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China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings
All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so. And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?
From Xinhua:
China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.
Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.
And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:
China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.
The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.
Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.
Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.
However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.
The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity. In fact, we are confident that the reval is a likely a key preceding step to any strategic decision vis-a-vis US FX exposure (read bond purchasing/selling intentions). As such, all those Americans pushing China to revalue, may want to consider that such an action could well guarantee hyperinflation, once the Fed is stuck as being the only buyer of US debt.
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Agreed. A basket of currencies including gold to replace US Dollar as reserve currency. US ends it's imperial adventures and spends a chunk of it's defense industry budget at home, shoring up what we have left and aiding in development of a manufacturing industry. Back to basics.
Your prescription makes sense, but is won't happen. The megla-maniacs at the helm would not find the new configuration useful.
"Getting back to Even." Jim Cramer.
I think China knows a LOT more about war craft that the US..
i.e., "The Art of War" by Sun Tzu
yeah that's why we had to rescue their ass from the Japanese in WWII, if the US hadn't gone after the japs all of China would be a Japanese protectorate to this day
and that's why they couldn't push the US Army out of South Korea in the 50's despite the fact that their supply lines measured in the hundreds of miles vs ours measured in the thousands of miles
try again
Not to mention they have made our Carriers OBSOLETE.
And they can field an army of well over 250 million in a snap if they wish.
We are stretched to the limit,AND THEN SOME and they )courtesy of Bill Clinton), have the guidance systems now capable of hitting the US anywhere.(Instead of just the West Coast.) As was the case before the traitorous bstd sold you and me out.
Obsolete how - untested antti-ship ballistic missiles? LOL.
I wouldn't put my chips on 250M conscripts not to mention they can't move more than about 50K amphibiously.
Our economy is fucked but the military is un paralleled.
More hubris.
Nukes level the playing field. Unless and until there is a way to neutralize them, there will never be a shooting war between major world powers again, only proxy wars at best.
Not simply major powers. Nearly every country has nukes today, from India to Pakistan or Israel.
And nuclear disarmament is an idealist dream at best, just like ending the drug trade.
We are in a new paradigm since 1944: the first crazy or desperate enough to launch nukes starts a nuke escalation. That's why as you said, there won't be any conventional war anymore.
Why? Because even if a no-nuke use war treaty is signed, when a country faces total annihilation, he will rather attempt to use nukes than accept death or slavery.
EMP's are the major threat.
I bought the extended warranty for my IPad.
"So long as there are sovereign nations possessing great power, war is inevitable. That is not an attempt to say when it will come, but only that it is sure to come. That was true before the atomic bomb was made. What has been changed is the destructiveness of war.
I do not believe that civilization will be wiped out in a war fought with the atomic bomb. Perhaps two-thirds of the people of the earth might be killed. But enough men capable of thinking, and enough books, would be left to start again, and civilization could be restored."
- Albert Einstein, 1945
Yeah but didn't he also say that WW4 would be fought with sticks and stones?
- what's his name said "survival of the fittest" & "natural selection".
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"- Albert Einstein, 1945"
Well, I think Mr. Einstein would agree with me that things changed since 1945.
Today casualty figures would be close to 100% Yeap he'd agree with that also.
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tmosley, not if one or two or three of the parties are guided by God and welcome the orange fireball as a martyr's passage to heaven. With the USSR and Mao's China we were dealing with pragmatists; there is an additional factor now.
Yes, buy into the "$NAME enemy of the week is CRAZY" propaganda.
None of these guys is any crazier than the leaders in the West. They know that religion is a tool used to exert power and dominance over their populations, and that they are on the receiving end of that power. They aren't going to screw that up.
NATO can't even scrounge up enough planes for the Libya campaign.......do you think that China is really worried about a military attack??
It's financial warfare, no F-16's, A-10's or nuclear weapons required.
All the Chinese need do is dump T-bonds.
The US did it to the UK and France in 1956, forcing an end to the Suez Crisis.
It marked the end of Great Britain's greatness.
Bingo!
Everyone who is not aware of that incident should go study it. Britain told us that dumping British bonds would hurt the US incredibly so they didn't think we would do it. Eisenhower replied that while it will hurt us, it will utterly destroy you. Britain looked at their hand and folded.
Yeah imagine how expensive a war will get with $150 oil and China no longer supplying rare earths for our weapons. No more shock and awe when you have no smart bombs/missles,etc.
You can't start a world war without us.
Tim will say no problem in the morning. Watch and see.
For all Geo-pols out there, this development offically ends the era of American hegemony and ushers in the era of US isolation.
China has no regional interest for us to be in Afghanistan. They have the opposite interest of ours in Iran and Iraq. The have aggressively moved to improve relations with Europe. They are buying natural resources in South America and Africa. They are building Aircraft Carriers and already have submarines on a par with ours. They are cash rich and the beginnings of a consumer economy that can buy their own products. Japan, the central part of our defense and economic containment policy of China, is a shambles.
As a result of this move, the only short term move that can save any vestige of the US dollar is for us to end our wars and de-construct our military industrial complex. Then our defict is drops to a few hundred billion a year (a sorry state even still.) China has just said they are ready to take over and don't need us to police the world anymore.
How many of you think our leaders recognize this?
If you are a true fiscal conservative - all of your predictions would be welcome news. Did you ever notice how the nations that shelter behind the US seem to have a happier populace? Its old - but I think most of our allies are happier than we are...
http://www.forbes.com/2009/05/05/world-happiest-places-lifestyle-travel-...
Absolutely, and aside from the lives of a few thousand youth we willingly sacrifice each year to do this, China has been the (main) country funding it. Well, no more. The debts are coming due.
China is one of the main beneficiaries of the wars in Iraq & Afghanistan
note the Iraqi oil contract going to China and the US building infrastructure in Astan that China will use to mine its new mineral claims there
US leaders have sold the blood of American youth to China in a diabolical quid pro quo
not to mention selling our manufacturing & technology
Dead right. This is the revocation of the informal G2 Yalta, unwritten but understood by all since October 2008 crash. The so called G20 was just cover up to the real G2 behind the scenes. Now China is telling Oh' Bama/FED, don't screw around with QE and inflationary export. Or we'll drown you in your own dollars. This is the beginning of the economic stand-off...China does not want QE infinity. PERIOD. OVER AND OUT. I think its message received in DC.
This is exactly what needs to happen. The US could cut half the $663.7 Billion spent annually on DoD without compromising security. The public would prefer that to losing social services and would lap up the argument that the "rest of the world can no longer be deadbeats" who rely on us for protection.
The recent successes of coalitions and treaty organizations could be touted as evidence that the world will remain stable.
Would love to see this happen. Only problem is that the US trades military technology, hardware and training to corrupt middle eastern regimes (and others) in exchange for cheap oil. When we withdraw (which now looks like we may be forced to), the dollar will be dumped and no one will care to sell us the spice.
Whoever would do that to a cat should lose a few birthdays. Just sayin.
Fancy Bear, although I agree that we can easily slash our defense spending in half by pulling troops from all over the world and becoming isolationist (we might not have a choice anyway), I would only ask, where does the Federal Government gets its authority to pick the pockets of the producers in order to provide social services? The public opinion is very much against social services (with the exception of the looters and moochers) and the Federal Governments expenditures in social services far outweigh its constitutionally mandated "provide for the common defense".
Just slashing defense will not do it. The Federal Government spends close to 4 trillion a year. Cutting 663.7 billion in defense spending would still leave about a trillion in deficit spending. Only by cutting out Social Security, Medicare, Medicaid and all unconstitutional agencies in the Federal Government (HHS, IRS, ATF, EPS, DHS, Education, Labor, Agriculture, etc) can they possibly balance the budget. Run the numbers if you dont believe me. Everyone has to take a haircut. Better by cutting out Federal meddling than to cut out Federal responsibilities.
But you would be deluded if you truly believe it is the responsibility of the US government to implement an imperialist foreign policy just so you can keep driving your SUV to the mall and back every week. Our bloated defense budget is dictated by the need for cheap energy of the hydrocarbon type so that we can continue to fuel our pathological consumer economy.
We aren't spending 700 billion a year on defense. We are spending it on the offense and attempting to maintain control of the flow of the spice.
Oh, I agree completely that everthing must get buzzed. I just don't think it's right that defence has been off the table thus far. It's a $600B gorilla that shouldn't be ignored and defence cutbacks may arguably be more tolerable than domestic services.
To chose one other, medicare is a system I know well, and it feeds so many parasitic entities that radical restructuring there could be high-yield too. Personally, I think it should be administered at the state level, similar to how the Canadian provinces run their single-payer systems. Because the budgets are much smaller, extra costs are detected very early and the system is kept more efficient.
+1
Cheap energy and reserve currency have made our pathological consumer lifestyle possible. Those paradigms are now collapsing. No point in maintaining our military industrial complex since controlling the flow of the spice will no longer keep the hydrocarbon energy cheap.
They have almost no options left.
"submarines on a par with ours. They are cash rich and the beginnings of a consumer economy that can buy their own products. Japan, the central part of our defense and economic containment policy of China, is a shambles.
As a result of this move, the only short term move that can save any vestige of the US dollar is for us to end our wars and de-construct our military industrial complex. Then our defict is drops to a few hundred billion a year (a sorry state even still.) China has just said they are ready to take over and don't need us to police the world anymore. "
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I stopped counting at 4 material errors and a couple in logic.
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I am sorry, did you say something? ( I am focused on your avatar.)
(I will concede/retract that China's subs still lag ours but their advance in technology in the past 10 years has been "staggering" according to Bush's Secretary of Navy. Give 'em a few years.)
Keep reading your own post and you may find 3 other material errors and two errors in logic. (but I doubt it)
I doubt it too.
No, the key is still oil and still the Saudis...
Course if I was the Saudis, i'd be frantically calling Ben.
You are living in fantasy land. Our elites have the upper hand over their elites. Our elites are crashing the dollar on PURPOSE. They already know ahead of time what China's actions are going to be more or less. The end game is the Bancor, the reason is control. Yes, we are fucked, but not by the Chinese. We have more gold and silver than they do, our military technology is decades ahead of theirs, and we are sitting on (hoarding) huge natural gas and oil reserves right here in the good ole USA. After the year of hell that will force us to switch to the Bancor, the Govt/FED will own almost everything. Welcome to the new world order bitches.
Am mulling which is the least worst alternative....shit. As an aside, haven't seen anybody yet take umbrage with his silly notion of China "taking over" our policing of the world. What a joke. Hey, I think we should GTFO of everywhere, but IMHO China's only "police" actions would be strictly colonial in nature.
China won't 'police' a damn thing. They will simply trade their way into hegemony (like we should have done.)
I smell a rat. Why did the PBoC wait until the USDX broke support before making this announcement?
Somthing is fishy.
agree.
That China story is weird, at least two ways:
- why on earth announce your intentions of flooding the market with $2T of anything, if you actually want buyers?
- just who will be these new bag-holders? Not Pimco; not Russia, not BRIC's. Wh
The Fed maybe??
Just thinkin' here.......maybe China tells the Fed "here, you take them off our hands at/near par, or we're going to sell them to the rest of the world at market."
Sure, the Chinese might be hurt in the short run, but their timeframes are much longer than ours.
Something is fishy? How about next week is the FOMC meeting and Uncle Ben's first press conference? Will Uncle Ben stop QE-ing? Raise rates? Will he be affected by the implicit Chinese threat to dump dollars? Will there be any questions for Uncle Ben about the topic of this article? What will Uncle Ben say? Timing is everything.
+3 trillion but most ZHers can't see it becuase they are too busy spit shining their guns and silver.
"i, i, i, say, i say...the Fed...i...say. the Fed is...i say...i say is...is...PH....PH...i say...i say
What consideration would facilitate this trade? FRN's?
Is Gordon Brown their consultant?
the other thing that's wierd is this google search
notice a distinct lack of Reuters BBC etc there? ZH and ZH readers who run sites or use forums?
is this ZH well ahead of the game (obviously) and a news blackout on it everywhere else?
or what?
Fishy, yes, but I'd keep those Eagles JIC...
Well, if China is going to put $2T which has been sitting on the sidelines into the game, then QE by the Fed becomes pretty much irrelevant. The chink trove is existing money rather than something created instantaneously from thin air, but it was money with zero velocity, and now it is going to have some speed attached to it.
Odd this should happen on the eve of Bernanke's press conference.
Whoever holds the $$$ is going to be looking to spend them fast before they become even more worthless.
Despite being made of paper and linen, they are still legal tender for all debts, public and private, here in the USA.
Seems like China's move would be the largest QE to date, by far, and if (admittedly a huge if) the money can be chanelled into the purchase of USA goods and services, it might actually be very good for USA businesses, and maybe at the same time very good for PMs.
About that huge if. It would seem more likely, in the absence of new laws to prevent it, that the $2T will be used to purchase US natural resources, Boeing, Caterpillar, Microsoft, Apple, etc. How do you say "Yes, master" in Chinese?
It is also odd that for 30 years I have been hearing folks complain that China needs to spend their dollars rather than hoarding them. Now I have to listen to people complain that they are spending them rather than hoarding them.
I have long envisioned a time of troubles for the Western world, a period when the loss of jobs to cheap third world labor would result in wrecked economies. My hope was that the third world would eventually reach a point when it would become rich enough to become customers for the West. A lot of status quo would have to be crushed in the process of a new equilibrium, some of which is the idea of Western leadership and pre-eminence, and now that I think of it, currency.
Why would China suddenly start buying US goods and services?
They are trying to build their own rivals to Boeing, Cat, MSFT etc, hardly makes sense.
More likely offer to convert USD denominated debts for Chinese Yuan debts, thereby pushing US banking cartel out of the global economy, the (credit) money just gets extinguished as international borrowers switch currency. In some cases, the preferred lending structure is repayment in raw materials.
QE is nothing more than a global stealth tax to bail out an insolvent US banking system a US government that is out of control. It is about time somebody forces them to slow down.
Perhaps I am not following and understanding your reply, but I think you just said that the Chinese would extinguish dollars rather than spend them.
Heck, I'll take them if they don't want them anymore. $2T, even an inflated $2T, must be good for something.
I agree.
Look for gaps across the board on the opening bell. This could be the peak in silver and the S&P as well as the low in the dollar.
The low in the dollar? Hmmm... What will make the dollar rise? An increase in rates? Don't think so, as the duration of the US debt is just over 5 years and they have to keep churing to pay it off as it matures, so an increase in rates rapidly pushes the debt into default territory.
The other thing that could make the dollar rise is if the US Congress and the Pres agree to cut US federal spending by 1/3 across the board and raise taxes across the board so as to immediately start running surpluses to pay down the $14T debt.
Neither is going to happen.
Just out of curiousity, what do they pay you to post this garbage, day in and day out? If you don't want to say, that's ok. I understand.
Buy the rumor, sell the news.
Let me ask you another question in turn. What exactly made the tech stocks keep going up in 2000?
Why, after ten years, have gold and silver still not found their true value?
Why did Real Estate go so high during the latest RE boom/crash cycle?
See, the mistake you are making is not understanding the human element of herd-think and panic that drives the markets.
There are fundamentals, and there are emotions. Sometimes one is in control, and sometimes the other has the reins.
You leave out that gold and silver are in fact different from tech stocks and houses. Thus, many people are buying pms with no intention of ever selling them. I know Indians whose families have had the same bars of gold for over three hundred years. This is what is different. If there is a "correction" like the kind of which you speak, I'm still never selling my pms. I'll use the opportunity to buy more.
Everything you say is about and directed to, Western-style "traders" who seek to make a profit off of something they buy and then sell. Hundreds of millions of people all over the world are buying pms but they will never sell them. Your "boom-bust" cycles are therefore an alien artefact of Western market capitalism and have far less efffect than you realize. I'm sure there are creatures who trade on the CME and they may even drive the price of silver and gold down 75% and if they do I will buy a ton of the stuff.
There are also ~600,000 Chinese families each of which has >$1.5 million in investable money. They no longer trust the stock market and they fear inflation. There are at least as many Indians. Throw in lots of middle-class Americans, and there is enough demand to account for 15 years' production of silver. Its not going away. Let the price go down. Millions of people all over the world will gleefully pile in to buy it all up.
American "analysts" who look at the charts and pontificate about "resistence" and "support" and "parabolic pullbacks" are so full of shit it makes me sick. They fail to consider even the simplest of global facts. None of them bother to look overseas. One of their "resistance" levels was 70,000 Rupees per kilo! Yet they never noticed it! Why? Because they're ......... Fill in the blank yourself and stop blathering about a cyclic analysis that does not apply.
I'm even going to stick my neck out here. The gold standard is Bernanke's Plan B. $5000 per ounce.
a bankers wet dream "a silver shortage" commensurate with "year ten in a mining boom and surge in prices of the most basic of industrial goods." ya know "like STEEL and COAL." well, "that and ZIRP...forever." Did i forget "soaring yields for sovreign debt that must be paid?" preferably "if not in gold then debt backed by gold" of course. the only thing better is "there is no crisis" either--"except in the greenback." really? "the greenback is in trouble?" "yes." "and all other banks other than yours are bankrupt or state owned." "oh, that's terrible. how DOES the other half live?" my question still remains: do billionaires sleep? if so "should they sleep more?" or should they in the words of Metallica "Sleep with one eye open...
Well - If the dollar crashes and the Yuan goes up - I guess we won't be able to afford any more of those fabulous "made in China" goods. For that matter - perhaps a giant crashing dollar will put an end to that whole globalization theory. Now - if only the clever Chinese had come up with a way to keep exporting to their favorite market of last resort...and...avoided inflation.
The point is that if we keep printing to infinity it will create massive inflation in China anyway and blow up their economy - I guess it boils down to we are all fucked no matter which way this goes! USA stops printing and raises rate=fucked. USA keeps printing and China dumps USD=fucked.USA keeps printing and inflation skyrockets=fucked.
no, repeat after me "Greece is phucked. Greece is phucked." the fact that it doesn't make sense is your problem not the market's. as i've said before "the last time the Chinese did this it blew up Europe." Europe has yet to "stop blowing up" and "now this." Maybe the Chinese figure "we'll just blow up Europe then"?
CCR Bad Moon Rising
http://www.youtube.com/watch?v=UYnySGM9dQA
What the fuck was that? Never mind, it was just Turbo Timmy whisking by me to board the next available flight to China. Thought I saw Timmy wearing eye mascara, lipstick, and some sort of orange ball was in his mouth.
LOL
Happy Easter ZH members. Tyler, thanks again for everything you do.
+1, very pulpish.
That light in the tunnel just got a lot bigger. No longer to wonder about it. This is gonna hurt.
Can they do a deal with Oil Producers to buy long term oil in exchange for US debt? Can they bail out Europe and exchnge EU debt for US debt. They accomplish a shifting of reserves and also begin to replace US influence with Chinese influence.
Buy Dinars with the reserves, Americans exchange dinars for the reserves.We have the worlds' largest pump and dump going on why not the worlds' largest money laundering operation?
Tyler please bring back the 5YR CDS sovergin debt heat maps. Great stuff and missed. It's starting to get a tad 2008 again.
We miss rational markets where stuff like CDS rel val and EV/EBITDA make sense. Once out little feud with the Fed is over, we hope to bring it all back.
Why would China say they are going to do this instead of selling quietly? This doesn't make sense to me...
sell 2 trillion in treasuries..........quietly??????
How is this announcement a smart move on their part?
I'd say it's BS, unless they have already done most of the dumping in secret, which is doubtful as there hasn't been any hyperinflation. That is, unless they literally have $2 Trillion in cash sitting somewhere, in which case the moment they decide to spend it on something hyperinflation will ensue.
Not saying this isn't the RIGHT move, but doing it in public like this lets every Tom, Dick, and Ping-Li frontrun them, possibly causing a dollar collapse before they are even able to buy any assets with their huge stockpile.
They have been walking on the knife's edge for a long time, and the blade has been getting finer and finer. This would seem to shrink it down to a single atom in thickness, if markets take it seriously.
Fair points along with "bagholder" comment above. But assuming China is stuck with our bonds, does the fact that they have a problem lessen our problem in the least?
The message that is being sent is that China will now decide US monetary policy. And fiscal policy. And foreign policy. "No more spendy, G.I. Joe."
Remember China can allow their own economy to crash periodically and end up in a far better place then we will when ours falls apart. Uprisings? Their response will be to shoot as many as necessary to put them down. So while they may have a bondholder problem and eventuallt take a haircut, they have just announced that the can will no longer be kicked down the road.
are you saying "the USA's borrowing needs are fully met and for the forseeable future as well"?
Nope, China is saying they had better be.
i see something shiny holding a gun myself.
they have been doing a lot of deals w/ many countries...perhaps, paying on treasuries....
No reason to raise the debt ceiling, is there?
"we don't need no stinkin' badges." now move along.
http://verbewarp.blogspot.com/2011/03/operation-death-star-australis.html
.
Terence Kemp McKenna (November 16, 1946 – April 3, 2000)
interview near bottom of page at link. big picture
at this link.
Man, when does the rabbit hole end? I knew aussie had haarp but the picture painted here is dark. the whole concept of superpower war seemed moot to me so as to avoid nuclear winter, actually how does this not end in nuclear war?
Do some reading, prior to his death Sagan repudiated Nuclear winter said he basically made it up..
China doing some political posturing ahead of the Fed's April 27 meeting telling Bernake to stop the QE...
Bingo!
OK, so no more QE and we default immediately. This helps China how?
OK so we default, this helps US how?
(and remember Timmay just said there was no chance we'll default.)
Remember creditors do tend to take your shit immediately when you don't pay. And that doesn't just mean "US Govt" assets. It means US based corporations, reserves of citizens, anything. Oh yeah, and at these levels, it could also mean war.
Yes this is what they will do. Can't pay up US? Well we'll nationalize all US factories and assests in China as a downpayment. When it comes down to it they will do this.
who will upgrade our I-pads then?
like Kirk said to McCoy "we finally have a chance to get away from it all!" Now COMMENCE THE BEAMING TO THERE!
lesser of two evils, a little pain now or "whoa, dude...take it easy, heres my wallet" later.
Everything has its beauty but not everyone sees it.
Confucius
Good quotes Thorlyx; do you have a link or a citation? I have not read the Analects yet but mean to . . .
"MAD money You can't AFFORD to miss it." Jim Cramer.
no need for QE3 with $2T soon flooding home?
Looking at this from a reverse angle, maybe QE was designed and intended to achieve this outcome: to force the Chinese to start using their wealth to lift the world economy.
Seems blatantly obvious that as soon as inflation of the dollar sets in, the Chinese would act to limit the risk to their reserves,
No, No, hell no!. The purpose of QE2 was to purchase US debt that the Chinese would no longer buy. If the Chinese dump 2T in t-bills, QE3 would have to be instituted to buy them back from them.
go long pop corn!
That makes the speculation of a pause between QE2 and QE3 even less likely or at least much shorter. How long could the US government keep running if nobody comes to buy treasuries? This is pulling the rug under the political theater.
Ok, so everyone thinks that China is brilliant right? Buying up every natural resource et. al. and you think they're going to commit economic suicide by flat out selling our debt...? Makes no sense. I just don't see China telling us to stick a gun in their mouths so they themselves can pull the trigger. Sure, we've got our hands full but if they sell, they too may have their Minsky moment.
I remember something about short hairs and having someone by them....oh balls I forget!
This is going to ANGER their ghost town constituancy. It's going to destroy ghost town jobs and ghost town values and drop dead fred is going to punish them.
http://www.youtube.com/watch?v=N3JaT0Zv6yY&feature=related
I know one should be worried about the USA debt, but on other hand, there are significant internal changes coming to China. Call it neo-stalinism. Succinctly, it tells it all. Take from those who have give to those who have not with full support of the Party for those who have not. Even if it means killing some part of Party itself- no big deal, we have seen it many times:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2627#p31950
What is the end point of turning neo-stalinist in internal policies? Militarization whose logical extension ( as someone has to pay for this type domestic demand one day) is Expansion.
Not a mention in any of the major media about this. No wonder America is being dumbed down and getting raped.
Ignorance is religion here. It's disgusting.
Fancy Bear; more like, Denial. Americans have ample resources for getting to the facts (or, at least, another side of the story) but choose not to. As Robinson Jeffers noted (Women At Point Sur) Americans short circuit at the threshold of the truth.
Not to get all esoteric or anything but as far as the ignorant go, I'm willing to bet it's not entirely their fault they don't know or that they are asleep. That is where information comes in to play. Throughout our history there has always been a spiritual war raging and it's all wrapped up in allegory, mythology and legends. Now is no different, just now with the help of technology, media and entertainment are being used as weapons.
http://www.youtube.com/watch?v=ixhSOjrHcec&feature=related
If anyone thinks this is just foolishness or junk then it wasn't meant for you to 'see' yet.
best that you and i be here than no one at all. insofar as not being "dumbed down." i am withholding judgement on "the rape thing."
This old news you need to read the story was published on Tuesday. It's reverse Psy Ops for upcoming dollar rally to suck some more shorts into the dollar and longs into PM's and commodities. So fucking obvious what's going on.
"China is certainly tired of recycling US Dollars" and many real americans are tired of buying Chinese products. Perhaps this can be the new Détente.
Exactly, if one of our so called "leaders" begins the buy American chant you can move to defcon 2
I see why China likes Mongolia. All they ever do is yak yak yak. Show me bitchez!
Do you kill your customers, who keep your workers employed ?
Do you kill the goose that give you golden eggs ?
China is not ready to go without US yet. Not in year 2011. If US go hyperInflate in 2011, there goes the whole coastal economy of China. All the factory will be shutting because US, and the world won't be buying the products. All buying will be in contraction mode.
China has problem with employment. Their college graduates are highly unemployed. Farmers and ranchers are dying because of high cost of fuel and inflation. Real Estate is in bubble. The high employment are in the low pay cheap labor. If factories producing goods starts to shut down. China will have a new revolution.
In short, the future is not looking good for US. But if China let US dollar die fast, they also commit suicide. US market goes down, Japan market goes down, Europe market will shrink because of panic scare. Nobody will be buying nothing from China--> Real Estate bubble burst and riots everywhere.
eh. "Sheet happens, bro."
If your customers are paying off with worthless paper and you already have $3 trillion of their rubber checks and you have warned them repeatedly that their credit rating is in jeapordy maybe the smart move is to cash some of them in for whatever you can get and stop extending them credit.
I am tired of this "mutually assured destruction" type BS! Yes, China will take a hit along with the US initially. Unlike the US though, it will bounce back and, quite possibly be dealing with a deflationary economy in five to ten years time while the US is still shell-shocked from hyperinflation.
It's been so long since anyone has had self-sustaining economies that nobody even believes they could exist anymore! Not only will they exist, but it will go back to being considered the norm and IMHO that is a good thing for all of us!
Do you know who Hu Dao Fuke Nose is?
Xia Bin can say anything,but it‘s President Hu to make a decision.
Dumping USD is not a childplay
"Sha bing?" "President Who?"
STOP BUYING ANY OVERSEAS PRODUCT.
BUY AMERICAN OR NOT AT ALL.
PERIOD.
We've done it to ourselves because of the WEAKEST LINK LEADERSHIP OF THE WORLD.
However there are things we can do to dampen the rest of the World flippin' the US the 'bird' 'crane' or 'black swan'.
If that doesn't work, there is our arsenal but we really don't want to go there.
Too late.....nothing much made in Amerika anymore.
Too late.....nothing much made in Amerika anymore.
scroogle up manufacturing stats of the world by country, be sure you're sitting down
this stupid lie has been repeated over & over & over....
+, Americas amber waves of grain are as potent a weapon as Saudi oil
+ corn, wheat, and ++++++++++ soybeans, I heard the Chinese really like those soybeans.
So blatantly Psy Ops for the last par of the pump on risk and dump within the next two weeks if not sooner.
Creed, couldn't have said it better, nicely put!
sparky,
A good friend of mine built a house last year in Idaho. Just like you, wanted American made parts. Was willing to pay any price. One example, door handles, could not find 1 manufactured door handle, no matter the cost, that was 100% made, 100% put together in America. Looked for weeks. Finally gave up.
Too late for us there. Agree, part of our downfall. But we did this to ourselves by doing a great job of being the most non conpetitive country on the planet.
There are still items that are American made of excellent quality. But not enough to support over 100,000 joining the job market every month.
Game over in that regard. But an excellent thought.
Talk about doom and gloom...
Nothing is made here because assholes like McKinsey et al have run from company to company selling the "outsourcing solution". If you resist their siren song of greater profits at the employee's expense - they tell you that all of your competitors are doing it and they will eat you alive. (If greed doesn't work - go with fear.)
It helps if we are dumb enough to believe that free trade and globalization equals nirvana. It helps if all of the politicians...err...I mean leaders say exactly the same thing - so there is no choice. No, no - don't look at those idiot Germans paying their employees more, with better benefits and fat margins on product. Join the global race to the bottom...
Face it boys and girls - we've been sold a crock of crap and told that it is peanut butter...but you can get the latest smart-phone for practically nothing...
In 2 years I'll get my first ipad, for $5 at a yard sale
GM to all, and Happy Easter to all who celebrate. :)
No, there is no rat. This is how China operates. They know they cannot dump 2 T all at once on the market. It will be a slow process, part will be that they just (stop buying our confetti), they will sell, and probably have been for a while. This is not going to open the flood gates all at once. Some, just do not give the Chinese enough credit. No doubt the end game is here, and my guess is about on schedule as posted so many times here.
Obviously Silver has been going nuts, and I know many of us are a bit worried....short term..... But have you noticed the quiet ascent of gold. Not a big deal, up 5 here, maybe 6 there, very steady and smooth. This tells me we are shortly in for a surprise, and I hope it is to the upside. But long term, very, very comfortable with my positions . Even have my 22 year old daughter covered.
So stock market continues to go up, dollar down, and the sheeples just keep spending on 55 dollar dinners, fancy clothes and more toys. Just do not get that part. How stupid can they be?
No way - either this is just saber rattling/complete BS or they have ALREADY traded 2/3 to 3/4 of the 2 trillion for tangible assets. No way they pre announce something like this, the Chinese have been buying assets like crazy the last 2 years
Real knowledge is to know the extent of one's ignorance.
Confucius
"buy, buy, buy!" Jim Cramer
actually i've come up with a new one: "first we gave them our money, then they stole it." i'll leave it to all of you to determine who "they" are.
.
In another perspective, China had yet secure enough resources to be independent from US. China need cheap fuel, ore and tech. Either China find a way to create renewable energy or convince middle east countries to get paid by Yuan, they will keep US alive.
But, but timmy said absolutely no way we will lose our AAA status, and, and it is getting better. Honest, he said that. I, I, just don't understand.
I mean, how can things go wrong when you have Obama, Geithner, The Berank, Lloyd and Jamie all together. They are smart people. Just....do....not.....get....it.
Sell my Gold. A bubble, right. What a crock. My only regret is I am at 50% of total physical. Keep waiting for the next dump to add. And no idea when, but the miners, especially the good ones will move a bit higher. lol.
Or should I buy PCLN, CMG. So confusing. NOT!!!
don't expect Wall St guys will bring manufacturing home,they're comfortable using RMB and foreign slaves
One trillion $ would buy theoretically all of the world's Central bank gold (~20000t @ 50,000$/kg.) That leaves another trillion for strategic investment.
Exxon has a market value of 428 billion$, Rio Tinto has a market value of 40 billion$.
A trillion$ is about the size of the rescue fund for Southern Europe.
Pretty impressive what they could buy with that money in a free market.
What happens if they put a bid on a big mining or oil company and that bid gets rejected for reason of national security?
Gunther,
Sure would, but you woud have to get permission to sell our oil firms to China.
Why sell anything of value for devalued currency?, and going much lower soon.
You would be a fool.
The Chinese already put a bid for Potash Corp in Canada, and they were rejected for reasons of national security. It has already happened.
if US defaults how much value would USD lose?
Theoretically, the US dollar can survive a US government default, because it is backed by the FED assets and not the US gov ; but a US gov default would annihilate everything, including the FED, so the USD will lose at least 60% of its value, and probably 100%.
Would my I-pad still work?
Waiting for Jan Hatzius to give us the Goldman estimate of QE3 amount. We should get a bet going. I'm feeling he's going to say "we" need $2.5trillion, knowing the number is really $1.8 trillion while also raising the interest on money held at the Fed by 50bps. Bonuses? Guarenteed for this year, boys.
I should say, they need $800 billion just to pay for the Federal government's net cash outflows for 6 months. Then they buy up all of the Chinese treasury holdings ($1 trillion). China is deleveraged from USD holdings by the beginning of 2012.
Hope and Change.
Bernanke: What, Me worry?
http://www.businessinsider.com/jim-grant-on-qe3-2011-4
Happy Easter.
WoW! Here They Come http://youtu.be/hZiEbfewefU
IMHO, China is rather stupid to create panic like that. They have trillions of dollars of reserve and notes. They got a huge inflation problem. And they have internal pressure ready to blow.
They are going to lose value of their reserve one way or the other, why not blow it on their people ? Why not openly subsidize the fuel cost for farmers or fuel pump ? That will ease the pressure on the Yuan, makes their own people happier. And also help ease the inflation problem. To me, that is making the best situation of out the cards dealt with.
With Trillions of dollar in bonds and reserve. I doubt China can get 50 cents per dollar back at this rate. In fact, when hyperInflation hits, they may get 20 cents back for every dollar.
I don't see why don't they just subsidize their fuel to kill off Inflation cost of fuel. Trying to make profits or salvage what is lost is stupid, if it only create more internal chaos.
they know they aren't going to get shit back. its strategic value is greater than its finnancial liability.