Hot Money Is Fickle

(Conspiracy Nation, 07/05/08) – Speculative capital or “hot money” is attracted to China at the moment, reports The Economist. The Chinese yuan lifts her skirt and promises 4 percent. The dowdy dollar has hairy legs at only 2 percent. The “hot money” gets a hard-on and asks the yuan for a date. (“Capital Inflows To China: Hot and Bothered”, June 26, 2008)

The “hot money” does not like the stock market lately. It does like oil and other commodities. But “hot money” is fickle, like Scarlet O'Hara.

Ambrose Evans-Pritchard, a Brit (one of the cousins), is a pound man. That is natural: he is British so he cheers their currency. For this reason, Evans-Pritchard loves Ben Bernanke and his low rates. The “hot money” likes the pound, compared to the dollar.

But Evans-Pritchard is aghast at euro rate rises. His beloved pound begins to look less attractive in comparison. The fickle “hot money” has a wandering eye, looking across the British channel at the seductive european maid.

In the U.S., a crackdown against “hot money” licentiousness is preached. “Hot money had better quit its amoral ways!” bellow some. This is instead of raising the skirt on the dollar to attract the “hot money.” (In other words, “Speculators had better quit their amoral ways!” bellow some. This is instead of raising the rates on the dollar to attract the “hot money.”)

Worldwide, petroleum is denominated in dollars. With the dollar not looking attractive lately, the “hot money” is exchanging dollars for oil futures. The oil futures look mighty attractive and begin charging more for a date.

Ben Bernanke, like an old-fashioned parent, keeps telling dollar, “Hot money will appreciate you for your inner beauty.” But “hot money” is running loose, driving a sports car, and never phones plain-Jane dollar for a date.

So plain-Jane dollar waits at the window, wearing a face which she keeps in a jar by the door. Her wild twin sister, oil futures, meanwhile has lots of dates. “How come oil futures has all the fun?” complains plain-Jane dollar. “Never you mind,” counsels Ben Bernanke. “'Hot money' will appreciate you someday, when he decides to settle down.”

But will this happen? Or will plain-Jane dollar wind up an “old maid”?

Friends of plain-Jane dollar want to build lots of walls to inhibit the wandering ways of “hot money.” They want rules and regulations mandating the currency Casanova onto the upright path. Friends of oil futures, wild twin sister of plain-Jane dollar, laugh at this. “'Hot money' is a swashbuckling character!” they chuckle. “He will just climb the walls!”

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