Reply #22: JMHO, but I think interest rates are out of their control now. We rely [View All]

way to much on the "kindness" of foreign central banks. Of course, kindness has nothing to do with it, it's all about competitive currencies and exporting to the gluttonous US consumer - but that's a whole other discussion.

Interest rates will rise when the world central banks (especially Asian) begin to demand more return on what they've been lending us (Treasury purchases). That day of reckoning is coming soon, they need to replace, or should I say supplement the US consumer as the driving force to their own economies first. That's slowly happening - check out the article on Japan's growing surplus. China has a long way to go to boost their domestic spending, partly due to the shear size of their population, but they're making great strides. Their goal is to float their currency by 2007, due to some agreement with the IMF/World Bank deal.

To get the most bang out of floating the Yuan, China will want to make this move when the currency speculators least expect it. They've been talking down the move quite a bit this week. I also noticed that Malaysia has gotten in on the rhetoric as well. It's like a game of poker, are they bluffing? Is the move coming much sooner than we think? Some scary stuff might be going on behind all of this currency talk the past couple of weeks.