Comments on: Carnival of Small Business Issues - Edition 4

By: CA

CA — Sat, 02 Jun 2007 11:27:46 +0000

I suppose “arbitrage” may have been the incorrect term to use there. “Speculate” should have been the word. What I mean is, if the perceived value of an asset is not the same as the current market value, speculators can either go long or short on that asset depending on where they expect the value to go up or down.

Just a quick note: China does enjoy a significant higher ratio of foreign direct investments to portfolio investments. So they are sitting pretty there. Moreover, I am not sure if the US will like China to go on a global asset shopping spree with a revalued stronger currency. That one factor alone is reason enough for me to agree with your assessment that “basing decisions on what might happen is probably riskier than just ignoring it.”

By: China Law Blog

China Law Blog — Sat, 02 Jun 2007 07:27:27 +0000

How can you arbitrage the Yuan when it is essentially fixed?

By: CA

CA — Wed, 30 May 2007 15:09:42 +0000

China Law Blog: what you say is true. China does want a stable currency. If their currency appreciates, it will be cheaper for China to import than export. The flip side of that is North America will find goods from China becoming more expensive.

Given their current trade surplus, I wonder how long will they manage to hold the currency steady. Something has to give, interest rates (and hence inflation) or the exchange rate.

This is a real risk for small businesses who invest their scare resources to do business in China. It is the Chinese government who is artificially pegging the value of the yuan. I guess it’s only a question of time when the financial markets decide to arbitrage on the yaun.

By: China Law Blog

China Law Blog — Wed, 30 May 2007 05:07:46 +0000

Great questions re the Yuan/renminbi. Unfortunately, I have no real inside info to allow me to make any predictions. I do know that China does not want its currency to rise the way Japan’s Yen did.

As for what small businesses should do, I guess I would say that they should to a certain extent ignore the currency and base their business decisions on the current economics. I have seen too many businesses over the last few years tell me they know the Yuan is going to rise big and it hasn’t and I think basing decisions on what might happen is probably riskier than just ignoring it.

Currency experts?

By: CA

CA — Tue, 29 May 2007 14:32:33 +0000

John: Thank your for your kind words. I am sure the BIG guys give small business owners sleepless nights. Great post.

Tracy: I would imagine, credit reporting agencies would match the SSN/SIN AND complete name. I am also assuming lenders use the combination of SSN/SIN AND complete name. Will this combination not help in reducing synthetic identify fraud? It can’t be so simple I thought, so I googled “synthetic identity fraud”. http://biz.yahoo.com/brn/070516/21861.html?.v=1 explains why the above combo may not always work. The article also lists two service providers for such checks.

Kristine: That is indeed a nightmarish scenario. I do hope they realize they will be killing a lot of small businesses - because that’s what it will amount to.