Tag Archives: international trade

Trade keeps inflation lower

My latest quarterly investment commentary discusses how trade is effectively importing low inflation.

“Prices are only stable for imports.”

“The US imports a low inflation rate.”

Download: 2005 Q4 Investment Commentary

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Population, Productivity, and Commodities

My latest quarterly investment commentary discusses some longer term global demographic trends, and implications for investors.

Download: 2005 Q3 Investment Commentary

Recent global growth rates are unprecedented in economic history.

Economic growth at this pace will put predictable strains on resources.

Population, productivity, economic growth, and production capacity point to long-term commodity gains.

North Korea

The conflict with North Korea is based on deception and fear.

North Korean leadership has deceived their population into believing that America started the Korean War and killed hundreds of thousands of Koreans. Based on this belief, North Koreans fear that Americans will attack and kill them. Their nuclear agenda may have started as part of their conflict with South Korea, but it has evolved into a defense against a perceived American attack.

To avoid war and encourage positive change, the US and the rest of the world should make an effort to integrate North Korea into the economic landscape. Companies and governments should offer to pay North Korea for exports — clothes, pots and pans, and basic manufactured goods to start. If the North Koreans can develop a growing economy, then greater employment will bring better education and reform.

With basic commercial trade, power is shifted slightly toward the economy and away from the state.

Chinese currency policy

The import textile quota expiration may be a catalyst for political pressure on Chinese currency policy. Non-Chinese emerging markets will threaten to devalue or peg their currencies as long as the US is not punishing that type of behavior.

See also: Renminbi Valuation

Buffet: "I don’t see how the dollar avoids going down"

Forbes reports on Warren Buffet’s currency perspective:

Heed the Sage of Omaha. Warren Buffett, whose investment acumen seems unerring, had a caveat for America: Barring “a major change” in policies, the trade deficit will further undermine the U.S. dollar.

The billionaire spoke in a Wednesday interview with CNBC, the cable TV news channel owned by General Electric (nyse: GEnewspeople).

Without shifting current trade policy, “I don’t see how the dollar avoids going down,” he mused, warning of inflation risks posed by an anemic Yankee currency.

The prairie-born genius also confessed he’s having a “hard time” identifying stocks to buy, and isn’t purchasing commodities. His cash swelled to $43 billion in the third quarter, by one account, because he couldn’t find many investment opportunities.

Buffett, 74, is chairman of Berkshire Hathaway (nyse: BRKa
news
people), the immensely successful investment vehicle that acquired a new–and immensely successful–board member in December: Microsoft (nasdaq: MSFTnewspeople) Chairman Bill Gates.

The latter also enjoys a personal friendship with Buffett, and takes part in his bridge games. (see: “Gates: Buffett’s Pal Bill Elected To Berkshire’s Board“)