In an Undercollateralized World concluded by quoting Michael Lewitt. Lewitt, the proprietor of Harch Capital Management in Boca Raton, Florida, wrote in the May issue of his monthly letter, The Credit Strategist:
"Readers interested in owning the Chinese currency can walk into the Bank of China in New York or Los Angeles and open a remnimbi-denominated account. While these accounts originally had limits on size, The Credit Strategist understands that these limits have now been lifted and meaningful amounts of money can be invested. These accounts are insured up to $250,000 by the FDIC (there must be some irony in that.)"
A friend, after reading Lewitt's comment, let me know he had just been to the Bank of China in New York (at 410 Madison Avenue, corner of 48th Street). He had met with his banker, had transferred funds to a higher-yielding certificate of deposit: higher-yielding, that is, than he could receive at a U.S. bank. Note Lewitt's comment, above, about the irony of Bank of China accounts being insured by the FDIC.
It was explained to my friend that the Bank of China's "bookkeeping and mailing functions are slow these days because they've been overwhelmed with applications for new accounts and they are having trouble keeping up."
My friend expects the remnimbi, thus his account, to appreciate against the dollar. I expect the same but have an even higher degree of confidence that once CNBC gets wind of the trend, we will be seeing, and reading, "remnimbi-in-a-bubble" stories from every media outlet in the country.
Frederick Sheehan writes a blog at www.aucontrarian.com
