Fed's QE does work - USA exports set to soar.

[GoFlyKiteNow]

Got this data from a friend in Oman.

In 2008 Oman Electric Power sourced for HV Transformers.

They purchased many of these from China at a cost of 7000 plus USD each.

The competing US make transformer was priced at 13,500 USD each.
Hence the USA product was not selected.

Note; Omani Rial benchmark is used for final price estimations
by the buyers in Oman.

Now:

Now the same item - the price differential in Omani Rials shows
the USA product has become competitive. Due to the fact that
the USD has gone down in value against the Omani Rial.

New orders are now being placed with USA supplier.

Thanks to the FED's Quantitative Easing that pumped 800 billion
into the global economy directly and indirectly thereby pushing
up currency values of other nations vs USD.

There will be many such instances across the globe that will show
the USA products have become competitive and US exports sector
is bound to soar and capture markets worldwide...at the cost of PRC exports.

Plus the USA already have a good product quality reputation anyway.
which is a big plus.
.

 

[longbow]

Weakening of US$ makes US goods more competitive against Japanese and German goods.

US mfg goods do not compete directly with China made goods. Your article of some one off transformer is very subjective. How large is the transformer - perhaps if it is industry commercial power station transformers it is possible? Even then the Chinese producers have economies of scale given that it has the world largest installation of new power plants and grid. They are even building power stations in India! However, that transformer could be highly specialized and Chinese are now longer using much of that item (different Chinese specs and the mfg feels it makes more sense to meet the huge local demand).

My reason is that Yuan strengthening is small advantage compare to huge difference in economies of scales and cost of labor in China. Furthermore, US QE has has limited impact on Yuan, so far, as most of the Asian nations have reacted by weaking their own currency.

However QE2 will make Boeing more attractive than Airbus, caterpillar tractors more attractive than Komatsu and GE medical more competitive then siemens. These are the industries that US are stong in.

As for the whole gamut of electronic goods, US does not make LCD TV, they do not make electronic toys (playstations, wii), they hardly have a garment industry, they do not make and assemble computers. So QE2 makes no difference.

I think the greatest impact is on Germany and japan and Korea. This was why when Obama, during the recent G20 wanted to take on the Yuan issue, he instead got blasted by german finance minister for manupilating the Us currency

 

[kukubird58]

GFK...i suspect u may have been mis-informed by your friend.

I do not know the exchange rate in 2008.
the exchange rate today is something like this:

1USD = 0.385OMR
1USD = 6.607RMB
1RMB = 0.058OMR

The original difference in price in 2008 is more than 92%.
The RMB has not changed much against the USD in the last 2 years despite US pressure.

In simple term, it means that if OMR appreciates against USD, it must also appreciates against RMB at the same time (with varying degree).

Hence the exchange rate fluctuation in the last 2 years is unlikely to make up for 92% in price...