken up reading Foreign Affairs. However, it's never been any secret that large quantities of dollar reserves can be used as leverage; people were obsessed about this 20 years ago when Japan was running up huge piles of dollars (they still have about as many as China does). Note that none of the sources in question concur with your assertion that China can "destroy" the dollar, send America and Europe into permanent depression, etc. I suggest you browse through the archives of Foreign Affairs over the last couple of years: there's been several articles on China which discuss this stuff in much more depth.

 

[superstring01]

Not to mention that in such a state of emergency, China would be utter devastated, but the US would simply do the unthinkable: declair a state of emergency, hyper-regulate for a time, and issue a new currency (some would say, this is the ultimate game plan all along).

~String

 

[Billy T]

It's good to see that you've taken up reading Foreign Affairs. However, it's never been any secret that large quantities of dollar reserves can be used as leverage; people were obsessed about this 20 years ago when Japan was running up huge piles of dollars (they still have about as many as China does). Note that none of the sources in question concur with your assertion that China can "destroy" the dollar, send America and Europe into permanent depression,.

I have read Foreign affairs for at least 30 years. In the blue-grey cover printed versons before it was avalable on the net. When I started, it came out only 4 times a year, now is every other month.

Note the current issue states that ONLY CEASING to buy US Treasury bonds will "damage the U.S. economy."

I agree, but when I have said that China either now or soon will have the ablity to "destroy" the US economy that was if they Dumped their approxately 1 trillion of dollar demoninated reserves. (No one actually know for sure how much they now hold in dollar notes. Their reserves total almost 1.5 trillion now.) When stating this, I have also been careful to point out that China has no need or desire to do that dumping now because of three facts:

(1) For about a decade still*, China need US and EU customers to buy the products of their factories. (EU is bigger buyer than US, so more important.)

(2) If dumped now, the economic pain to China would be so great that it might provoke a revolution - collapse of the CP. Many would be thrown out of work as some factories close. China's rate of growth would be only about 40%of what is now. - I.e. still twice as fast as the US's current growth rate; but of course if China did dump its entire dollar reserves, the US grow rate would not be +2% but very negative.

(3) If China is winning the economic struggle for world domination (US is still dominate but losing power and influence every where, even in England!) Hell, even the pupet government US set up in Iraq is starting to act against the US wishes. (Being friendly to Iran with high level visits, trying to put Blackwater's murders on trial, etc.).
In contrast, China had more than 50 nations come to trade conference in Peking last year, has many 10s of billions of dollars in new long-term (some for 30 years) contracts for energy, raw materials and food stocks signed in Africa and South America. Just two days ago, a new 5.5 billion dollar investment by the Chinese Industry and Commerce Bank purchased 20 of South africa's largest bank, Standard Bank. One of the stated reasons was to facilate the financing of many other operations and investments in the south of Africa.
Summary of (3): Direct conflict with US is not only dangerous for China, but totally un-needed when you are so rapidly over taking the US. The US has no long term contracts for energy and raw materials as does not think beyond the next election. China has alreday picked the next leaders to take over from Hu in 2012! (All are in their early 50s but one of the three possibilites may die before then. Which will be the next "great leader" will to some extent depend on how they do in their current important roles within the CP.)
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As I have said for years, approximately in 2020, China will have zero need of the US and EU customers. US will actually be running a postive trade balance with China several years before that. China is obligating itself to build many roads, railroads, ports, airports, mines, factories (to concentrate ores and proccess other items like pigs into frozen pork, sugar cane into alcohol, etc. as part of these long term contracts). These exports that pay for the Chinese imports of raw materals, energy and food stocks PLUS the rapidly growing purchasing power of the Chinese labor force will stress the capacity of China's factories. I.e. China will have much higher living standards, begine to clean up its rivers and air, just as the US did aftrer its era of "industralization at any cost" was over. (You may be too young to remember when Pittsburg, PA's or Gary Indiana's air was so polluted that on a wndless day, you could not see across a wide street because of the industrial smog. Do you even know what "black lung" disease is?)

I again tell you there will come a day in about a decade, or perhaps a little more, when China will tell US to: "Go to Hell - we do not need you to buy our products anymore." My only doubt about this is whether or not because of GWB's wars and deficits, the US will already be in "Hell" before the Chinese are ready to send the US there.

Believe me -There will come a day when the losses China incurs in dumping its remaining dollar reserves (Those still not moved via the sovern funds and Chinese banks, like the 5.5 billion just moved two days ago, in to real asset owned instead of US Treasury paper promisses) will be more than compensated by the lower cost of oil and orther raw materials that the reduced demand for them with US and EU in depression will cause.


Unlike Japan, China is not the US's friend. I was never concered by fact that Japan had large dollar reseves. Could also, in theory, destroy the US economically. Unlike much larger China, Japan has too small a domestic populatrion / market and MUST export to US and EU for as far into the future as one can see. Japan will thus also be badly hurt when the Chinese decides that it will be profitable to send US and EU into depression. (Take a relatively small loss on their remaining dollar reserves by dumping Treasury bonds to destroy the dollar and trigger a run by all others to get out also.) However, not one tear will be shead in China if the Japanese starve to death. (They remember well what the Japanese soldiers did to Nanking and other Chinese cities during WWII.) Japan not only needs the US buyers, but due to the constitution US wrote for them at end of WWII, they require the US navy off thier coast to be secure; however, even in Japan US is not liked and just recently asked the US to reduce the number of US troops stationed in Japan (to or by?) 8000, as I recall from memory. (GIs have raped too many Japanese grils, peace loving Japanese do not like the "war prone" US, etc. In their own "peacful way", they too are attacking the US economy by Toyota, NEC, new technology, etc. but even when all others are following China's lead and dumping dollar, perhaps the Japanese may not, but,if not, they will be the only ones to simply "eat" their near total loss.)

SUMMARY: Japan is not a danger to US no matter how large its dollar reserves become, but China certainly is. China will destroy the US dollar, sending US and EU into deep depresion when it is "net profitable" for the CP to do so, assuming GWB has not done so first. China's CP hates Japan and certainly will cry little when the US collapses economically, if that occurs at least a decade hence. (Perhaps the CP is secretely worried that GWB will destroy the US before China can dispense with sales to Wal-Mart?)

 

[Billy T]

Many years behind still, but the gap between western and eastern worlds is closing. Not yet to any significant extent in technology, compared to the rate of closure in economics.

The economics gap can (and I think will) close rapidly when China decides it is in its best interest to greatly reduce the west's demand for critical and limited resources like oil. I.e. when China uses it great accumulation of dollars to destroy the dollar. This will not be profitable for China for about a decade. Their internal market's buying power plus the required exports that pay for the imports of raw materials, energy, and food stocks, must first demand nearly 100% of China's productive capacity. Both of these markets are growing much more rapidly than even China's extrodinary GDP growth. The "economic gap" will reverse (China in the lead) when China does dump its remaining dollar reserves on the market, which is already finding the dollar not very attractive.

Text below is from the current isssue of the Economist. It is a note about China's technical progress; but, just as Russian Sputnic did not give Russia anything like the economic power its oil has now, this advancing Chinese technology is not much threat to the western world. That threat is the "economic gun" the west is now loading with dollars and euros.

China's Chang'e 1 satellite, launched in October, began its first lap of the moon, marking another step towards a manned lunar mission.

China's technological enthusiasm is matched by that of India, which hopes to circle the moon with its own satellite next year. As the special report in this issue shows, both countries believe they can succeed in high-tech markets that America, Europe and Japan have long regarded as theirs by right.

These ambitions are viewed with alarm by the leading technological powers, not least America. Policymakers and industry groups quake at the number of scientists and engineers the two populous Asian countries turn out. They squeal about the imitation of ideas, both real and alleged, and lament the emigration of jobs. In 2005 the American Electronics Association called for a “Sputnik Summit”, which it hoped would stir the country to meet China's challenge, much as it responded to the Soviet Union's first satellite 50 years ago. Daniel Rosen of China Strategic Advisory, a think-tank, has heard dark murmurings on Capitol Hill, such as the suggestion that America should “nationalise whatever is left of the machine-tool industry” to stop firms decamping overseas.

 

[peta9]

All my friends except for two are phd students in engineering, male and female. My real dad was an electrical engineer. My brother is a chemical engineer. My uncle is a chemical engineer and VP of a chemical company in korea. lol

My korean friend is studying to be an electrical engineer. My chinese friend is studying materials engineering. My friend in korean university is studying to be an engineer. All in doctorate programs. My japanese friend is studying botany and will continue to the doctorate level. lol

 

[Billy T]

" ... The enfeebled dollar—lately in sight of $1.50 to the euro—would be weaker still without enormous purchases by central banks in emerging economies. This support is now waning. China and others are putting a smaller share of increases in reserves into the American currency. And Asian and Middle Eastern countries with currencies linked to the dollar are facing rising inflation, but falling American interest rates make it harder to tighten their own monetary policy. They may have to let their currencies rise against the sickly greenback, meaning they will need to buy fewer dollars. More important, as international investors wake up to the relative weakening of America's economic power, they will surely question why they hold the bulk of their wealth in dollars. The dollar's decline already amounts to the biggest default* in history, having wiped far more off the value of foreigners' assets than any emerging market has ever done.

The vigour of emerging economies is good news for the world economy: for its growth, it has much less need of a strong America. The bad news for America is that this, in turn, may mean that the world also has less need of the dollar. ..."
From:
http://www.economist.com/opinion/displaystory.cfm?story_id=10134118
Part of article entitled: "Recession in America / America's vulnerable economy"

More, even gloomer, at:
http://www.economist.com/opinion/displaystory.cfm?story_id=10134077

Just what I have been saying for some time, please note. More of my prior predictions also in the full article. Anyone want to bet which happens first: Euro worth 1.5 dollars or oil worth $100/ barrel? Things I have been ridiculed for predicting.
-----------------
*Before quadraphonics correctly again points out that technicaly this is not a "default" I will do so. The holders of US Treasury bonds will be paid in full, just as they always have been, even if the ink on these dollars is still wet from the printing press and they are of little value.

 

[quadraphonics]

*Before quadraphonics correctly again points out that technicaly this is not a "default" I will do so. The holders of US Treasury bonds will be paid in full, just as they always have been, even if the ink on these dollars is still wet from the printing press and they are of little value.

It would be nice if you'd let me make my own arguments instead of fabricating fatuous ones for me, and then attacking the resulting straw men.

The real flaw in this view is that it posits that the recent slide in exchange rates is permanent. In an actual default, there's nothing you can ever do to recover the money (other than whatever collateral you have for the loan of course). In this case, you can simply hold on to your dollars and wait for the exchange rate to pick up again.

 

[Billy T]

It would be nice if you'd let me make my own arguments instead of fabricating fatuous ones for me, and then attacking the resulting straw men. ...

I did not mean to either offend or to set up a strawman. I infact learned from you that "no default" only means that that the promissed amount of dollars (in this case) will be paid and states nothing about their value. I was not well informed on this until you corrected me earlier. Certainly my repeating your prior information is not "setting up a strawman."

As far as holding a currency that has collapsed is concerned that may be an alternative if it does every recover it former value, but in most historical cases of deep devaluation that rarely happens. For example, do you still hold some of the $100 bills with Jeff Davis's picture on them? (Confederate money does have some value to collectors, perhaps the one dollar confederate bill, in good condition, is worth a dollar now, or soon will be more valuable than one dollar at the rate the dollar is now falling.)

 

[quadraphonics]

As far as holding a currency that has collapsed is concerned that may be an alternative if it does every recover it former value, but in most historical cases of deep devaluation that rarely happens.

You mean like the Real?

 

[Billy T]

You mean like the Real?

As you like for us both to be technically correct in our statements, I take you point (assuming you really mean to refer to the Brazilian currencies "pre Real") but note that the Real has been contained within the range 0.80 to 4.0 to the dollar for its total life - about a decade now. The "correct value" for the Real, IMHO, is about 2R$ to the "current dollar". It is actually 1.75R$ to the dollar last time I looked a few days ago. (At the rate dollar is now dropping, this will be the "correct value" by second quater of 2008.)

When it was first created and for several years thereafter, Brazil had a quasi fixed "band" for the exchange rate around 1 real = 1 dollar. It cost a fortune to keep the real that valuable. Brazil has had so much a history of inflation that it has had to lop off three zeros from the currency in circulation more than once. No one bothered to pick up a coin dropped. - The asphalt roads near shopping centers were covered with shiny disks of no value, which the sun and passing cars soon made impossible to remove, even if someone wanted to! During some of the worst inflation periods, the value of the currency dropped by more than a percent each day! (Late in the week, newspaper ads might promise: "NO PAYMENTS UNTIL NEXT WEEK!") Nice employers paid the staff early in the morning each week and gave them some hours off to go and spend it before the merchants could get all of yesterday's prices marked up. Brazil actually ran out of names for the currency and had to re-use some. Thus there was both the "Cruzeiro" and then after several other names were used, the currency was called the "New Cruzeiro"

Inflation expectations were so built in to the Brazilian by this history that a very clever plan (and the above mentioned quasi-rigid, but VERY expensive pegging of the Real) was required to break "inflation psychology." The government required all items in stores display their cost only in "URVs" (Unit of Real Value) and these could not be changed (but slightly a few times each year).

The URV did not actually exist, but each day the relationship between the URV to the circulating currency was published and the merchant calculated what you had to pay in the circulating money. (Laws written then had the associated fines stated in URVs and some still are, I think.) After more than a year of seeing only stable prices on everything, the people began to think and comparison shop in terms of the URVs. Then the government called in the circulating currency and replaced it with the Real which had the value of essentilly one URV on the day it was introduced. (Merchants no longer had to calculate what you must pay - you just paid what the price marked on the item was.)

This plan worked whereas 10 or so tried before it had all failed to curb inflation. Most everyone agrees (not just Brazilians) that the "PLAN REAL" (with URV)was brilliant! (and well executed). Many now think that it was not necessary to spend so much after the Real was introduced to peg its value (against the dollar) inside a narrow band. That is a major part of why Brazil went deeply into debt (post earlier defaulted debts, of course). I think this is mainly "wishfull hindsight," but perhaps Brazil could have safely switched to the current "free floating" exchange rate a year or so sooner.

Now Brazil again has a "currency problem"*: The Real is too strong, hurting or even terminating exports of low value added industrial products like shoes. In Reals the price of most commodities, like oil, has not increased much for years. I.e. the dollar price may have more than doubled (for several commodities at least) but as the Real will now buy more than twice as many dollars, the price of oil, copper, etc. to Brazilian is actually dropping now (or sometimes or stable)!

*SUMMARY: Yes, if you have any Real, definitely hold on to them. Even dump all the dollars you do not need to spend and buy Reals with them. - Most of the financially intelligent world seems to be doing this now. - Then use those Real to buy stocks, land, etc. in Brazil. (or India - I do not trust China or Russia, but if you know when to sell, they may be even more profitable.)

Better still, buy ADRs of Brazilian (or indian companies) as effectively this does the same without any cost of conversion into Reals. If you had done this when I first recomended doing so, you would have at least twice as many dollars now, three or four times more even if you only bought the average Brazilian stocks. My largest value and best performing ADR is SBS. - In dollars, it is up about 11 fold now! But in "stable-value" money like the Real, (not the US's green paper with Washington's picture on it ), it is up only about 600% in about 6 years. It is so cheap for Brazilians to now visit the US that I had trouble reserving an airplane ticket to do so this July, but will cost you dearly to visit Brazil of Europe now. US's power and influence is rapidly sinking down now. - thanks mainly to GWB.

 

[quadraphonics]

As you like for us both to be technically correct in our statements, I take you point but note that the Real has been contained within the range 0.80 to 4.0 to the dollar for its total life - about a decade now.

And the dollar has been contained within the range 0.68 to 1.20 Euros. Call me when the dollar approaches 0.25 Euros (which, if you don't consider the Real to have collapsed, still won't be fatal).

 

[Billy T]

And the dollar has been contained within the range 0.68 to 1.20 Euros. ...

yesterday (or was it earlier today?) it was slight above 1.48 dollars to buy a Euro. This differs so much from your range, that you must be giving it the other way around. I.e. (1/1.48) is your ~0.68 I.e. the lower end of your range is becoming lower, almost daily now. Wait til the run to get out starts. Then compare to the stable relatively Real.

I admit that the Real should never have been equal to the dollar back when it was. Nor should it have ever been 4 to the dollar as it was just prior to Lula's first election, when everyone was trying to get value outside of Brazil (fearing lula would confiscate wealth etc.) That is yes, as Brazil tranformed from "run away inflation" to a stable value currency there were political and policy "bumps," but in the last year or so the Real has held it value much better than the dollar and that is now the expectaion of most economists. - The transition "bumps" are over most now believe and are sending their dollars here to be more secure, long term, in a trouble-making, ever-increasing flux it seems. I.e. they are "putting their money where their mouth is" now also.