Again you are wrong. Fuel price affects everyone, to businesses to consumers. The subprime woes would have pushed USA into recession and that's why Ben & Co reduced interest rates 7 times to help the US market to avoid recession. However, inflation and high oil prices dampen consumer spending significantly. That's why Dow Jones doesn't react to the news of more foreclosures because inflation is a much bigger issue and will linger longer.

PLEASE get your facts right. IT's not about mindsets that matters the most for a Fed banker. ITs the credibility. IF you notice, one week its about saving the financial sector, and the next week is fighting inflation? So which is it? The credibility of the US Federal Reserve is severely questionable.

Housing market will recover, and it takes time, but inflation is much harder enemy to combat with.

That's why the ECB is only targeting inflation. There isn't one time ECB Trichet said he's going to cut interest rate to spur growth. It has always been targeting inflation. This is what the FED has to do; if the FED flip flops on its policy, it will cause more pain than the housing market.

US subprime woes affected many non US banks too; such as Barclays and UBS. Not only that, EU unemployment rate has ticked up with German consumer confidence falling. Even with those signs, Trichet is sticking to his guns.

I beg to differ, if the Fed doesn't have a constant mandate, it will be disastrous in the long run. Take a look at Vietnam currently having a problem with runaway inflation because inflation wasn't dealt with in the first place. India and China too has taken steps to cool down their economy due to inflation. Bombay Sensex, China Shanghai and Vietnam stock exchange have all retraced 40-50% due to inflation fears.

My point is; inflation is the greater enemy here. Recession is part of the economic cycle but a lingering inflation will decrease the standard of living worldwide.

I hate to say this, but i do have to agree with George Soros. The 1987 crash looks more likely to happen now.



This post has been edited by AdamG1981: Jun 14 2008, 11:23 PM

I heard that Bank Negara will raise interest rates next month. Anyone knows of this?

This post has been edited by AdamG1981: Jun 14 2008, 11:32 PM

Then what data do you have to support your theory? From my understanding you are saying an inflation is not as big or even bigger problem than the housing woes and that inflation and oil price doesn't affect consumer confidence and spending. IF you can explain to me, in economical terms, that would be great.

"Inflation is GREAT when you are debtor" Then do you think more lenders would want to lend money if there's runaway inflation?



This post has been edited by AdamG1981: Jun 14 2008, 11:40 PM

Today the G 8 nations have said they wanted a strong dollar and also said commodity Prices Replace Credit Squeeze as Major Risk to worldwide economic growth.

http://www.bloomberg.com/apps/news?pid=206...Gxrs&refer=home

Technically, countries such as China purchases huge amount of T-bills because USA is a country that has never DEFAULTED before. However, China has also recently hinted that it might diversify its holdings. The main reason why Americans got cheap financings in the first place was because of China's huge purchase of T-Bills. Again, this might change in the future. (Monday- Treasury auction)

Here's my take:
Inflation is a bigger threat because it affects everybody and its costlier to us in the long run.
Consumer spent more for necessity items such as food and gas. As a result of more money coming out from the consumers pocket, the consumer sentiment sours because now he /she thinks that everything's expensive when actually it is not!

Automatically when your fuel and food budget represents a big chunk of your paycheck, then you will not want to spend.

If you take a look at corn and cocoa futures, both prices have hit MULTIYEAR high, and this has worried the Fed. IF basic food items are COSTLIER, the standard of living decreases overall, this might lead to strike, riots, etc as seen as many places Malaysia, Indonesia, Philipines, Vietnam, etc.

I rest my case.

China has multiple investments she can make; such as drilling oil at offshore Cuba, finding more resource. IF you have notice lately, China has been aggressively signing agreements with countries that have black gold so that its future is not threatened.


OK, base on what fact do you know that FOOD and GAS do not affect the US citizens much? How do you know is 10% to 20%? Have you been to the US, driving to work and paying market price for fuel? I can assure you there are many concerned citizens about higher prices of food and gas.

Read below
http://www.cnbc.com/id/25169813/for/cnbc

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Added on June 15, 2008, 11:04 pmADB Urges Asia to Take Anti-Inflation Measures Or Risk Growth

http://www.bloomberg.com/apps/news?pid=206...syvc&refer=news

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Added on June 16, 2008, 12:42 amBank Negara's biggest hint of an interest rate hike

Malaysia May Raise Rates on `Generalized' Price Gains (Update1)

By Shamim Adam

June 15 (Bloomberg) -- Malaysia's central bank may use interest rates to tame inflation if there is a ``generalized'' increase in prices, Governor ZetiAkhtar Aziz said today.

The country faces the risk of slower economic expansion and the bank will decide at its next monetary policy meeting in July whether there's a need to change its official growth forecast for this year, she told reporters at the World Economic Forum on East Asia in Kuala Lumpur.

``We'll assess very carefully what the impact of rising costs has on the general prices and if it results in generalized price increase, then interest rates may be the instrument that'll be used,'' Zeti said. ``At the same time, we'll look at what the growth outlook is and right now, there is also the risk that we may have slower growth.''

Central banks around the region have raised interest rates to quell price pressures amid record food and oil costs. Indonesia and the Philippines both raised rates on June 5, while Vietnam and India increased borrowing costs in the past week.

Bank Negara Malaysia kept its overnight policy rate at 3.5 percent for a 17th straight meeting on May 26 and isn't scheduled to review its interest-rate policy until July 25. The central bank in March forecast economic expansion of 5 percent to 6 percent this year, after growth of 6.3 percent in 2007.

Malaysia may miss the upper end of this year's economic growth forecast, Prime Minister Abdullah Ahmad Badawi told reporters today in Putrajaya, outside Kuala Lumpur.

Growth of 5.5 percent is ``achievable,'' rather than 6 percent, the top end of this year's forecast range, he said.

Bloomberg
http://www.bloomberg.com/apps/news?pid=206...c&refer=economy

This post has been edited by AdamG1981: Jun 16 2008, 12:45 AM

You cannot compare your friends and families "spendings" to project the overall sufferings of American citizens as your experiences do not count as scientific information. By the way, I am surprised that you have to mention your background to challenge my thoughts. There's no need to boast that you have family & friends in 30+ countries as it doesn't boost your credibility any further.

Do you know that obtaining new resources (natural gas, oil) is also expensive? China has a lot of options than just investing in T-Bills; not to mention it needs all that reserve to prepare itself for a soft landing.

Market is worried on Dow Jones later on tonight. Adobe Systems post better results but gave a revenue forecast below analyst estimate. Goldman Sachs and BestBuy are reporting later on tonight; with PPI and housing starts due also.

My advise: take your profit today, and bargain hunt tomorrow.

This post has been edited by AdamG1981: Jun 17 2008, 11:05 AM

Yes, volume has been anemic. Alot of clients took their money out to invest in foreign currency due to inflation fear/ depreciation of the ringgit.

This post has been edited by AdamG1981: Jun 17 2008, 10:49 AM

Haha, what positions you have now cherroy? I am betting that the Fed will not follow through the tough talk.. betting on the Euros to reach 1.58 again.

Well, there's a lot of volatility and lack of direction in CI these days. But its best you sell on a rally, and buy after a pullback. Keeping it till Sept is not recommended.

Well, it will be interesting to see if the Ben will actually raise rates during election year.

But if the Fed doesn't raise interest rate next week, the Fed's credibility is severely tarnished.

That's why currency speculators will punish the USA further if the Fed doesn't dare to raise interest rate. Ben can talk gungho all he wants, but money talks bullshit walks.

I am also bullish on the Singapore dollar. But you are right, most bullish is AUD.

Dow Jones futures +34.

Shanghai Composite at 15 month low. -2.76% today

UK CPI up year to year.
ECB's Bini Smaghi says 0.25 pct point rate hike may be enough to calm inflation
http://www.cnbc.com/id/25204133/for/cnbc

Maybe consolidate to 2000 points after the olympics before settling at 2300-2500 end of the year.

Wow if its true, tomorrow we might see a mini crash on CI.

PM unaware of Sabah MPs forming own bloc

http://www.thestar.com.my/news/story.asp?f...0986&sec=nation

The press conference of SAPP president Datuk Yong Teck Lee is scheduled for 2pm, according to a senior party leader who spoke on condition of anonymity.

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Added on June 18, 2008, 10:02 amCI continues to head south, new low each time.



This post has been edited by AdamG1981: Jun 18 2008, 10:02 AM

CI closed for morning session at intraday low; 1213.66.v (-14.10)