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Brazil Confirms What Everyone Knows: "A Currency War Has Broken Out"
From the FT: "An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness." Welcome to the new frontline. It is being played out at every 500x levered FX trade station. No prisoners are taken as those wounded are immediately shot. And the incursions have now entered stocks and bonds. Trading any assets is now retaliation against a central bank somewhere (most typically at Liberty 33 or at the Marriner Eccles building) which is engaged in open warfare against the world's middle class. And yes, the Brazil Central Bank earlier announced that it was heading unto the breach, buying yet more dollars for 1.7094 reais at auction, and has bought as much as $1 billion USD each day for the past two weeks, putting the Japanese intervention from two weeks ago to shame.
From the FT:
Mr Mantega’s comments in São Paulo on Monday follow a series of recent interventions by central banks, in Japan, South Korea and Taiwan in an effort to make their currencies cheaper. China, an export powerhouse, has continued to suppress the value of the renminbi, in spite of pressure from the US to allow it to rise, while officials from countries ranging from Singapore to Colombia have issued warnings over the strength of their currencies.
“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness,” Mr Mantega said. By publicly asserting the existence of a “currency war”, Mr Mantega has admitted what many policymakers have been saying in private: a rising number of countries see a weaker exchange rate as a way to lift their economies.
A weaker exchange rate makes a country’s exports cheaper, potentially boosting a key source of growth for economies battling to find growth as they emerge from the global downturn.
The proliferation of countries trying to manage their exchange rates down is also making it difficult to co-ordinate the issue in global economic forums.
In spite of Mr Mantega’s recent aggressive public statements, however, Brazil has so far held back from taking any action other than intervening in the local currency spot market.
The central bank bought as much as $1bn a day for much of the past two weeks – about 10 times its daily average in recent months – but this was largely to absorb money entering the country to take part in last week’s $67bn share issue by Petrobras, the national oil company.
We feel sad for the central banks, who apparently don't realize that in this war of attrition there are no losers, and the final outcome is the end of Keynesianism. We hope someone promptly discovers the FX equivalent of the nuke, and a global exchange occurs, as we, for one, can't wait for this most destructive experiment in economic fundamentalism to end already.
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In the race to the fiat bottom, I keep getting this mental image:
http://www.youtube.com/watch?v=w4HMRtxY-ik
However, in my vision #1 is the yen, #2 is the $, #3 is the euro and #4 is the Swissy.
More like this one: http://www.youtube.com/watch?v=QtMzNTzMw2c&feature=related
Golden mustard falls behind due to the cap in the face 1980s, loses shoe in the 90s, recovers and takes the lead in 2000. Green relish dollar tries to cheat in the end but..."face plant, body slam, mustard wins. That's huge."
This is good too. It's a local talent:
http://www.youtube.com/watch?v=9n8xMAh29rc
http://www.youtube.com/watch?v=IIcyFSYhvV4
Free beer night at the local waterin' hole?
in a very broad, idealistic sense, this currency fix is a scam...therefore it's short-term. a game changer should turn this around very soon. countries will close up for "d" market
Paper cuts!! Bitches!!!
you are gay
You are annoying.
You are obvious.
Who?
Whom.
Awe. You're like a linquistic correctional facility. Where's my orange jumpsuit?
Ubefindin'itwityoroll homie just like the Brazilians. The joys of the dollar trap.
+1 You just got your AAA+ rating from Moody! :)
Who.
Refer to the he/him trick.
Who is gay?
He is.
To whom is he referring?
Him.
The "m" in "him and whom" is a clue for which pronoun to use.
The question "Who ....... is gay?", can't have the answer, "Him.... is", it has to be "He is" therefore the use of the pronoun "Who" is justified and correct.
Grammatically speaking, the who/whom conundrum is resolved, when one can decipher the '"subject/object" rule to the "question/statement" clauses of sentences, about said subject/object.
If "He" is the subject of the clause, then "who" is used. If it was "him" that I was referring to then the clause refers to the object, hence "Whom"
"you are gay"
Did you wave a magic wand while you wrote that because I'm feeling pretty gay right now. I think i'm gonna goatse.
You knew someone would google that, didn't cha? Click "Eh" for full effect.
Ya know, none of that has anything to do with gay. Just sayin'.
If you're going to Google, may as well look up vajazzle.
Who doesn't like a good party?
www.lemonparty.org
You will never, ever, ever, ever be forgiven for that...
got Gold?
absolutely and silver and some PGMs and some PM equities
nice.
http://www.youtube.com/watch?v=iPvBQ1qscpg
PM shortsqueeze Bitchez!!!
Hi Hulk,,,How the hell are you?
"Got gold" Errr, no. I wouldn't touch that barbaric relic, a commodity no different than soybeans or diapers.
Please take note of this fact, government watchers and list makers monitoring the most subversive financial site on the internet. No gold at here at all. None. Move along.
I will be surprised if gold saves you. Soybeans maybe, but the have's are greatly outnumbered by the have-not's.
Accidental post.
Pax Americana man, how f***ed is that? They make their product (greenbacks) as valueless as they can, and everybody else buys them as fast as possible to keep their value up. Again, the question is how long can it last.
Probably for quite a while still. But in the meantime, the Gonzo Economic predictions of an imminent bout of hyperinflation due to a loss of confidence in the dollar isn't looking good. It looks like there's lots of interest in keeping the dollar higher than the local currency. The name of the game right now is exports, and to get beggar-thy-neighbor, we're seeing cheapen-thy-currency.
Let's call this what it really is - a trade war. Not a currency war.
Devaluing the currencies are a just a method used to gain trade advantage.
..... and when that doesn't do the trick, sanctions and protectionism will be the only option left. That's the only way that manufacturing jobs can be enticed back to the Western hemisphere. Unless of course we are willing to accept the wages and living standards of the standard third world agrarian village dweller.
All day I'm waiting for a reaction to the QE9 news that the Fed will gas the balance sheet by another $500MM. It even made CNBS and nothin nada zip. It's meshugass. Maybe it's the effect of the real QE manipulation.....Quarter End
How long does the currency war last until all fiat currencies are worthless? Anyone have a guess? Years?
Years? Doubtful. Once it really gets going, it will be over in days or hours. We've probably got a matter of months until it really gets going. But this is the result of the actions of a very small group of people, and as such the timing is unpredictable. It could happen tomorrow, five minutes from now, or a month from now.
What if they had a currency war and nobody came? (Nudge, nudge, wink, wink)...bitchez!
How about if one steps up to bat and backs their currency with Gold (Nudge, nudge, wink, wink)?
We (meaning the United Fascist States of America) would invade them.
Of Bourse we would.
Hegemony Cricket!
MsCreant, will you marry me?
Ever seen The Crying Game?
china appears well positioned for that gold based currency. Our president is not encouraging us to buy gold or silver , but China is.
Invade China... lol , right away
We can't. Jackie Chan and Jet Li taught them all karate.
I believe that would be a Chinese martial art Hep...BTW, they can also fly, which the japanese haven't perfected yet!
Encouraging them to buy, yes, but the US still has far more Gold than China does.
prove it then: show us the gold
See my post above.
Prechter on w Maria at 3:30...gotta love it
Precter on CNBC...now, saying don't fall for the recovery...
He warns of hyperinflation and says hold cash. They'll pull his he nobel prize in economics with that boner. He is predicting dow 2000 within a few years. Guess BIDU will be reversing their 10-1
Well the maket certainly sold off after that interview.
but because most shareholders got a goldfish memory, they are now wondering why they sold. They'll be back tomorrow!
precter loves the dollar - his rationale - I like to look at the other side when everyone is negative - a bit like having terminal cancer and telling yourself you will be the statistics that disproves the rule. Maybe but not probable
All done because actual trade protection legislation would be impolite or something.
No, it's being done because they can and because they have to. This is the final gravity well for fiat money...down the tubes...
Is this the 2010 version of Smoot-Hawley?
Is currency depreciation the best answer to the mercantilist? Doesn't the $$ currency debasement really hurt China the most of any?
Not sure I have the answers to these questions.
sschu
Floyd Smoot was a fine conductor of the Cannonball but how they ever let him draft legislation, I'll never know.
That's exactly right. Begger-thy-neighbor is in full play now.
Begger-thy-neighbor is in full play now.
Since it seems none of the players have any scruples and this is serious hardball, devaluation of the $$ would net in our favor. Most of the US problems are of our own doing, but the aggressive economies of Asia (Asia Tigers, China, Japan) have been practicing this mercantilism for decades. It was fun for a while, we could buy stuff that was cool on the cheap. But the party is over.
Someone is going to get hosed here, and they are going to be fighting mad. Perhaps China gets the worse end of the deal, and that creates a whole new global dynamic.
There will be war.
sschu
america committing financial suicide, weakening itself in every way. In the long term there is no doubt China will be the winner/survivor of any currency or economic war. They have already won from my view.
This week's must read book:
http://en.wikipedia.org/wiki/Currency_Wars
Been waiting for the english version. My Mandarin is light years away from being up to the challenge.
And how will you be able to communicate with our soon to be overlords?
You know that only 40% speaks Cantonese do you?... you do speak Cantonese right?
Overlords? Nah the same establishment on top will stay the same, the enforcers may change but that's pretty minor in the scheme of things. Though I am attempting to learn Mandarin, but my skill is piss poor to put it lightly.
Have you? Is it translated into English?
Unfortunately, our Jewish moneymasters will never let the English translation be completed.
Although the usual suspects junked your post, the notion behind it is supported by the failure for years now to translate Solzhenitsyn's Dvesti Let Vmestye (200 Years together)--a monumental effort by a great man to honestly assess the history of Russian-Jewish relations.
Apparently a group of gutsy white nationalists are moving ahead on the project despite the unwillingness of the NY or academic publishers to support. Kevin McDonald is sponsoring a good deed indeed.
A little local color on next month's G20 in S. Korea
Kim's heir to head disruptive campaign against G20 in Seoul
http://www.theaustralian.com.au/news/world/kims-heir-to-head-disruptive-...
A war over who has the best toilet paper. I'd like to wipe my ass with the winner!
My money's on Charmania.
But the dollar will probably win out in the end, since you can wash it and reuse it!
"Charmania..."
+1
My money's on Charmania.
Don't discount Scottland. But even without Alaska and Hawaii, I'd place my bet on the Cottonelle United States.
Man, this is the greatest blog ever.
If it passes the Thumb test and doesn't make my ass look sandblasted, it'll do.
Canadian dollar hit .98 to 1 USD again and the market took it's usual dirt nap. Fuck it's like setting a watch now.
I still think its done on purpose, the USA without running 1.5T deficits and running 2 wars would collapse immidieatly(throug a Revolution or Bancrupcy) with every1 buying dollars
1st US wont go officialy bancrupt
2nd US will pull every1 with them when they fall
The best strategy would be just to cut your self off the international monetary system and go cold turkey, but that would be unthinkable for any politician to implement both moraliy(politicians have a reverse morality) and intelectualy
When a severe alcoholic is cut off 100%, they can die from the shock of it:
http://goo.gl/vgXT
1 billion a day... I guess those hard working, rich Brazilians don't mind that their government is playing poker with their tax dollars...
Destroy what you want. We'll just print up more.
Dollar$. Bet you can't debase just one?
Man...
A POTATO CHIP reference...
It's why I love Zero Hedge.
+a 13.5 oz bag and a Coke
Capitalist elites have already destroyed the wealth of their domestic populations and surpassed the capacity of foreign markets to absorb their crap, so the only "solution" left for them is to capture whatever demand is left in the world by competitively devaluing their currencies.
http://peakcomplexity.blogspot.com/2010/09/complexity-manifesto.html
The US will most likely "lose" this game in the short term, as we have no real exports and the reserve currency, meaning massive amounts of dollar-denominated debt held by domestic and foreign economic actors.
I'm a Capitalist. And I'm not even a little bit elite.
You know that you can even be the best as being worst? That also makes you "elite".
I was referring to the typewriter font size.
You think the government and the Fed are run by CAPITALIST elites!?
I have a website I would like for you to look over: www.dictionary.com
The government and Fed are OWNED by capitalist elites. That should be pretty obvious by this point.
You are making the common mistake of confusing a "free market economy" (free of government interference) with a capitalist economy (marked by capitalist relations of production).
The capitalist elites will use both free markets and government-manipulated markets to further concentrate wealth in their greedy hands.
LOL. Its like a war where everyone just has a gun to their own head. Everyone is screaming they will shoot if everyone else doesn't put their guns down.
Why don't they just buy zimbucks at face if they want to devalue their currency? I got a 100T just lying around I can sell them.
*1
"The FX equivalent of a nuke." Maybe the US could figure out a way to put everyone else on the gold standard so that the US dollar could become worthless first.
Reverse armed robbery?
"Take this gold or I'll cut ya!"
Okay, just so I understand the implications of Brazil's effort to devalue their currency.
In an effort to make their goods and services cheaper to the export market, the money they use to buy USD's has to be raised by either taxation which would hurt their GDP or by printing money thus creating inflation.
What do they do with USD's? Buy UST's?
Oops, thought of a third: Cut spending! It didn't occur to me at first because we never do that in the U.S.
"What do they do with USD's? Buy UST's?" Nothing. They just buy the USD which are wired from the US to Brazil by all of the brazilians workingn in the US and sending the money home.
I'm guessing they would just hold on to the USDs, not do anything with them. They want to deflate the USD money supply relative to their money. I think it's less about debasing their own currency and more about fighting the Fed's efforts to debase the dollar. Or maybe equal parts of both. But definitely not limited to just debasing their own currency, or they would just hit <Print>.
In addition to having over 200 million people and an untapped store of natural resources, Brazil is an agricultural powerhouse with an expanding industrial base. Also, they have no credible enemies in their neighborhood.
They're about to get a new president, one who may institute change for real, or for reals. Google Dilma Rousseff. Interesting resume.
Let's hope they have better luck drilling in the open Atlantic down several miles that BP did in the relatively shallow GoM.
Why would they need to do that. According to reports I've seen, Brazil nearly 100% energy independent as a result of converting their energy infrastructure to run on bio-fuels, specifically ethanol as corn is a major agricultural product [read: virtually no reliance on oil].
Brazils ethanol is produced from sugar cane which produces higher net energy gains than that produced from corn. Estimates for sugar cane NEG is anywhere from an energy sink to 9.0 although Brazil claims 1.9 which seems quite reasonable... Most independent studies confirm that ethanol produced from corn is an energy sink... It appears that most studies that do not confirm this seem to originate from government and other vested interests (the corn lobby/the children of the syrup/corporate central planners)...
A bit off the topic but nevertheless, educational ;-)
http://www.youtube.com/watch?v=Pr5HQrgg9mM&feature=related
http://www.youtube.com/watch?v=5eKYyD14d_0
US "energy independence" can be easily achieved just as soon as 85% of the population can't afford gasoline or cars or electricity.
Bicycles and bathing in the river, yo. Wake at dawn and sleep when it gets dark.
Shouldn't take long at the rate we're going.
CURRENCY WAR
http://williambanzai7.blogspot.com/2010/09/currency-war.html
you make it so easy to understand william.......and eliminate most of the words at the same time too.
What I don't understand: if the US destroys their currency they will piss off their biggest trading partners by inflating away debt holdings. It will also destroy the willingness and ability for said partners to buy US goods??!? Who will be left to trade with?
Not to mention inflation will crush the demand for US made goods.
gonna get uglier before it gets better.
removed
Again I totally understand declaring war on your own savers to drive down wages, extract wealth, and keep exports going. Don't agree but I understand, and this leaves everyone in a plunge to the bottom and trash heap of currencies. But call me crazy why not print up a mess of bills and just enter the open market and buy gold or other assets? It should accomplish the same effect of creating more money and devaluing the currency and the printer will get something tangible for it. And it's not like the gold/asset will back a currency, the IMF has rules about that. I know if could create Fun Bux at will I would be buying real assets with them as fast as the printer shot out wads of fun.
I guess they can't be quite as obvious as that about it. That's what the primary dealers are for. Or rather, maybe the primary dealers are the ones who say 'make us some cash' and the Fed does so. The PDs are pretty much the same people who own the Fed anyway.
Why? If Brazil can come out and say "We are fighting a currency war and buying loads of $$$" then why not "We are fighting a currency war and we are printing money to buy gold". With the almost no yield on treasuries both they and gold are basically a no yield asset. Now the US can't do this scheme because assuming it works what would we export, other then dollars?
Now all I can think is the first nation to come out and announce that would found to be a hot bed of activity for terrorists and promptly invaded to prevent the use of WMD.
You're probably right...unless it was one of those "madman with a nuke" scenarios..."I'm buying a zillion tons of gold and taking everyone down with me!"
I dunno, I'm about to give up guessing the tactics and strategies of central banks. I know what they want, and I know the ending isn't going to be pretty.
All paper currency is fungible via FOREX. Remember that when you can't figure out why gold keeps going up no matter the lastest scam being played out on the dollar.
When one prints, it effects all of them. FOREX is a license to print everyone else's currency.
And it's also a license to sop up everyone else's currency...In the information age, I'm having trouble wrapping my head around the notion that a currency war could ever last longer than, say, a chess game.
Chavez calls Angela Merkel.. "A Nazi in a pantsuit".
"She is from the German right, the same that supported Hitler, that supported fascism, that's the Chancellor of Germany today," he said.
Chavez said he could confront her about the statements if he attends an upcoming summit of heads of state from Europe and Latin America in Peru.
We’re in the midst of an international currency war, a general weakening of currency
Got Gold?
trade war next?...then plain old war. That will get economies cranking.
Here comes the Gold beat down, it's 3:41, do you know where your stash is?
Ya they hit it pretty hard. Their 8 dollar beatdown is down to 5 dollars now.
http://www.youtube.com/watch?v=uRapYDc3m2E
Will the consequences be similar to a trade war? Could this ignite a concomittant trade war?
Flow control has seemingly broken down so let's try and force more pressure on the needs of repatriation paid for by the ever kind Brazilians.
Good old Ross Perot's giant sucking sound seems to be working in reverse these days....
OK, so I've got a bit of a handle on the whole four X's thing, but one thing puzzles me greatly...
If EVERY currency is struggling to debase at the same time, why should the poor or middle-class care?
I buy my groceries with dollars. The groceries come from other countries seeking to drive down their currencies. If they *all* devalue at a rate anywhere near comparable, it seems to me that it should have relatively little impact on my life, aside from pushing acquisition of precious metals further out of reach.
Anyone who might clear that up?
BTW: I do like gold and would certainly buy it (physical) if I had any wealth to "preserve." But I don't.
So is there any real cause for concern for us peasants?
So is there any real cause for concern for us peasants?
It seems to me the biggest risk here with $$ devaluation is the price of commodities, especially oil. If the price of oil goes over $100/b and stays there, we are in a depression for sure and for a long time.
Maybe we shouldn't be all that concerned about having a Muslim president .... :-)
There are so many inflection points right now around the world, economic and other, it takes a chess grand master to keep track of it all!
sschu
Yes, that certainly makes a good bit of sense. I've never noticed any news or rumor about Saudi currency debasing, but in keeping with my original puzzlement, I'd expect that if the Saudi riyal was debasing at the same rate as the dollar, the oil cost wouldn't change that dramatically either, given that they're the largest exporter.
Although as you mentioned, keeping track of ALLL the inflection points is hopeless. If we buy most of our oil from Canada, and the riyal collapses and the Saudis want to drop their oil price, does that pull "our" aggregate price up or down?
Uy. Thanks.
Saudi currency debasing
This is a bit beyond my knowledge, so some help would be great. I do believe oil is sold in $$ world wide, you want to buy oil, you pay in $$. Not sure that the Saudi's really care about their currency, they buy their gold plated Lamborghinis in $$. The Canadians probably care though.
The bottom line is our cost of oil and if we debase our currency, the cost of oil in $$ will go up. This just will accelerate the destruction of the middle class and our demise. BB etal is playing a very dangerous game.
FWIIW, sschu
Monetary inflation is a stealth method of capital confiscation. The economy is unable to mend itself in an environment of constant fiat manipulation, whether inflation or deflation. The longer this bubble economy lasts, the lower our standard of living is going to be when it pops.
I posted this in the wrong position... Cheers
Geo
http://www.youtube.com/watch?v=iPvBQ1qscpg
I'm so sick of hearing how debasing your currency helps exports...as if such a thing is costless.
It does so by FUCKING labor and FUCKING wage earners in the ass. Everyone is trying to devalue against everyone else.
As long as the dollar buys oil, we cannot be defeated in this game. Only a fall in the House of Saud or an exit from Iraq/ME/etc. can dislodge us. Stupid euros shouldn't have had us be the world's navy, eh?
either way the future is bleak for labor...
As Colbert says, I want my Brazilian from a Peruvian working at a Spa that serves me a tomato cut by a Gutamalen after being picked by an American. The tomato and anything else out of Brazil should be taken with a grain of kosher salt.
Chart: DX
USD futures appear to have bottomed and may begin to rise within a newly formed channel. It's not just Brazil; it's probably an entire BRIC ready to be thrown at the proverbial fan.
http://99ercharts.blogspot.com/2010/09/dx_5053.html
Where's The Money?
BRICs: $3,476,781,000,000
USA: $128,601,000,000
You do the math.
http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves
Charts
EUR/USD: http://99ercharts.blogspot.com/2010/09/eurusd.html
GBP/USD: http://99ercharts.blogspot.com/2010/09/gbpusd.html
USD/CHF: http://99ercharts.blogspot.com/2010/09/usdchf.html
USD/JPY: http://99ercharts.blogspot.com/2010/09/usdjpy.html
currency devaluation is a loser's game - especially for those economies where export trade is relatively small percentage of gdp. :-O
america is the new spanish empire.
S&P 500 FINANCIALS INDEX - an important chart:
http://stockmarket618.wordpress.com
A lot of people griping about recession leading to protectionism, but when the global economy turns down, one way or another, trade contracts. That drives the currencies of countries that run trade deficits down, and the currencies of countries that run trade surpluses up. Resistance is futile.
In a war of currency debasement the US/Fed is doing a good job, Now Japan takes its gloves off it will be toast, However Japan could win hands down, Just appoint Gordon Brown the former UK prime minister to the governor of the BOJ Gordon Brown is the undisputed world champ at trashing foreign governments national currencys, Hes not cheap but the best never is lol.
Just me being sillly but this situation is beyond silly its World War and is worrying me big time.
The "trade war" meme assumes that nation states will engage in beggar-thy-neighbor through competitive devaluations. Nation states however do not behave in such maximising behavior vis-à-vis their export sector when an internationalized central bank can dictate the cost of capital to all economic actors.
Guido Mantega is not pursuing a beggar-thy-neighbor. Rather he is lending support to the troubled dollar at the expense of the least capable of defending themselves, the Brazilian workers. In the process he is throwing some meat to the export sector, and the capital markets, but this is a side show.
i love zerohedge policy cheap hosting
The "trade war" meme assumes that nation states will engage in beggar-thy-neighbor through competitive devaluations. Nation states however do not behave in such maximising behavior vis-à-vis their export sector when an internationalized central bank can dictate the cost of capital to all economic actors.EX0-101 \ 350-018 \ 70-290 \ 1Y0-A08 \ 1Y0-A05