The Lesson to be learn from Japan.

Lesson to learn from Japan, as Japan want to share it to US, this is the story below:-

The United States should use public funds to shore up its financial system and calm recent market turmoil, Japan's financial services minister said in an interview published Monday. "It is essential (for the US) to understand that given Japan's lesson, public fund injection (into the financial sector) is unavoidable," Yoshimi Watanabe told the Financial Times.

He said Japan was ready to share its experience with the United States at the Group of Seven meetings of finance ministers, who are due to gather in Washington next month. "We are prepared to take coordinated action if necessary," he said. "We must recognise that the current crisis is not as straightforward as past dollar crises." The same newspaper reported over the weekend that US and European central banks were considering buying mortgage-backed securities to resolve the credit crisis triggered by a wave of US home loan defaults.

The problems have pushed the dollar down to a 12-year low against the yen and to the lowest-ever levels against the euro, causing concern in Japan and the eurozone about the impact on exports. Japan suffered a deep and prolonged banking crisis in the 1990s after the country's asset bubble burst, leading to the failure of a number of high-profile financial institutions. The Japanese government injected capital to the banking sector in an effort to shore up markets and struggling financial institutions, some of which were nationalised to prevent their collapse. The problems came amid Japan's "lost decade" of stagnant growth and on-off recession in the 1990s, from which the country is still recovering.

--------------

This is the same kind of matter that happen in Japan's property bubble. If the crisis is very serious it may have a serverity deflation in all asset in US just like Japan that time. Is not hard to find some information that Japan had the property bubble that cause a great deflation.

is there a advantage for currencies to pegged with weak dollar?

This is the news that I get from internet that said:-

Abundant liquidity, triggered by sharply higher oil revenues, and the effect of currencies pegged to a weakening dollar are fuelling inflation in the Gulf region, economists say. And the situation is so serious that Gulf business leaders will meet in Bahrain on Monday to get advice from the International Monetary Fund (IMF) and the European Union on how to tackle the problem. "The growth of money supply in Gulf countries has in some cases exceeded 20 percent," leading Bahraini economist Ahmed al-Yusha told AFP this week. "This reflects in (higher) demand, and consequently affects prices." Gulf Cooperation Council members Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have been enjoying a windfall of oil revenues on the back of record crude prices. But the surge in revenues, which have injected GCC economies with a shot of energy reflected in impressive economic growth, has also left countries awash in cash.

The IMF expects overall GCC inflation to rise to six percent in 2008, with consumer prices in some member states rising at much higher rates. The UAE and Qatar registered 9.3 percent and 11.8 percent, respectively, in 2006. Most final inflation figures for 2007 have not been released, but inflation is estimated to have hit 11 percent in the UAE and 12 percent in Qatar. Saudi Arabia, which traditionally had a fairly low inflation rate, reported a 4.1 percent rise in its consumer price index in 2007. A key element in higher prices is the sharply higher cost of housing. Even though the region is experiencing a frenzy of construction, there is still a bottleneck in supply. The increase in the cost of goods that are imported from non-dollar zones is also blamed. A December study by the Federation of GCC Chambers blamed inflation mainly on the huge money supply and the peg of all GCC currencies - except the Kuwaiti dinar - to the deteriorating dollar. "Available liquidity that is accompanied by a fixed supply of goods and services ... and the drop in the value of local currencies due to the weakening of the dollar" are the two main reasons for inflation, said the Saudi-based federation, which groups the region's chambers of commerce, industry and agriculture. The study pointed out that the weakening greenback contributes to the "increase in the cost of GCC imports from countries whose currencies had appreciated against the dollar, like the EU, Japan and China." "The imports of the GCC jumped from 154.5 billion dollars in 2003 to 376 billion dollars in 2007, a 143 percent increase," the study said. The dollar peg forces GCC central banks to follow the US Federal Reserve in setting interest rates. But while the US central bank continues cutting rates to stimulate a sluggish economy, GCC central banks are faced with expanding economies that were already overheating at the higher rates. On Tuesday, the Federal Reserve slashed key interest rates three-quarters of a point, lowering the federal funds rate to 2.25 percent, and most GCC central banks followed suit with cuts of their own. Dubai-based investment bank EFG-Hermes said on the same day that the need for a "currency reform" in the GCC increases with the aggressive interest cuts in the United States and the sharp dollar weakness.

"We forecast a greater than 60 percent probability of currency reform" in the first half of 2008 by one or more states, the bank said, without elaborating whether reform should mean currency de-pegging or revaluation. It suggested however that the UAE or Qatar might lead the way, while saying it might be done by the GCC as a whole. Meanwhile, Yusha suggested that the link to the dollar should be revisited without necessarily de-pegging the Gulf currencies, saying this could be done through revaluation.

---------

So do you think is a good ideal to invest in weak dollar? Better think twice first before you put your money in weak dollar. Do more research the fundamental of dollar and you will know why.

As for me what I think Dollar got a hard time to climb back to pre-credit crunch level. This is due to high level of bad debt in US, unless US come out a new standard for their currency policy that are not Dollar policy.

Does currency hike curb higher oil price?

Oil price for NYMEX is future price that why is at least one month advance contract.

Nov. Oil price is USD$ 90/barrel

Mar. Oil price is USD$105/barrel

Base on the currency Chart for one SG Dollar that exchange in US Dollar.
We get the Oct. exchange rate at 0.68 for buying Nov. Oil contract at NYMEX.

and get Feb. exchange rate at 0.705 for buying Mar. Oil contract at NYMEX.

Working on Nov. Oil :-

Using SG Dollar to buy Nov. Oil, therefore 1/US$0.68 = SG$1.47058

SG$1.47058 X US$90/Barrel = SG$132.35220

Working on Mar. Oil :-
Using SG Dollar to buy Mar. Oil, therefore 1/US$0.705=SG$1.41843

SG$1.41843 X US$105/Barrel = SG$148.93515

The difference is 148.93515 - 132.35220 = 16.58295

that is for 11.1% increase currency hike for SG Dollar to buy the oil at NYMEX.

If let's say SG Currency fixed at Oct. exchange rate to buy Mar. Oil at NYMEX.

(Mean that SG Dollar don't get any hike)

Working:-

SG$1.47058 X US$105/Barrel = SG$154.41090

The difference is 154.41090 - 132.35220 = 22.05870

This is very expensive to fixed the currency for buying the growing high oil price.

This is the Pro for currency hike to curbing higher oil price but is bad for exporting goods to other trading country, because high SG Dollar other country people will have to pay more to buy SG Goods.

I believe that oil price will goes down in the middle term this is due to most country adjust their economy growth to lower and the winter in cold country is goes to ended soon.

New York bridge is falling down! - US Dollar is falling..

By looking at this chart you will know US Dollar is falling and Japanese Yen is raising.
This will making more inflation to the world economy just because of cheap US Dollar in the near future, just don't forget those commodity product are priced in US$ and the buyers are from the country from the whole world because their currency is going up and up..they have a lot of saving to buy those commodity.

It look like Japan may head a recession, maybe to Japanese recession is not a big deal because they have went thru a very long recession since that burst of property bubble (that is 1989 time...) I can't image that one US Dollar can only buy 97 Japanese Yen (Forex Exchange rate on 17/03/2008) that can tell you Japanese goods are expensive. To those who are able to go to Japan for a tour that they are well loaded with cash. most of the people will start to thinking of buying US goods when US Dollar is falling to the lowest like 1.20 or 1.15?...who will know how low the Dollar will goes? can't tell.

There is a lot used of US Dollar in many products, like Oil, Gold, commodity, most of the country in the whole world their saving (reserves) are in US Dollars that is a lot..that are talking about 1/8 trillion or 1/2 trillions..like China is ready having more than a Trillion in their reserves.
NOTE: US Dollar is a "reserves currency" that are commonly used in the world. There is noway for a Top billionair to manipulate US Dollar movement because it too huge for manipulate you are talking about a country level in controling the currecny that needed a few billions..unless a few central banks make-up together for invention the Forex market then the US Dollar will follow as their wish. if not they just don't like US Dollar like what some OPEC countries going to do about the US Dollar in the future (recent news only)...

Following day may will be happening because most of the US Banks, lenders and brokers going to report their earning in this week. so there will be a market meltdown again. This type of market only headed for selling only, good for short seller. I feel that 2nd Quarter of this year maybe is the bottom if US economy can really avoid the recession if not,...all the way down. that tell me something like Japan's property bubble during 1990's. now you can know it about how bad, just to get you the feel. What the US Fed can do is printing more and more US Dollar notes that what American said "Paper Dollar"....print more US Dollar note will cause the falling in currency Value and making other Foreign currency to rising...

American alway said "In God We Trust" let the God make the faith.

Will Oil price continue to rise?

Future oil price believe to stay at $100 and above but in the mean time there should be a correction in oil price in the short term is because most of the countries are try hard to let their economy to slow down for control the recent high inflation, also the weather in cold country will went into warm weather soon.

If the Oil price still staying high, is would tell they can afford at current price with the amount of oil that they want, then after if they can't afford the Oil price would fall. This would have to wait until most of them exhausted in their fund for purchased Oil.

We can never know when and where in the world oil well is going to run at peak rate that so call peak oil in oil and gas industry.

For your information an average oil well will run completed dry that will be about 45 years for a average size of oil well we are talking about. but not for Saudi's giant Ghawar field, the world's largest oil field, with estimated remaining reserves of 70 billion barrels. That field is the largest and have not yet reach it oil peak production, also that is couldn't know it that is when.