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No Currency Manipulation Here

We were discussing futures contracts and the wisdom of using  currency manipulation to try and improve the market for a country’s goods before the intermediate class Monday.  Here is an article from the CATO Institute  which finds no evidence that Japan has manipulated its currency.  Indeed Japanese imports are down from 2001.  But production is up in America by foreign owners producing cars here. It is simply not going to be possible for the Big Three go pay legacy costs and make the money the foreign owners do.  Last night ABC broadcast from a Ford plant and will look at the Big Three on subsequent broadcasts this week.  AS the article says with Michigan’s Dingell chairing the Commerce Committee will Congress try to ‘help.’  Stay tuned.

Speaking of currencies and interest rates, here is an interesting article about Iran  and how Ahamdinejad has mucked up the Iranian economy.  Gee, interest rates and currencies matter in those economies too.  Quick what is the name of the Iranian currency?  Read the article and find out.

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8 responses to “No Currency Manipulation Here”

  1. Kimi Pope Avatar
    Kimi Pope

    “The Big Three have hurt themselves with overly generous union contracts…overemphasis on light trucks and sport utility vehicles ….and a lack of exciting new models. No appreciation of the yen will save the Big Three from competition against nonunion plants turning out stylish, dependable and fuel-efficient cars” That says it all right there. The Big Three churn out so many suv’s and gas guzzling trucks that with gas at $2 a gallon, we are going to lean more towards buying the fuel efficient cars. I have owned both a Ford and a Honda, and hands down I preferred the Honda over the Ford. Looks like the big three is looking for a scapegoat rather than attempt to tackel the problem of low sales. International trade is good for all parties involved and its a shame that the big three are passing the buck and trying to limit trade.

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  2. Kimi Avatar
    Kimi

    “The Big Three have hurt themselves with overly generous union contracts…overemphasis on light trucks and sport utility vehicles ….and a lack of exciting new models. No appreciation of the yen will save the Big Three from competition against nonunion plants turning out stylish, dependable and fuel-efficient cars” That says it all right there. The Big Three churn out so many suv’s and gas guzzling trucks that with gas at $2 a gallon, we are going to lean more towards buying the fuel efficient cars. I have owned both a Ford and a Honda, and hands down I preferred the Honda over the Ford. It looked better, was more gas efficient, and I had less problems with that car overall. Looks like the big three is looking for a scapegoat rather than attempt to tackle their problem of low sales. International trade is good for all parties involved and its a shame that the big three are passing the buck and trying to limit trade through political measures.

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  3. Dennis Elam Avatar
    Dennis Elam

    The ‘legacy’ costs that the three have are a result of unbridled hubris in the 1980s when they were already asking Detroit for import limitations on small Japanese trucks, at the same time they assumed their market share would go on forever and signed contracts such that even if they had that market share they would be hurting and screaming now. But Porsche has the German unions and I was stunned at how much money P. is making on sales of less than 50,000 vehicles.
    I have driven or owned nearly everything and now drive a 2003 Ford Escape with 78,000 miles, not a single repair, just normal maintenance, tires, wipers etc. It is a wonderful vehicle, but now Ford has to convince everyone of that. Speaking of Honda
    did you know every car in the last Indy 500 ran a HONDA engine?
    Gulp…..
    DLE

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  4. Dennis Elam Avatar
    Dennis Elam

    The ‘legacy’ costs that the three have are a result of unbridled hubris in the 1980s when they were already asking Detroit for import limitations on small Japanese trucks, at the same time they assumed their market share would go on forever and signed contracts such that even if they had that market share they would be hurting and screaming now. But Porsche has the German unions and I was stunned at how much money P. is making on sales of less than 50,000 vehicles.
    I have driven or owned nearly everything and now drive a 2003 Ford Escape with 78,000 miles, not a single repair, just normal maintenance, tires, wipers etc. It is a wonderful vehicle, but now Ford has to convince everyone of that. Speaking of Honda
    did you know every car in the last Indy 500 ran a HONDA engine?
    Gulp…..
    DLE

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  5. Jason Raper Avatar
    Jason Raper

    Speak of the devil….any ideas about the recent NYSE and TSE alliance and possible merger?
    Here’s something interesting from the announcement on Yahoo:
    “Under the terms of the agreement, NYSE Group and the TSE will establish working groups to discuss such things as infrastructure, technology and trading issues, as well as market data products and regulation and governance of listed companies. They also will examine ways to enable companies who are listed on only one exchange to have better access to investors from the other.”
    Any ideas why this is happening now?
    Jason

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  6. Dennis Elam Avatar
    Dennis Elam

    Yes Jason there are two explanations. The first is simply mechanical, the MERC and CBOT have merged, the NYSE and the Eurobot have merged, some of these resulting mergers have been really hot stocks like ICE and NYX, so there is the urge to get on the bandwagon. A merger of TSE and NYSE is probably a further outgrowth of NAFTA. And rememer that 90% of Canadians live within 100 miles of the US. Canda and the US are major trading partners wtih Ontario advertising the advantage of locating there versus say Michigan all the time.
    The second is socionomic. Stock market bottoms are exclusionary, busineess are just trying to stay in business, witness GM and Ford selling off their prized assets like GMAC and Jaguar to stay afloat, or mortgaging their very factories like Ford is doing. While the overall stock market is high, ford and gm are hitting bottom so to speak. But, brokerage stocks are doing great as the markets hit new highs on the dow and S & P. At market tops, people feel inclusionary, they want everyone in on the deal Market tops generate optimism, indeed economists are always unified at market tops that things look great. There is a famous quote from an economist issued Sept 1929 that the US has entered a new era of prosperity, ie, safe from the usual business cycle downturns. Check the date, see what happened. Enron at its top declared it was a new kind of energy firm forming new markets where none had existed before, yeah right! AT that point Enron was able to get Merrill to fire an analysts critical of Enron, so positive was the spin. That analyst has now been vindicated; how could the entire firm of Merrill with over 100 yeras in the business not see that one coming? Right now private equity firms, hedge funds, are wild to borrow debt and take public firms private-euphoria reigns.
    And so it will always be.
    DLE

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  7. Dennis Elam Avatar
    Dennis Elam

    Socionomics
    Check out this explanation
    http://www.sociotimes.com/what_is_socio_times/
    I have contributed several articles to this site
    DLE

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  8. Jason Raper Avatar
    Jason Raper

    I copied this article from Yahoo, but this is certainly an interesting article on the issue of the currency manipulation that Dr. Elam posted last week. Paulson directly addresses the issues brought forward by the Big 3.
    JR
    Yen’s decline is not a concern
    WASHINGTON – Treasury Secretary Henry Paulson said Tuesday he was not concerned about the lows being set by the Japanese currency against the U.S. dollar because those values are being set in open markets.
    Paulson was pressed on the issue by Rep. Sander Levin (news, bio, voting record), D-Mich., during a hearing of the House Ways and Means Committee. Levin questioned why the Bush administration was not doing more to encourage the Japanese government to halt the slide in the yen against the dollar.
    American automakers believe that decline has given their Japanese competitors a tremendous price advantage.
    Levin said European auto companies were complaining about the yen’s decline against their currencies. He suggested that Paulson should join forces with European finance ministers to lobby Japanese officials on the issue when the countries meet this weekend for the Group of Seven finance ministers meeting in Essen, Germany.
    Paulson, however, said the Japanese government has not intervened to influence the value of its currency since 2004.
    “This is a currency that is trading on a competitive, open market place,” Paulson told Levin. “Some people may not like where it is trading, but it is my job to fight for a free and open market.”
    Paulson noted that the Bush administration has been encouraging China to allow its currency, the yuan, to be set by market forces. American manufacturers contend the Chinese government is unfairly keeping the yuan undervalued against the dollar by as much as 40 percent to give Chinese companies a price advantage over U.S. firms.
    The meeting of finance ministers and central bank presidents of the Group of Seven rich industrial nations — the United States, Japan, Germany, France, Britain, Italy and Canada — will begin with a dinner Friday and conclude with the release of a joint statement on Saturday after the second day of talks.
    The G-7 countries will be joined at the dinner by finance officials from Russia, China, India, Brazil, South Africa and Mexico.
    Officials said a review of the global economy, discussions of reforms to the International Monetary Fund and currency rates will be among the topics discussed.
    The Bush administration has gotten support over the past three years from the other G-7 countries in its campaign to get China to move more quickly to allow its currency to rise in value against the dollar as America’s trade deficit with China has soared to record levels

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