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China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency Status
In a surprising turn of events, today's biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People's Bank of China.
The statement, google translated as "Pragmatic and pioneering spirit to promote cross-border renminbi business cum on monitoring and analysis to a new level" is presented below:
Reuters provides a simple translation and summary of the announcement: "China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily." To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.
International Business Times provides further insight:
This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.
Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.
Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.
Aside from the efforts of the Chinese government, fundamentals also point to the increasing international popularity of the Chinese currency.
China is already the leading trade partner with Australia and Japan. It’s also the leading or a large trade partner with many of its smaller neighbors. The purpose of having foreign currencies is to conduct foreign trade and investment, so the yuan is expected to become a more attractive currency for China’s trade partners, espeically as the government continues to relax restrictions.
The reason for this dramatic move may be found in what Stephen Roach wrote a few days ago in Project Syndicate:
In early March, China’s National People’s Congress will approve its 12th Five-Year Plan. This Plan is likely to go down in history as one of China’s boldest strategic initiatives.
In essence, it will change the character of China’s economic model – moving from the export- and investment-led structure of the past 30 years toward a pattern of growth that is driven increasingly by Chinese consumers. This shift will have profound implications for China, the rest of Asia, and the broader global economy.
Like the Fifth Five-Year Plan, which set the stage for the “reforms and opening up” of the late 1970’s, and the Ninth Five-Year Plan, which triggered the marketization of state-owned enterprises in the mid-1990’s, the upcoming Plan will force China to rethink the core value propositions of its economy. Premier Wen Jiabao laid the groundwork four years ago, when he first articulated the paradox of the “Four ‘Uns’” – an economy whose strength on the surface masked a structure that was increasingly “unstable, unbalanced, uncoordinated, and ultimately unsustainable.”
The Great Recession of 2008-2009 suggests that China can no longer afford to treat the Four Uns as theoretical conjecture. The post-crisis era is likely to be characterized by lasting aftershocks in the developed world – undermining the external demand upon which China has long relied. That leaves China’s government with little choice other than to turn to internal demand and tackle the Four Uns head on.
The 12th Five-Year Plan will do precisely that, focusing on major pro-consumption initiatives. China will begin to wean itself from the manufacturing model that has underpinned export- and investment-led growth. While the manufacturing approach served China well for 30 years, its dependence on capital-intensive, labor-saving productivity enhancement makes it incapable of absorbing the country’s massive labor surplus.
Instead, under the new Plan, China will adopt a more labor-intensive services model. It will, one hopes, provide a detailed blueprint for the development of large-scale transactions-intensive industries such as wholesale and retail trade, domestic transport and supply-chain logistics, health care, and leisure and hospitality.
Obviously, a reserve currency would be not only extremely useful, but quite critical in achieving the goal of China's conversion to an inwardly focused, middle-class reliant society. And even that would not guarantee a smooth transition. However, should China really be on a path to a step function in its evolution, the shocks to the system will be massive. Roach puts this diplomatically as follows:
But there is a catch: in shifting to a more consumption-led dynamic, China will reduce its surplus saving and have less left over to fund the ongoing saving deficits of countries like the US. The possibility of such an asymmetrical global rebalancing – with China taking the lead and the developed world dragging its feet – could be the key unintended consequence of China’s 12th Five-Year Plan.
A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.
And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel "China Attacked the Dollar" (google translated):
The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars. Beijing shakes America's claim to represent the key currency - with serious consequences for the U.S..
The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.
This will respond to the growing importance of the yuan as a global reserve currency. "The market demand for cross-border use of the yuan rises," said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.
Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.
Currently, the People's Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People's Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur - and not on supply and demand-based exchange rate.
Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.
The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.
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Have they failed to see how well that plan is working for us, or do they believe the BLS' numbers?
They have the manufacturing capacity to back it up. You know, like the US USed to, but gave up so that everyone could own a Chinese hotair popcorn popper (with twice the lead!) for 2 bux less than the one made in the US.
My point exactly....when we started this 'service economy' nonsense, we had the manufacturing capability as well. That was the reason we 'outsourced' all the manufacturing to China. See how well that is working out for us? Didn't China look at the example before deciding to play 'me too'? They plan to de-outsource all their manufacturing back to the US?
"They plan to de-outsource all their manufacturing back to the US?"
Yes Siree, that is exactly what they are going to do.
Oh snap
Damn, I guess Tyler does read the flame threads. He keeps posting timely shit like this to destroy troll arguments.
Thanks again, Tyler.
It's about time we heard something strong directly from China, ain't it?
Of course, it's also nice to be able to say "told ya so."
Peter Schiff was right, again.
China and USA will engage in a war, probably towards the end of the decade, if not sooner. That will be the big (and last) one.
The last war!? Ha! Where's your imagination?
I imagine the next one will be fought with sticks and stones.
A stone on a stick, and you have a maul.
The last big one, perhaps, definitely not the last one.
If there is a world war III it will be a mutually agreed upon war for the sole reason of Poppulution.
Milestones
Right on. The one cure for all ills is a 90% culling of the global population, so it's either a "white plague" or global war. When it starts, watch for the "random" nukes in third world population centers. Reset to under 500M global population, makes "everything new again" for the survivors. Believe me, their are plans for this.......why I smoke weed.
I have two things to say:
1. Just, wow
2. We were all expecting this
Well, most of us were. Some have been fully deluded into thinking that it would never happen.
Normalcy bias in action.
I always thought if it as "center thinking" myself --- always and only looking at the usual, the typical, the routine, the standard, the middle-of-the-road, the consensus, the "normal", the uncontroversial. Bowing to the "mainstream" in all things. I have been aware of it almost my whole life, and have always been puzzled by the phenomenon of people who never question authority, or who never stop to imagine their lives or the world as it might be and not just accept everything as it is.
Such people can be found, for example, among those who cannot even imagine voting for anyone other than a member of one of the two Establishment political parties, who routinely eat at McDonalds and shop at WalMart, who find the latest titillating gossip about Paris Hilton or Kim Kardashian or Charlie Sheen to be newsworthy, and whose idea of an exciting vacation is visiting the homogenized, sterilized, plastic unreality of Disney World or Las Vegas.
Most people are and always will be center-thinkers, never questioning the status-quo or accepted "wisdom".
My life has been defined by the opposite.
I completely agree, especially with the last part of your post.
Contrarian thinking/beliefs, by defintion I suppose, is defined by ridicule and isolation. While most of the time those experiences build character I have to admit I sometimes wonder what it's like to be able to tune out everything and focus on the idiot box or whatever. On some level the sense of belonging is important (Maslow, etc.) .... but my instinct has always been to run in the opposite direction of the rampaging masses.
As far back as I can remember, at least as early as kindergarten, I have always felt the same way --- don't do what all the others do, and at least try to do what they do not. I have no idea why this is such an ingrained pattern and desire in me, but it is integral to my very self-identity. I really pity the mass of sheep who just follow the herd; that would be a living death for me.
For me, I was around 8 or 9 and the neighbours took me to see a boy band. The cheering, the hysteria turned me off. It was just so stupid.
preach on akak!!
pirate truths!
rock on akak.
Akak Livingstone Seagull
++++
Yes, last week the Bank of India already announced direct trade agreements between rupee and RMB.
http://timesofindia.indiatimes.com/world/china/Bank-of-India-becomes-fir...
bbbut India's our ally, we gave them nuclear technology, weapons sales (though they kept the Ruskies as their main arms dealer)...
How could they turn their back on our used toilet paper?
lmao
I know, and it's actually academic if they can pragmatically pull it off. The PERCEPTION has now changed.
Please watch this short clip on Communication to underline this event. Really good.
http://www.wimp.com/humannature/We now have gone into OVERT language, It's out there in the open.
The dollar is dead.
++++
in this bizzaro market...I would not be surprised at ll if this was the news that sends the dollar on a rally...granted, it may be a farewell rally...but a rally none the less.
play taps...fade to black...curtain down.
After copying Japan's mercantile model, they are now looking to take a page from the US playbook, become a reserve currency in order to export their inflation.
Exactly! But it probably wont work. They are too opaque and secretive for anyone to trust them as a reserve currency. This is a hail mary at best.
Spot on TCT. The $ trades at (x,y,z, pick your denomination) cause the world says that's what a dollar is worth. The Yaun trades at ONLY WHAT CHINA says it is worth pegged to the buck. Until China permits the world's markets to price the Yaun it has as much chance of being "a" reserve currency as the Brazilian real - and the world prices the real. Regards CI
Which dovetails nicely with the PRC's populace amassing precious metals. When their currency does float, man will it float. Recall: China is a creditor, not a debtor. But they too want an 'orderly' destruction of the USD, so they can divest while the divesting is still good. Any guesses as to the asset classes they might be looking to shift into?
LOL yeah unlike the open and transparent FED - get real
Given China's modern era history with hyperinflation, coupled with their bank status and construction bubble, they are delusional to think the yuan will become the global reserve currency.
Not saying I'm a fan of Federal Reserve Notes, but any countries that move to the yuan will be twice as screwed withn the **it hits the fan.
... +1 , China has "called our Ponzi" and raised us a Ponzi... Go fish. No, make that go pig. Fish too expensive round eye.
i'm going to go rabbit myself, myself.
They don't have the gold, or the military might to back it up.... yet
Remind me again: who says that China doesn't have any gold? Also, who says the US has any gold to speak of?
I'm down with your point about their military, to a point.
Though, you have to admit it's not as if the US' hyper-expensive milk-it-ary has been claiming a lot of conclusive victories lately.
Aside from the victory of bankrupting the American people so that 'Auchteritywitz' could be implemented, and, of course, the 2003 "Mission Accomplished". Oh, and they have been very successful at stirring up hornets' nests worldwide to keep themselves in business too. An actual war with China is their dream scenario, and they'll do everything they can get away with to drive you to it.
This means War
I'm afraid your right Rusty. I believe they sensed a weakness in the force, ME turmoil, Shit happening... and took advantage.
I expected them to move on Taiwan if shit broke out in the world or if we had moved on another country. This is the financial equivalent.
Fare thee well friend
they couldn't mount an amphibious invasion of Hong Kong, much less Taiwan
you could be right, China ... "the non-aggressor", leave us alone, we don't need you ... go away.
Dont be silly!
Hypothetically, would this mean those holding debt in $'s are slaves?
It's coming apart at the seams and this time no POMO punt is going to save the game.
Let's have Spalding Smiles come around here and argue this is dollar bullish...fucktard.
My thought. Dam dinner got in the way.
King Dollar, please report to the tower of London!
Him, TBT, Rodent Freikorps, and Team America are the stupidest of the bunch!
roflmao
Actually TJ it might be bullish. Any time the global financiers and merchants can be educated to the value of a currency, freely traded, widely held, instantly recognized and transparently managed (manipulated) the value of such a useful tool will improve. Competitive Analysis is a proven Value driver. Regards, CI
The Renminbi as reserve currency is laughable. What can you buy with this communist paper? Junk toasters and curling irons? LOL!!!
You have five minutes to find three consumer products that weren't made in China.
GO.
Time was up awhile ago...
He's still looking.
So am I, for that matter.
Consumer products...Are tools (mechanical, electronic, etc.) included? If so, Snap On, Craftsman, etc
Are stereo components included - lots of high end speakers, amplifiers, etc
Is cookware included? Are kitchen appliances included? Knives? Scissors? ...
That is high end stuff there. You think that stuff is going to get cheaper when we lose access to the cheaper Chinese goods? Or more expensive?
People never seem to recognize the coming loss of purchasing power and the resultant drop in standards of living that will come from this--they just harp on about how great it will be for exports. This is net harmful to the US. The depegging of the Yuan will do nothing to solve our regulatory problems, or our high taxes. It will just plain make us poorer.
Sadly, economics has been replaced with a cargo cult.
It's absolutely not net harmful if we can close some of the gap between the warm body outsourcers at the top and line workers that actually make the products. Prices do not have to go up...they can, but then they'll have to be offset by something like paying workers what their labor is actually worth or making better quality products. It's no more a fairy tale than the insane expectation that a nation of burger flippers would be able to keep paying the $495 markup on a $5 iPad in perpetuity.
C'mon T, don't you think you're confusing volition with capabilities? That alot of stuff is made in China today isn't because of any great prowess or know how on China's part, it is a basic economic decision. They better hope that folks don't pick up their marbles and go home before they can build up a domestic demand. Else, there will be a whole lot of empty factories and angry peasants to deal with.
Demand increases as a currency's strength grows. All they need to do is revalue the currency, and the demand will appear (it has the same effect as pushing prices down).
In other words, the only hard part is making the stuff. Consuming it is easy. You think you would have trouble if your dollar suddenly bought twice what it buys now? Four times? Six? Ten? Neither would the Chinese. They don't need our paper, but we need their products, or else our snap-on tools and CAT machinery will be all we have left, if that, as that stuff will be bought up by the Chinese with their newfound purchasing power.
And yes, it IS about capabilities. They have all of the factories now. We have been shutting ours down. And before I hear a mercantilist argument, let me cut it off. Saying that China "stole" our industry is analogous to China claiming that America "stole" their children. Sound crazy? It is. They stopped their children from being born with their one child policy the same way we stopped new factories from coming online with similar regulations and high taxes. America had no one-child policy, and China didn't have the regulations and high taxes.
They grew their own industries, who were simply contracted by our own corporations to make things for Americans. If our corporations hadn't gone there, those factories would still be there, they would just be making different things, whether they were to be consumed locally, or in nations other than America.
Wrong again .......
Mike Pettis • China Pro •
...... " But what would happen if China were to raise the currency too quickly? In that case the profitability of the export sector would decline so quickly that exporters would be forced either into bankruptcy or into moving their facilities abroad to lower-wage countries. Either way, they would have to fire local workers
But firing workers reduces household income and household consumption. If it reduces household income faster than the revaluation increases real household income (by lowering import prices), the net result is a reduction in total household income and a reduction in household consumption.
Balancing and unbalancing
This is the problem China faces. It must raise the value of the renminbi as part of its rebalancing towards greater domestic consumption, but if it does so too quickly, the rebalancing will occur not as an increase in consumption relative to rising production, but rather as a drop in production relative to declining consumption.
This may seem like a confusing point, but it is worth understanding. China can rebalance with high unemployment as well as with low unemployment, and the difference has to do with the speed of the rebalancing. If China adjusts too quickly, consumption will actually decline, and production will decline even faster. In that case China rebalances (consumption rises as a share of GDP), but under conditions of rising unemployment. " ..................
Also ...... From a few years ago.
Bottom Line: While China's exponential economic growth over the last 40 years is pretty impressive, from wretched, abject poverty and only $128 of per capita real GDP in 1969, to per-capita output of $2,800 in 2010, China's economic output on a per capita basis is still about the same as the U.S. in 1878 ($2,800), 132 years ago.
Two words: Domestic Cons..
Ah fuck, why bother with talking to a wall
<hits the autojunk>
Because it is almost better than talking to yourself?
sure, I`ll go with that. Honest, I`m just trying to help the guy.
Corn meal, soybean meal, bone meal
Why unclebigs, you look like somebody just walked over your grave.
China is now making and selling more vehicles than the US.
The US is making a lot of vehicles that are piling up on dealers lots... It's difficult to buy a vehicle if you don't have job.
and your point is?
a) that china with a current est population of 1,343 million (1st) is now producing and "selling" more cars than the usa, with a current est population of 311 million (3rd) because we showed them how to do it?
b) that the usa can look forward to "zero down/zero interest/and zero payments for 18 months to "buy" a car in addition to dealer discounts and factory incentives and rebates?
c) all of the above?
d) something about yourself, perhaps?
tyler, you are such an asshole for springing these pop quizzes in the middle of the week!
1) this is not 'news',
2) ergo, it can not be "important" 'news'.
3) two of the para's you quote, above, make no sense, whatsoever.
4) hmmmm....? maybe we should just try to understand that Central Banksters, who keep running around the world holding "secret summit meetings" are doing the SAME THING to the chinese, the australians, the irish, the french, India, and so on, as they are doing to AMERICANS, where they are in control of OUR fuking goobermint.
i know, tyler. this idea gets even less play than china's common-sense sovereign currency moves, which may not be against us in any way shape or form, and which are probably also not what they appear to be, as usual, whatever usual might be in this context, too, eh?
so, it's hard for the divine ms durden to bring it up, so slewie just says, fine. i understand. there isn't a plethora of "news" on how folks see their possibilities of taking some sort of a Constitutionally mandated (2nd Amendment = Militia = Now), legal, legitimate, unified, peace-loving "stance" which also just happens to have a heluva good track record, too, by the way.
i would say We are up against the tyrrany of the banksters. We know who We are and so do they. if they would like to recognize their affinity and good will toward Us and play their hand to Our benefit, that would be great, wouldn't it? we're not really any better or worse than thay are are. we're just on the winning side, that's all.
any questions?
fondly,
slewie the pi-rat, chaplain, US Militia, aka "We The People"
Hey slooo...eeeee....Yu kant go all normal on us now....*&^$&^^#*, jes cuz yu fell likit? we'z uzed to making pie, in th skye at that, while making sense of urs not so trully's pontiff-ick-ayshuns.
Me? I'll settle for original slewie speak.
;-)
ORI
well, ori, when i get pissed off at tyler, sometimes i just feel like i'm running out of choices. not tomorrows. they never run out.
"1) this is not 'news' "
So you are going CNBC on us and deciding what is and isnt news? lol... Of course it is news and news that we have been waiting to hear for some time. I have figured this was coming since China stepped up and strengthened the SCO around 2004. Do you even know what the SCO is and what it's goals are?
...and, on auto production... I predict that US auto production for local consumption will never again equal Chinese auto production. Every other manufactured good that you can name will also be made in larger quantity in China than in the US...most already are.
...and your response to news that you didn't want to hear? Bash Tyler! Duh, might as well stick yourself in a rabbit hole.
We are witness to a changing of the guard. All empires rise and fall. Get popcorn, watch show, buy PMs while some are still for sale for trash cash.
Slewie, Slewie. Slewie the Pie Rat. Arrr matie. Hoist yer mail sails and batten yer hatches. The inflationary winds will keep yer sheets tight. Red dawn in the morning.
Seems like the opium dens will reopen in China.
The old tricks are the best tricks.
I really didn't want to have to learn to speak Mandarin....grumble...
Mandarin is the old tongue.....
You should know.
@unclebigs
the arrogance and stupidy of some comments on zerohedge never ceases to amaze me considering the quality of the articles.
As opposed to the arrogance and stupidity of your comment?
You suck for just being so very wrong on PM's.
This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.
In the decades to come.... lmao. You can almost hear the desperate junkie squeal for his FRN fix!
This is what China is accumulating gold & silver for! Yay! Go long Yuan and let these FRN loving carpetbaggers get a real job!
Beautiful!
Decades.....you are right. That is how long it will take.
We got another one! Another FRN junkie scared shitless his fix (pun intended) is toast!
Get a real job, biatch!
Lets see if the FRN makes it through the year!
The frn will be around in a year, but I doubt you will remember your prediction. You will be off chasing the latest conspiracy theory.
Clown, what r u doing here? This is Sparta... er, fight club!
Muthafucka, u want conspiracies? I'll give y all the true conspiracies tgat prove what everybody here knows: that the USSA is the evil empire:
www.scribd.com/zaknick/shelf
read my summary titled, "A brief comment"
Fascist lover! Maybe you forget that fascist lovers lead dangerous lives in uncertain times.
Somebody ought to carve a swastika on topcallingtroll's fat butt.
Kinda hard to do when master bates is givin' him the reach around from behind...
China has a massive debt issue , good luck. A safe haven some day .... Lol' , Communism ... I thought Tyler has been posting about all the bogus companies with fraudulent books for months, now she will become a safe haven for the worlds wealth ... Hmmmmmmmmm ....
Victor Shih has done some serious analytical work to try to get a handle on the magnitude of China’s local debt. His post, which included extracts from his op-ed in the Asian Wall Street Journal, shows that some of the narratives about China are woefully incomplete. The whole post is very much worth reading, but here are his main conclusions (hat tip Michael Panzner via Jim Chanos):
Yves here. This is consistent with what I heard at a lunch with Josh Rosner and Chris Whalen yesterday, who went on at some length about how awful the Chinese banks were, as in stuffed to the gills with bad loans. They think the idea that China is so well off by virtue of its massive FX reserves is oversold, given the black hole in its banking system.
Shih thinks the central government needs to stop leveraging by local investment companies, take over their debt, securitize it, and peddle it to local and foreign investors. Shih argues that foreign investors will take up this paper as a renminbi revaluation play.
I’m skeptical for several reasons. The act of selling this paper itself would push the RMB up. The early buyers can rely on momentum, but what about the later sales? Moreover, what will be the reporting on the performance on this debt? The US has had more than two decades to create the legal mechanisms and related reporting for securitization of debt to work (and it still wound up with considerable abuse and mispricing). Is anyone going to find the initial and ongoing reporting the underlying assets in this sort of program adequate? Highly doubtful, which means it would need a government guarantee.
http://www.nakedcapitalism.com/2010/02/chinas-burgeoning-local-debt-mean...
The yuan, however, may never kick the dollar off its pedestal.
It takes more than economic might for a country to establish its currency in marketplaces and treasuries around the globe. Indeed, the favored status of the dollar and the euro in international trade settlements—as safe-haven investments, and as the currency of choice for many nations' foreign reserves—depends on something China currently lacks: the rule of law and long-term political stability.
As corruption stays rampant and the rich-poor gap keeps widening, social instability remains a real threat to a country without a democratic system in place. For central banks to hold yuan for the long term, they need to be convinced that Beijing will establish a political system that makes the nation's future stable and easy to predict.
Since July 2009, Chinese exporters in 20 regions have begun settling trades in yuan. Chinese imports settled in yuan remain less than 1% of all goods brought into China, but that share is expected to grow to 20% in 2015, according to a research report by London-based Standard Chartered Bank.
http://online.wsj.com/article/SB1000142405274870339520457602334207759715...
Gosh there are so many usa haters at zero hedge that they cant evaluate the reality of china. They would rather junk you than respond. We will see how much yuan trade there is in a year. It will be insignificant.
It's o.k. I love rubbing facts in said face. China = ticking time bomb, did they not just slap around protesters a few days ago, what about the....... " • Jasmine Revolution • " just days ago, I thought the protest / government was on the verge of being overthrown ??? What happened ?
So you're saying that China is a ticking time bomb, but you maintain that Chinese authorities will simply maintain the status quo, no matter what?
You sure do like to have things both ways a lot. Doublethink like that is vital to maintain a unicorn-based economic theory like yours, though.
Spalding is correct on China...you FRN haters with your death wishes need to STFU
There was no Jasmine Revolution, that was western propaganda. America in particular tries pretty damn hard to create instability in China. From funding terrorist operations by the Dalai Lama to exporting inflation.
For the "Jasmine Revolution", there were more western reoprters than people protesting. Actually I think not a single person was protesting.
Complete agreement. China's banking system is a house of cards.
That and consider how badly the Chinese fuck other countries in business via outright fraud and malfeasance. You'd be smoking crack to take fiat yuan in trade.
You know why? Though they are communist, their policies from the above article aim to bring their nation into the right direction while US policies still aim to bring everybody into a massive debt cycle with no exit.
That's why.
LOL. First thing that came to my mind is how hollow the concept might just be. Where's the faith? Credibility?
Yeah, we are quickly digging our own FRN grave here, but the Yuan as a replacement within a year seems a bit desperate - or maybe just a poke into BB's eye. NWO SDR more likely to be what is next. Not the Yuan. And I doubt the central bankers want to set up shop in a communist country next... need a revolution first (which can probably be engineered). Hmmm.
We will share a basket of currencies some day ... China , EU, USA. Maybe in 10 -15 years.
A basket of assorted turds still, in the end, consists of nothing but turds.
OK, you say, let's throw in commodities and gold. Oh boy, that lets us go from eating 100% turd pudding to maybe 50% turd pudding. Forgive me if I fail to wax enthusiastic.
Face it, fiat lover, whether by themselves or collectively, fiat currencies are nothing but Ponzi schemes and abominable scams perpetrated on an ignorant and continually-fleeced population --- always have been, always will be.
nice. ++
Thanks GF.
I know we have crossed swords a time or two here, but I think you are one of the more intelligent and thoughtful posters here, and I always make a point of carefully reading your comments (I cannot say the same for those of Balding_Snails, however).
Heh, we both 'lived to tell the tale', Akak.
Right back atcha.
I think their credibility is on par with the United States. Its a sales game. India has already bought into it. So China is not credible, they offer a way to give a final 'f**k you' to the USD and govt for dragging the world down.
This is my first posting on ZH, dont trash me too hard. :) but I really do enjoy reading the commentary at the end of these articles.
The credibility of China leaped ahead of that of the US when China told it's citizens to go out and accumulate PMs while the US takes steps to make PM accumulation by citizens difficult and hires trolls to bash PM accumulation on every site and MSM outlet I have visited...
BTW, the entire economy of the world is a 'sales game'... You remind me of Steve Martin in the film 'The Jerk' when he was told that his job of guessing the weight of carnival goers was a 'profit thing'... duh
I suggest you continue to 'read the commentary' till you figure out what is really going on in the continual war known as macro economics.
The time frame of a year is a complete joke. Just like their silly attempt to hide treasury purchases thru the U.K.
If the chinese do this, then I dont see how they maintain a dollar peg.
If they give up on the dollar peg then we win.
If they try to keep the dollar peg it will be very cumbersome. If they try to do this like their current yuan trade with russia, meaning they have an exchange house that auctions currency in each and every country with which they do business, then it will take decades, not years.
Suppose they drop all those T's onto the market as they unpeg?
They could do that, but that would hurt them too, which I believe is tct's contention. So I would imagine more of a slow bleed while they collect real assets in exchange, thus keeping Smailes and co's 'dream' alive just enough. Then, once they have some real wealth stored in return for the US tp, they'll drop the USD peg, and peg their currency to something of actual value (you know, some of the things they have been accumulating using the USD denominated tp... you get the idea.)
But as the Chairsatan prints the days and nights away, real purchasing power of the dollar sinks while commodity prices rise. Seems to me the net tipping point for them might be much lower than we usually think . . . especially if they see a quickly declining US as an inevitably terminal case. Perhaps a mercy killing would be in their best interests, everything considered.
A $1T paper loss realized in exchange for a prominant role in a replacement reserve currency might be a small price to pay. Of course, if they played it out over the next year or so, it would be much less than a 100% loss.
Well, it looks like we all agree it's 'sooner or later'. Which probably means, like you say, it'll be sooner.
That would be the mutual assured destruction...An atom bomb on UST yields.
http://en.wikipedia.org/wiki/Protectionism
Protectionism by any other name, is still Protectionism...
Protectionism is the 1st step towards war...
***** "
When Goods Don't Cross Borders,Armies Often Do
History is not lacking in examples of cold trade wars escalating into hot shooting wars:
What good does it do to point out what is all wrong with some action, with out putting forth something better?
I have no control over what China does with regard to China providing what it percieves as cover for its currency.
I think that I am just shinning a bright light on things to come, so that others maybe be better prepared and not caught in the Christmas shopping rush.
JW n FL / GLP ^TrInIty^ puts forth the only action he understands WAR. This is all he knows. He brings his beligerance to ZH as well as using it back at his own Fetid Poo Pit of a forum known by some here as... www.godlikeproductions.com. JW n FL wants war with everybody especially if brown and Muslim.
My Name.. Is... James Edward Workman and you can meet me face to face to discuss anything you like.
No need to hide who you are Jason, everyone here knows its you or Alex.... and no one cares, unless you want to meet.. then I care.. but only then bottom feeder.
This is in the interests of global corporations who should have no problem with it. So why American politicians will worry about it and bitch about it in public that won't mean a thing. Yes the American government/empire is weakened but that's what has always been meant by limited government so let's not hear a lot of bitching about this please. Leave that to the proles.
As for China, the nation, whose to say? It's said it has been around for 5000 years. America? 235 and it's likely to splinter into who knows how many pieces. No problem for global corporations so no sweat.
While America celebrates its legitimacy based upon the consent of the governed arguably China's government has far more legitimacy among its people. Legitimacy in the sense the people believe the government is serving the common good. True or not my take that is what is believed. Here nobody thinks the government is serving the common good and one party believes the common good cannot actually be identified. That would be the party most closely associated with global corporations. Conicidence? You decide.
If I were a tinpot dictator that's where I'd keep my money.
Really? I would keep mine in gold.
135 tons of it? Where would you keep it, in a hole in the back yard?
In a fueled up jet, of course. These guys know what they're doing, even when they are incompetent. Last official act and all.
You'd need a 747 but it could be done. Sure would suck to crash with all that loot. Still, that's "only" about $7B. Hosni had like $80B. You have to have a friendly country to hide a shitload of loot.
How about diamonds? Do they have more "wealth-density"? Which begs the question...are diamonds an effective inflation hedge?
Diamonds are a bit of a pain. They're all different and the value can vary wildly depending on who you are trying to sell them to. Total world production of diamonds is "only" $9B while gold production is over 10X that.
Ocean's Thirteen (or whatever sequel it's up to):
George Clooney and Brad Pitt steal your plane in 10 minutes with bribes and a clutch hotwire job.
This is a short.
It does $100M domestically.
...maybe a response to the dissing they got at Bernanke's testimony today by some....
Perfect timing, in light of BerYankme's testimony the last 2 daze.
Anyone who shops at Walmart can take some responsibility for this (not much, but some). We did it when we let the powers to be push though "FREE TRADE". There is no such thing as free. Now we really get the bill. Let's see if Obama can now say "Buy American made".
'Free Trade' had nothing to do with it. Now, voting Libs is another story.
(Cue Bob, the Troll)
how you can troll ZH regularly and not be a political athiest by now reflects either lack of objectivity or simple ignorance.
Didn't Native Americans essentially give up their territory in exchange for charms and disease infested blankets from the colonists? Well Americans gave away their economic prosperity for inexpensive consumer goods and easy money. Free trade is a great name for a trojan horse, no? Come on now, you know you want some of this free trade little sheep. Take a little more free trade now, and a little more. What? No, no, those aren't shears they are ... happiness makers.
The native Americans failed to individually own the land, and did not recognize property rights. This is what led to their destruction. They attempted to treat the powerful and numerous westerners as if they were a rival tribe that they could simply steal from as they wished.
Trade had nothing to do with it.
LOL lack of property rights was the least of their worries you fucking douchebag
Oh, so you think they just chose to be at constant war with each other, and to never settle and create industries which they could have adapted to create more of the white man's arms?
You must have missed the part where frontiersmen and their families lived in constant fear of being attacked by nearby tribes. Where the military was eventually called in to quell the tribes, and eventually to simply slaughter them.
Or maybe the hard truth just left you wanting to simply respond with an insult rather than refuting my thesis? I will be happy to debate you or anyone else on the subject.
I junked you Tmos, for being callous and indifferent to the values of a worldview other than those professed by 'Europeans'.
An anthropologist would eat you for lunch (depending from which nation he derived his ancestry, of course).
You must have missed the part where nearby first nations saved some of the original settlers from dying before they made it a year in NA.
Hubris begat violence which begat violence.
http://www.kyphilom.com/www/seattle.html
how's that "individual ownership" idea working for folk lately? how do you think it may work out for your children? or their children? the original peoples of this continent held that life must be lived with regard to the seventh generation out, for sustainability.
the concept of "individual ownership" extends to owning individuals, as the truth of amrka's history is revealed to those who believed themselves "free" and they come to realise they were lied to just like the native peoples before them.
Actually, the Indians met people who did not recognize the (Indians)' property rights, even if their own judiciary said they should. That was the primary issue for Indians.
Trade had a lot to do with it. Indians were not efficient enough in the eyes of European traders(Smithian economics). In a nutshell, the Indians conceived trading as a means to support themselves only. Thus they hunted short hours when the game was abundant and long hours when the game was scarce.
Smithian economics is all about transfering wealth from an exterior to a delimited area. This means depleting as much as possible the exterior from resources in order to raise the wealth of the delimited area. Indians did not meet this kind of demand which led to catch as much as possible game whenever it was possible. This created a lot of tensions as it conflicted directly with the Indians' way of doing.
So what is the critical DXY level again? 74.64?
Well, all the stuff used to be made on our side, now its made on their side, so whos fault is that?? I think we set our own trap.
What's China's M2 .... Thats right, its going up 20% a year. The USA 2%. And all the non-performing loans.
China's non-performing loan (NPL), though has a slight fell from 2009 to date, may regain risks from lending to local governments and property sectors, which are at the risk of bubbles.
Chinese banks went on a lending spree in 2009 in response to the urging of the government as part of the 4-trillion-yuan (601 billion U.S. dollars) stimulus package to ward off the effects of the global financial crisis.
Nearly 9.6 trillion yuan in new loans last year fuelled fears of banks distributing bad loans.
Many banks continue to depend upon issuing credit to government-backed projects to secure profits, Wang Zhaoxing, deputy chairman of the China Banking Regulatory Commission (CBRC) said at an industry meeting on October 21th. However, those projects often lack adequate risk management.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1203&MainCatID=...
So, what are the US Shitty banks NPL?
Chinese banks went on a lending spree in 2009 in response to the urging of the government as part of the 4-trillion-yuan (601 billion U.S. dollars) stimulus package to ward off the effects of the global financial crisis.
Yes, they used that money to bail out the economy, not bail out criminal bankers like we did.
I agree the money went to projects.. but they are some corrupt little fuckers... I mean more than our worst... everyone with a title has thier hand out waiting to be tipped... the sidewalk inspector expects fucking 2%... they have a much bigger problem with corruption, even so those people getting lobby dollars at the construstion sites are out shopping which helps the economy over there. Un-Like here the banks get 0's and 1's emailed over and no one ever really lays hands on it.. goldman / jp morgue makes what? some percentage but it is never circulated around... never mind the best deal in the world, trickle down or get pissed on more like... but even that doesnt happen.
I say some austerity measures of the feel of austerity measures are upon the majority of the population now without any savings being realized.
Sorry to ramble, all the best to You Sir as always.
Quoting JW n FL / GLP ^TrInIty^
>>but they are some corrupt little fuckers... I mean more than our worst...
Well you should know! The way you clip the paying "members" at you own Fetid Poo Pit forum, Captan Underpants.
My Name.. Is... James Edward Workman and you can meet me face to face to discuss anything you like.
No need to hide who you are Jason, everyone here knows its you or Alex.... and no one cares, unless you want to meet.. then I care.. but only then bottom feeder.
Anyone not JW n FL / GLP ^TrInIty^ / Ja$on Luca$ / "James Edward Workman" please skip down as there is nothing interesting to see here (sorry)!
Quoting JW n FL / GLP ^TrInIty^ / Ja$on Luca$ / J.E.W. (Haha!)
My Name.. Is... James Edward Workman and you can meet me face to face to discuss anything you like.
No need to hide who you are Jason, everyone here knows its you or Alex.... and no one cares, unless you want to meet.. then I care.. but only then bottom feeder.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
What will you do if we arrange a meet, jump up and "Shamash" me in the face?
It has taken a week for you to respond to my repeated comments to you here at ZH. And yet a poster who humorously accuses you of poor quality trolling, gets one of your famous vicious bipolar attacks. I guess you are beginning to realise I'm not going away! For anyone in doubt, I cryptically mention JW n FL on www.godlikeproductions.com and the owner dropped the ban hammer. How would you know J.E.W aka ^TrInIty^. Just go away, you have despoiled this comments section. http://www.youtube.com/watch?v=PFnWcZFbwG4
Would the real Jason Lucas / Alex (I assume Shamash GLP SHR) stand up (who brought Mr Shamash into this, is he posting here at ZH too?).
JW n FL / J.E.W. (I can't get over that one!), have you been doing a little digging into the dynamic duo's history. The rabbit hole goes deep on that one. Here's another (of your beloved) Youtube clip(s) for you... http://www.youtube.com/watch?v=muDZD3wgoHI& Think she's a member of the tribe as well!
so, that's what happened, you got banned from his forum and your pussy hurts so much that you have to stalk him over here and clog up our comments over and over? fucking internet stalkers are worse than trolls. i remember when you used to add something to the conversation at hand, please return to that.
But but Spalding_Smailes said!!!!!!!!
China is a country with many people. Most of them have trouble seeing and need glasses. I would urge you to invest in good optometrical stocks.
Jim Chanos -
JC: They're empty shells. When you buy a condo, you're getting an empty shell and nothing more. By and large most of the developments are 1100 square foot boxes. And they [the owners] don't rent them because people want to keep them basically as pristine as possible for when they flip them because new is better than old. So ironically, you have people that are buying multiple condos here to speculate who are carrying themselves - there's no rental income.
The other interesting thing about the boom here is that it is completely high end. When people talk to me about China's "migration of people" into the cities and the population and blah blah blah, and the growth of the economy, I said "That's all and good but they're putting up the equivalent of New York City highrises at almost New York City prices for a populous that is 1/10th of that per-capita income." So this building boom is aimed at: A) the corporate market, corporate highrises and office buildings or B) very high end of the residential market. It's not the masses - it's for people speculating.
BI: I've heard that a lot of families in China are maxing out as much as they can in terms of credit and borrowing in order to get into this.
JC: They have to! Keep in mind that the average median income in China, and it's only slightly higher in the cities, is something like $3500 per person. Typical second-tier city real-estate prices have now gone above $100 a square foot. So a typical 100 square meter condo is probably going to cost you after all your expenses (if you build it out to live) $120,000 to $140,000 US. Well say you're a dual income couple and you make $7000 to $10,000 a year total. OK? Even if you put down the 20% down that everyone's pointing to, that's 20% on your purchase price. You're still paying mortgage interest of probably ... 60 to 100% of your income, pretax.
BI: Pretax?
JC: Pretax. And that's not super high end - that's an urban couple, dual-wage earners in a second-tier city. So it's already getting to the absurd in terms of prices relative to incomes. And the problem is construction is 50-60% of China's GDP. And of that, the vast majority is this type of construction. There's going to be a real brick wall here being hit at 200 MPH - it's just a matter of when.
BI: So when do you see the bubble bursting for China?
JC: Well, always with these things, we're often early and it appears we're early here too. But the good news for office building bubbles is that they're pretty tangible. So when you see the apartments stop selling, when you stop seeing foundations being laid, and holes in the ground, when you see the cranes not going up anymore, buildings being half-complete - that'll tell you you're at the end.
Read more: http://www.businessinsider.com/qa-with-jim-chanos-part-ii-china-is-a-property-bubble-2010-4#ixzz1FUyy7pYB
I think JC = Jim Cramer. Boy, are you clueless.