GAME On in China

• Report this Comment On September 25, 2009, at 4:29 PM, farrockgrad wrote:

  I think there is something bogus going on here. They delayed the opening supposedly because there were so many buy orders and no sell orders and yet when it opened it immediately went down in price. The Shanda parent got beat up bad losing almost $7 from its $56 price.

  i had been warned about possible manipulation of this stock but most of the honchos were promoting it.

  Oh well, got out without being too badly damaged.

  Steve D.

• Report this Comment On September 25, 2009, at 4:44 PM, elephantinroom wrote:

  My view point: Shanda is a gaming company at the end of the day. Gamers are a VERY fickle lot. Switching cost of customers is VERY low. I don't believe they're very sustainable. And you have greedy owners without a very professional management team.

  A123 on the other hand makes real things in real factories for a real market, with A-list investors, board members, and a professional management team. They're using the cash to scale and deliver because the winner in this market is who can deliver in scale and at the right cost. Plus they're the only US company to do this.

  Investors these days can afford to be choosier. And they've chosen to invest carefully - and not just look at the banter on blogs and message boards from "professional analyst"

• Report this Comment On September 26, 2009, at 7:27 AM, BucketOfOnions wrote:

  Following statements earlier this month by Premier Wen, which voiced apprehension concerning the future stability of the USD, the head of the PRC's central bank, Zhou Xiaochuan called for a new international reserve to replace the U.S. dollar, a truly global currency, which is independent of "economic conditions and sovereign interests of any single country". This reserve would be an enhanced version of the International Monetary Fund's (IMF) Special Drawing Rights (SDR).

  SDRs are valued based on a basket of currencies, the USD; Euro; Japanese Yen; and British Pound Sterling. They were originally proposed to replace the Bretton Wood's "gold standard". The SDR has never gained the popularity of the U.S. dollar; only a handful of nations peg their currency against SDRs. Since Bretton Woods ended in 1971, the global market has set currency prices of "floating" exchange rates. This put more power in the hands of national central banks, such as the U.S. Federal Reserve. Due to the economic downturn it is tempting for nations to devalue their currency to make their exports more competitive, which could spark a trade war. This goes to the heart of Chinese Premier Wen Jiabao's concern over the safety of Chinese investments. China does not completely trust the government and Federal Reserve to do what is best for the world economy over what is in America's best interest. The various bailouts and liquidity schemes that the U.S. government and the Federal Reserve have promoted appear to China as an attempt by America to pay for financial stimulus by "printing money". This could create inflation which will weaken the value of China's assets.

  One problem with Zhou's proposal is that the IMF would determine the value of the SDR, a multinational institution where there would be much political pressure from major contributing nations to bend the exchange rates in a given nation's favor. When the IMF does allocate SDRs, countries exchange them for local currencies at domestic central banks. The country then uses it to buy capital assets which often inflate domestic currency, which is also problematic. Such a proposal has been suggested before by Russia and other lesser developed nations, but the United States has always been wary that this could be inflationary and affect the central role of the USD.

  Recently, Treasury Secretary Timothy Geithner said he was "quite open" to an "international reserve currency" to replace the dollar, but then quickly reversed, trumpeting the dollar's dominance as the USD and various stocks market values begin to drop. The U.S. will likely work to reduce currency fluctuation and ease world trade where politically possible in the current climate, not find a means to remove the special status the dollar holds in the world economy.

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