ruh roh shaggy....china says no more dollars. very..very bad.

[ORDagnabbit]

http://today.reuters.com/news/articleinvesting.aspx?type=hotStocksNews&storyID=2007-03-20T145650Z_01_T68421_RTRUKOC_0_US-MARKETS-FOREX.xml


The Emerging Markets magazine quoted Chinese central bank Governor Zhou Xiaochuan as saying "many people say that foreign exchange reserves in China are (already) large enough."

"We do not intend to go further and accumulate reserves," Zhou was quoted as saying in the magazine, which was released at a meeting of the Inter-American Development Bank in Guatemala.


"This is very bad news for the dollar. The U.S. has a current account deficit to finance," said Axel Merk, portfolio manager at Merk Hard Currency Fund in Palo Alto, California.

more at the link...

[BattyDem]

1. Uh oh ... this can't be good for us

:scared:

[onehandle]

2. Our future masters know exactly what they're doing. nt

[WinkyDink]

31. My mother always said it would be the Chinese with the last laugh.

She's 82, been saying it for a long time. She might yet live to be right.

[a kennedy]

36. I think this is like Native Americans having the last laugh on

the white gambling folk at their casinos.

[SpiralHawk]

37. slot machines = chrome buffaloes

republicons have played right into the hands of the Chinese, and
screwed America.

[lvx35]

3. I wonder how China feels about the Euro.

That would give some context to this news for me.

[soothsayer]

4. When they threatened to dump the dollar we sent our whole economic

team over there (around xmas?) and asked 'em not to, and when they said they wanted to anyway we said (so the story goes) "how would you like to go without oil for a few months cuz the Iran pipeline that feeds you gets blown up?" and they said "you wouldn't dare---that would be crazy" and our top economic guy says "have you met my boss?" and all of a sudden they didn't dump all their dollars. BUT this is an interesting development. Watch the runup to iran escalate!

[Bozita]

14. Praying you're wrong, but fearing you're right.

Hard to take money out of a home with a new mortgage when the home prices are dropping.

[idgiehkt]

19. interesting

makes sense, though. They should know by now that the cons would dare. But it's inevitable they will get rid of the dollar eventually, isn't it?

[The Doctor.]

22. Lovely...

So they're getting ready to float the yen... aren't they?

[MazeRat7]

29. oops - wrong sub-thread... reposting.. sorry

[Virginia Dare]

38. Once China breaks free of it's dependence on us...

and they will, because they are working overtime at it, all bets are off. Our arrogance and greed will ultimately spell the end as far as world domination goes.

[Morgana LaFey]

42. I'd love some links for that

for my own records.

[ContraBass Black]

5. We knew that they wouldn't keep propping up our currency forever.

Why should they? It looks like the cost has just exceeded the benefit.

[ORDagnabbit]

6. I think you hit it. n/t

[Blackhatjack]

7. We may be facing the 'perfect storm' .....

China stops buying US debt instruments(dollars), and the dollar declines.

Inflation goes up significantly.

The real figures relating to the US housing market start to show up in the foreclosure figures, increased market inventory of homes, and lower housing prices. New housing starts are off, and all businesses that depend on the housing market suffer.

Jobs do not grow --they contract, raising unemployment figures.

The bill is finally coming due with the convergence of all these events, and we are not ready to deal with it as a country.

[nguoihue]

33. The value of the dollar has been declcining

steadily for the past 14 or 15 months. I'm not in China but not far away. The value here is off about 20% in just over one year. Unless some serious changes are made soon the declining value will bring about higher inflation in the US and could affect economies world-wide.

I'd hate to think what the worst case scenario might be.

[soothsayer]

35. that's funny, the US has inflated the dollar by 20% ! Ever since we

took the dollar off the m3 index last march (where you had to tell folks how much money is in circulation---and now we don't have to tell anyone that---the us economy is a big fat black ops) I hear we've been printing money like mad, to the tune of 20% inflation. China's no dummy. So last year they say they're going to dump the dollar, and while our markets are closed on thanksgiving at 4 a.m. the dollar comes under attack by a whole bunch of countries: the chinese, the syrians, the iranians, and oddly enough the brits (!) start attacking the dollar in waves and there was a historic meltdown in the foreign exchange market, very nearly triggering a US dollar meltdown. Then the chinese say we're dumping our trillion US dollars. Paulson. Bernanke and the whole bush economic a-team goes to china in early dec and says hey, you get most of your oil from iran, so what if we blow up 100 miles of pipeline and you go without oil for a month? Then the chinese say 'you wouldn't do anything that insane' but someone (paulson perhaps) says 'have you met my boss?'

The whole thing actually starts with Leo Wanta who used to work with reagan (very complex---wait for the tom hanks movie on Charlie Wilson to come out next year). In short, Wilson arms the afghan rebels with MI6 and the CIA, and the soviet army is defeated. Wanta helps further topple the soviet union by using a superfund of money (around a trillion dollars) and is tasked with destroying the soviet economny, and thru a series of ruble scams and counterfeiting manages to take the soviet credit rating from AA to 4F; two days after the world announced that no one would honor the ruble or float their loans, the berlin wall came down. Wanta was then supposed to go into russia with that superfund and kickstart a freemarket economy, but it never happened. Instead that money kept floating around, becoming trillions of dollars.

At that point, Wanta's sitting on 58 trillion dollars, but lots of it is looted by govt's and presidents and prime ministers all over the world. A deal was made to pay wanta 4.5 trillion dollars to sort of settle out the fund (to give the money back to the US) with disbursements going to russia and china, but it never gets paid off. And last june or july, someone (possibly Paulson, who becomes head of the treasury of that time) has the money transfered to wachovia bank in ny to a goldman-sachs account---did I mention that Paulson was the former head of goldman sachs?) and the money is put into a 'parcel post carousel' account where it is transferred from bank to bank in 24 hr increments, with the banks collecting 24 hours of interest on that money. Goldman sachs makes so much money that they are able to pay those record bonuses last year ($16 billion last christmas).

Anyway, if china is threatening stuff with the dollar again, watch nutso go into iran. The US will be fully positioned to do so on April 7, so the story goes.

[Manifestor_of_Light]

8. I am no economist and no banker

And I'm trying to figure out how to get around the declining dollar, other than just investing in foreign corporations on American exchanges. Foreign banks?

Somebody help me here to prevent devaluation and inflation destroying wealth. Like the nightmare of wheelbarrows of Deutschmarks to buy a loaf of bread in Germany. PM please.

[ORDagnabbit]

10. gold, silver, real commodities, stored food... etc...

[gravity]

25. Commodities have their risk too

My parents invested in gold in the early 80's and lost lots of money on it. I believe they just finally broke even now, but still lost on 25 years of inflation.

[WinkyDink]

32. And who will buy the gold and silver? I remember gold at $33/oz.

[diamidue]

34. Well, if people are lining their birdcages with US dollars,

gold all of the sudden won't look so bad. Even a $33.00 gold piece beats having nothing.

[PerfectSage]

21. GLD = gold etf ticker symbol

SLV = silver etf

There's an oil etf, don't know what the ticker symbol is.

http://stockcharts.com/charts/gallery.html?gld


US$ index futures chart heading towards 52 week lows again?
http://stockcharts.com/charts/gallery.html?%24usd

[yodermon]

39. Can't we just buy Euros?

how does this work?

[Bluebear]

9. Chief of the U.S. Liaison Office in the People's Republic of China. Ambassador to China....

Carlyle's senior adviser for Asia.....all GEORGE H. W. BUSH

[ORDagnabbit]

13. da bushies have been good for us since trading with hitler aint they?

[Horse with no Name]

11. I don't know exactly what this means

But I want to watch this thread as smarter folks come in and tell me.

[ORDagnabbit]

15. me either but the laymans terms that I have read ....

means the worth of the dollar will drop...alot.

[Horse with no Name]

20. That's what I thought.

By the time it's over, it will be cheaper to wallpaper my dining room with money than to purchase wallpaper.

[proud patriot]

12. Not good

x(

[dweller]

16. please post in the SMW thread in the morning

i'm sure it will garner responses there.

dp

[ORDagnabbit]

17. I;m a newbie...whats a swm?

[dweller]

18. SMW = Stock Market Watch

posted daily in LBN
(latest breaking news forum)

dp

[alittlelark]

23. Our dollars are worth nothing more than our debt.

What happens when we get no more credit?

[soothsayer]

41. our dollars are backed by oil right now, aren't they?

[gravity]

24. Dollar steadies, markets ponder China FX comments

SINGAPORE (Reuters) - The dollar steadied on Wednesday, after falling on a report China would stop stockpiling foreign exchange reserves, while traders were cautious ahead of a Federal Reserve policy-meeting statement.

More analysts were also taking the view that the dollar's decline was unwarranted and that People's Bank of China Governor Zhou Xiaochuan's comment about China's $1 trillion stash of reserves had been incorrectly interpreted by the market.

...

Analysts noted that China would still be accumulating reserves. China is setting up a new investment agency which is expected to manage some $200 billion of assets and aims at increasing returns by investing in a wider array of financial instruments.

"Our read on this is that he's saying it is not China's deliberate intention to increase its reserves, but it may be a secondary consequence of policy," said Gerrard Katz, head of North Asian currency trading at Standard Chartered Bank.

More: http://www.reuters.com/article/hotStocksNews/idUSSP9635220070321

It seems like things are already recovering. I don't think it's much of a bid deal.

[eridani]

26. Is that a problem if they don't dump what they already have?

Please explain for your less economically literate readers.

[rockymountaindem]

28. In short: yes and no

They can't dump what they already have because the bonds have pre-determined expiry dates. If they don't buy new ones, we're going to have to come up with a way to pay of the current bonds as they expire besides just replacing the old bonds with new ones. That's a time-delay process as a result of the expiry dates, but it may necessitate some uncomfortable economic choices.

[WorldResident]

27. Finally, it's about time to let the yuan float freely!

n/t

[MazeRat7]

30. Booyah... sounds like its time to make some MONEY.....

Short the financials and go long on the precious metal producers and domestic capitol goods manufactures that have global exposure.

Of course if you've got the gonads to play in the FOREX market... you could do even better.


MZr7

[earth mom]

40. Zoiks!

:scared: