MENSACCINO+

The "+" stands for games on top of well........you get the picture. It was my first time meeting up with some members of the local mensa here in Hong Kong since I joined in early April and it was quite a warm gathering. The atmosphere was relaxed and informal. If this 1st meeting is anything to go by, it seems the chapter here in Hong Kong is represented by a wide spectrum of age groups as well as nationalities consistent with the international status of Hong Kong.

But the thing that really surprised me most is that all of the functions including today's and the day to day administrative duties are organized and carried out by the members themselves voluntarily, which is how the costs are kept low. I find this special.

Gold and Silver

Although, the official inflation rate in the US is nowhere near Zimbabwe’s levels, the easy monetary policies of Mr. Greenspan and lately, Mr. Bernanke are really starting to take a toll on the US currency. Since 2002, the US Dollar has lost its purchasing power against European currencies and even more so against the commodity-producing nations (e.g. Australia). Not suprisingly, the world’s reserve currency has lost the most against real money – gold and silver.
Now the people who did buy gold at a low would rub their hands with glee with the fact that both gold and silver have risen by roughly 400% since the start of the precious metals bull-market (2001-2002). However, the real value of gold and silver have not changed at all (an ounce will still buy the same amount of real stuff like oil) but the reality is that the US Dollar itself has lost a considerable amount of purchasing power over the same period, relative to real money. Now, given what we have witnessed in Washington in the past few months (the creation of more money out of thin air), I have a lot of doubt in my mind that the US establishment cares about the health of its currency.

COMPETITIVE DEVALUATION

Are you worried about the US dollar depreciating against major currencies?

On the face of it you should be (those who live in the US and Hong Kong). However think of it logically:

How far do you think the EU Monetary Authorities will "let" the USD depreciate against the EURO? Companies like Airbus are already suffering (flying on the A380 worries me a bit), ditto BMW (they have to set up plants outside of Germany as the cost is simply too high).

Similarly how far do you think the BOJ will let the yen appreciate againt the USD?

I predict a competitive devaluation will soon start with all the central banks. In other words a massive increasing in their respective money supplies.

Prepare for your savings to be worth much less!!



Michael Chew

FINANCIAL MADNESS

THE BEAR BAILOUT

How do you think Ben bailed out Bear Sterns?

Did he print the money, obtained it from somewhere (like the treasury)?, borrowed from another country like China?

Nope. It's just a book entry. An account is created, a number "thought" up and you simply add as many zeros as you need in front of it!

Scary? Yes. True? Unfortunately also yes!

More Later.................