Monday, March 14, 2005

China's Currency Policy Leading to Housing Bubble in U.S


Monday March 14, 3:00 pm ET


- Featured in This Week's Barron's Online China's Peg to the Dollar is Distorting Treasury Bond Yields and Keeping Mortgages Artificially Low, Says JBGLOBAL LLC

NEW YORK, March 14 /PRNewswire/ -- JBGLOBAL LLC asserts that China's peg to the dollar is causing bond yields to remain at forty year lows which in turn causes mortgage rates to remain artificially reduced. This unnatural reduction in rates is fueling the U.S. housing bubble.

An artificial distortion like this occurs when a large and well-heeled buyer makes purchases without regard to any of the typical investment rationales (like price or risk) -- in order to peg a currency, for example. "China must buy our bonds to peg its currency, in order to possess enough dollar-denominated assets to serve as a backstop to the Yuan," maintains James Berman, President of JBGLOBAL. "This gun to their head shanghais them into buying Treasury bonds without regard to our deficits or low yields -- the type of thing a normal investor would care about. The artificial buying of our bonds without regard to price causes our yields to be lower than they would be in a truly rational market," says Berman.

James Berman, JD, the founder of JBGLOBAL.COM LLC, a Registered Investment Advisory Firm, specializes in asset management for high-net-worth individuals and trusts. Mr. Berman is a specialist in global investment, asset allocation and modern portfolio theory. As the president of JBGLOBAL LLC, the general partner of an investment fund, Mr. Berman directs a global investment strategy that invests in the United States, Europe and Asia. A frequent lecturer, Mr. Berman is a faculty member in the Finance, Law and Taxation Department of the NYU School of Continuing and Professional Studies. He publishes the JBGLOBAL Macro Compass, an email newsletter for investors. Mr. Berman is regularly published and quoted in a variety of publications, including Barron's and Fortune. He is a graduate of Harvard College and Harvard Law School.

0 Comments:

Post a Comment

<< Home