Bill Gates, Warren Baffett and China against the dollar

William Pezek
Analyst, "Bloomberg News"

The dollar can add the two richest people in the world in a list of its detractors, it is surprising that in Asia. Bill Geyts, the head of "Microsoft Corp.", Left no doubt that, in the television host Charlie Rose "I have a short position on the dollar." The richest man in the world called the record federal debt of 7.62 trillion. $ "A little frightening" and lamented that the U.S. is in financial terms to the "unfamiliar territory". And he is right. Just ask Warren Baffetta, the richest man in the world number 2, which purchased foreign currency against the dollar since 2002, expressing concerns about U.S. deficits. The rate of true. Company Baffetta "Berkshire Hathaway Inc." reap the profits (excluding tax) in the amount of $ 412 million on this sale in the third quarter of 2004. Gates and Baffett can not stand on a par with George
Soros, although their investments have certain similarities. Financier George Soros has long been disappointed in the global reserve currency, and the competence of American President George Bush on economic issues. Yet the U.S. may face an even more powerful force than wealthy individuals - the fastest growing economies in the world. China seems to have quite a lot of questions from the U.S. regarding its monetary policy.

A reasonable level of
"Please leave it to us," said deputy chairman of the People's Bank of China Lee Horn in Davos, Switzerland, where it was suggested that a stronger yuan would help China. "We are happy and willing to listen, but do not ask us to do what you say," he said. Huang Ju, who directs the financial policy of China, as deputy prime minister, even more coldly replied to the suggestion to raise the yuan. "We must support the exchange rate at a reasonable level," said Huang, also attended the World Economic Forum in Davos. Yet Chinese officials have given food for journalists and analysts, made a statement, which seems to be more sympathetic to Gates and Baffett. "The U.S. should make efforts to restore order in their own homes," said Chinese central bank adviser Yu Yongding.

It really is breathtaking to see how Chinese officials are accountable USA. This may be paid for all the lectures from the U.S. Treasury Robert Rubin in the 1990's to John Snow today, they have made in Asia. More likely, however, that Chinese officials are beginning to worry about their own reserves in U.S. dollars.

Big Seven
If Bill Gates had put his 46.6-billion in the state of American debt, it would be only about a quarter of China's reserves. The leaders in Beijing to buy U.S. treasury bills, to keep the exchange rate of 8.3 yuan per dollar. And their American debt reserves were losing value because of the 26% reduction of the dollar against a basket of six major currencies since the beginning of 2002. A lower dollar increases the competitiveness of China, and yet it can have negative consequences. While China will not let go of the yuan for fear of losing control over their economies, a lower exchange rate makes it more difficult their task to keep inflation and avoid overheating of the economy this year. The issue was raised before the meeting the leaders of seven leading economies in London. There is little doubt about the weakness of the dollar and euro eventually rise, which is at the center of attention. European Central Bank President Jean-Claude Trichet expressed concerns about the dollar.

Risk
Until now, the U.S. had been able to manage the situation. Now they apparently lose their ability to keep investors and central banks are under control. Once central banks here in Asia have turned to the dollar, for the United States occur very turbulent times, as the yield of bonds increases. Risk can be seen in the development of China's incentive to change its dollar guidance. U.S. uses its power to push China to raise yuan, reducing thus its commercial advantage. Yet it bears the risk of volatility and large losses for the dollar-denominated reserves, which could eventually lead to China. So, this American weakness, not strength, that the views are treated in Beijing. Among all this, the Gates Foundation and Baffett heated to China. This is a risky assumption, perhaps, given its fragile financial system, inadequate transparency, lack of democracy and the failure to halt piracy of goods. However, in Davos, Gates described China as "an agent of change" within the next two decades. In September, 27-billion Gates Foundation has received approval from the regulator of China's foreign currency to invest the whole $ 100 million in Chinese equities and bonds. Baffett, who visited China from Gates in 1995. Made his first investment there in 2003. By purchasing a share of the "PetroChina Co." However, the appeals of the United States do not Gates and Baffetta happy - they are convinced the central banks of China and the rest of Asia is not to dismiss its approximately 1.1-trillions of reserves in U.S. Treasury obligations. If they do so, the two richest people in the world will also be described as two of the most far-sighted foreign exchange speculators.

Forex Magazine
based on www.bloomberg.com