House of Paine

why so many pegs below fair value

  god why won't they 
just relax
and listen to me ...


  part 97 




============


why do certain countries peg ??? 
 
cause they can  
and they want to conquer foreign markets  
 
why do they think that works best for em ??? 
 
must be because  
playing the trade game well 
requires at least 
an undervaluation 
that plus open doors  
are necessary  
if you want an export 
led economy  
 
and thats gospel 
based on decades  
of solid demonstrations  
in country after country  
 
experience shows 
in the real global set up  
with all its 
unmodeled complexity  
the best outcomes 
follow from strategies 
arrived at empirically  
 
strategies  
that  
defy simple 
model based  
ivy league  
rationality  
 
like a below fair value peg  
 
 
---------------------- 
the reason no pegger listens to 
well intended  
fellahs  
crying bust your pegs  
and we'll all be better off  
is obvious  
 
the pegs get em what they want 
 
my advice  
if you want to understand the peggers  
work back from what their goals are 
and see how your unpegged path 
gets em their better faster more reliably  
 
i bet u can't 
i bet u 'll use a model 
 
not the historical record 
 
do low valuations get changed ??? 
 
sure  
look at japan 
 
they played the revaluation game ... 
 
 
of course  
today they're in what ? 
year 13 
of domestic  
dumpster city  
 
so why did they switch ??? 
 
lack of fore sight ?? 
 
no  
 
because some time  
in the late 70's 
the main japanese 
trans nat corporations  
figured they'd be better off 
becoming major 
fdi capital exporters  
then staying  
major product exporters  
 
that works best if you're 
currency is over valued  
 
so bling the yen hits 
the roof at  
above one penny  
 
and the rest at home 
has been ...ugly  
 
 
-------------------------- 
 
as to the imf  
 
as peg buster  
 
again 
maybe you are not looking at  
the interests 
of the big capital fdi 
corporate exports  
 
they like it when pegs are removed 
 
after their optimally positioned 
 
inside that peg country's economy