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Chinese Inflation Heats Up Again As PBoC Takes Another Step To Establish Yuan As Reserve Currency

Tyler Durden's picture




 

That China's February inflation just came out at a consensus-beating 4.9% is no surprise. After all, the country miraculous slipped just below the consensus so the Department of Truth had to keep things somewhat symmetric. And yes, while this is the 5th consecutive month that Chinese inflation is higher than the official target of 4%, this is not the news of the evening: a press release just issued by the PBoC however is...

But before we get there, here is Bloomberg's brief take on the latest Chinese number, which will likely have an adverse impact on the market:

Investors are concerned that monetary tightening to tame inflation may slow the Chinese economy, weakening a global expansion already hampered by elevated unemployment in the U.S. and sovereign debt woes in Europe. Stocks tumbled globally yesterday as the Asian nation reported weaker exports, U.S. jobless claims rose and Moody’s Investors Service cut Spain’s debt rating.

“Inflation and overheating are still a bigger risk in China than an sharp economic slowdown,” Yao Wei, a Hong Kong- based economist with Societe Generale SA said before today’s release. “The economy has strong momentum.”
China’s economic data is distorted in the first two months of each year by a weeklong holiday to celebrate the Lunar New Year. The customs bureau yesterday cited the event as a factor in an unexpected $7.3 billion trade deficit for February, the nation’s biggest in seven years.

Premier Wen Jiabao’s campaign to cool real-estate and consumer prices after the economy surged back from the financial crisis has included three interest-rate increases since mid- October. Producer prices rose 7.2 percent in February after a
6.6 percent gain in the previous month, today’s report showed.

What is the big news is that a short week after the PBoC made it clear it would start allowing CNY in all cross-border transactions, a direct affront to the dollar's reserve status, it just stepped up its rhetroic materially with the following press release on its website:

From: "Zhang Xiaohui: to promote the interest rate, exchange rate formation mechanism reform and monetary policy transmission mechanism"

The key selection Google-translated:

Promote the reform of RMB exchange rate formation mechanism, improve the managed floating exchange rate system is based on China's national conditions and development strategies to make the choice, improve the socialist market economic system consistent with the direction of reform, in line with our long-term and fundamental interests of promoting China's economic restructuring , curb inflation and asset bubbles, maintaining the development of strategic opportunities and international trade environment has a positive effect. Meanwhile, as the development of a large open economy, further enhance the effectiveness of monetary policy is to achieve our internal and external macroeconomic balance, keep the economy stable and healthy development of the necessary requirements of a managed floating exchange rate system will also help improve China's implementation of financial macro regulation of the initiative and effectiveness.

"Eleventh Five-Year" period, the RMB exchange rate formation mechanism reform an orderly fashion.To achieve unification of exchange rates in 1994, China began to implement a market-based, managed floating exchange rate system, only after the outbreak of the Asian financial crisis narrowed the floating band of RMB exchange rate. July 2005, after full argument and preparation, our implementation of the RMB exchange rate formation mechanism reform, the implementation of the basis of market supply and demand with reference to a basket of currencies, a managed floating exchange rate system. Second half of 2008 to further deepen the international financial crisis, many of the national currency devaluation against the dollar, the RMB exchange rate maintained basically stable, and global economic recovery in Asia has contributed to demonstrate our efforts to promote global economic balance. June 19, 2010, under domestic and international economic and financial situation and China's international balance of payments situation, the PBOC announced that further advance the reform of RMB exchange rate formation mechanism, focusing on the basis of market supply and demand persist, with reference to a basket of currencies. July 2005 to exchange reform since the end of 2010, the RMB against the U.S. dollar has appreciated 25% against the euro has appreciated 14%, according to BIS data, to the end of 2010, the RMB appreciation of 14.8% in nominal effective exchange rate, real effective exchange rate appreciation of 22.6%.

RMB exchange rate formation mechanism is also supporting the work of other steadily. First, the foreign exchange market and vigorously promote the construction, based on market supply and demand mechanism of RMB exchange rate formation system of support. Inquiry into trading and market maker system and improve the RMB exchange rate formation way, and to develop inter-bank RMB forward, swaps and options markets, innovation and exchange rate hedging instruments, enhance risk management capabilities. Spot foreign exchange market in 2010, forward and swap transactions were 3.05 trillion U.S. dollars, 32.7 billion and 1.28 trillion U.S. dollars, respectively, 4 times in 2006, 2 times and 25 times. The second is to strengthen and improve foreign exchange management, and continuously expand the channels for foreign investment, gradually introduced a series of policies to relax the companies held by residents of foreign exchange restrictions, speed up the pace going. While also strengthening cross-border financial supervision and prevent large-scale short-term arbitrage capital flows. The third is closely monitoring the economic situation, to observe the business capacity, while maintaining stable and rapid economic growth while actively and steadily promote the reform of RMB exchange rate formation mechanism.

Since the reform of RMB exchange rate formation mechanism of RMB exchange rate fluctuations in two-way, significantly enhanced flexibility, the market supply and demand in the exchange rate fundamental role in further strengthening. View from the operation of the real economy, the exchange rate formation mechanism reform the overall impact is positive in promoting China's foreign trade structure adjustment, economic structural optimization and industrial upgrading to achieve sustainable economic development to the positive role gradually. Micro-enterprises and financial institutions, the main initiative to adapt to the heightened sense of exchange rate fluctuations, changes in the market should also have greater flexibility and capacity to improve. The rapid development of the foreign exchange market, interbank foreign exchange market quotation active trading volume grew rapidly, such as derivatives swaps and long-term steady development of the foreign exchange market efficient allocation of resources and further enhanced. Financial institutions, exchange rate flexibility in adapting the same time, strengthen risk management and improve the ability of independent pricing, improve financial services and innovative financial products. These were to some extent, reinforce the transmission of monetary policy and market micro-foundation base and enhance the effectiveness of monetary policy.

Steady progress in interest rate reform, the exchange rate formation mechanism reform is an important part of our financial system, but also to establish and improve the socialist market economic system component. Play a good interest rate, exchange rate effect of price signals, for optimizing resource allocation, promote balanced and sustainable development of economic significance. "Eleventh Five-Year" period, the area of ??reform has achieved remarkable results, the People's Bank monetary policy system has improved constantly, and gradually shift to price-based indirect control tools, significantly enhance the flexibility of RMB exchange rate, money market, the rapid development of the foreign exchange market, the market With the further expansion of the depth and breadth of the micro subject of monetary policy are also constantly enhancing the sensitivity, flexibility and effectiveness of monetary policy be improved. Transmission mechanism of monetary policy more smoothly.

The next stage, the People Bank will "Twelfth Five-Year Plan" of the general requirements and basic conditions, interest rates continue to steadily promote market-oriented reform and the reform of RMB exchange rate formation mechanism, and enhance the policy relevance, flexibility and effectiveness, improving macro-control capacity. In accordance with the requirements of prudent macro management, establishment of prudent financial companies must have qualified the hard constraints; guide financial institutions to further improve the pricing power, market pricing of infrastructure to promote continuous improvement; gradually liberalized the prices of alternative financial products, banking products to avoid excessive cross-subsidies, to achieve a variety of products in the market pricing. Through interaction and mutual promotion in many fields, especially to speed up the cultivation of the financial markets, from the start of building a mechanism to create conditions for the market to play a greater role in interest rate decisions. In accordance with the initiative, controllability and gradual manner, to further improve the RMB exchange rate formation mechanism, market supply and demand in the exchange rate to play a basic role in reference to a basket of currencies, exchange rate more flexible and keep the RMB exchange rate at a reasonable and balanced level the basic stability and promote basic balance in international payments.

Simply stated while China says it will follow a prudent monetary policy, which however means to keep the Yuan stable and thus not revalue, further pissing TinyTaxFraud off even more, reiterates it will expand Yuan use in cross-border trade, and will rush to improve its international balance of payments even with the current rate.

All of which simply means that China just took another big step toward instituting the Yuan as the next reserve currency.

 

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Thu, 03/10/2011 - 22:59 | 1039239 buzzsaw99
buzzsaw99's picture

All of which simply means that China just took another big step toward instituting the Yuan as the next reserve currency.

That's what the bernank and turbo want too.

Thu, 03/10/2011 - 23:16 | 1039289 dlmaniac
dlmaniac's picture

China bought so much gold and silver recently they had a trade deficit.

Thu, 03/10/2011 - 23:18 | 1039294 william the bastard
william the bastard's picture

It's a good thing?

Fri, 03/11/2011 - 05:35 | 1039907 Weisbrot
Weisbrot's picture

in respect to the Chinese divesting themselves of the devaluating fiat dollar it is, for them.

Thu, 03/10/2011 - 23:18 | 1039291 william the bastard
william the bastard's picture

At least they are avowed communists.

Thu, 03/10/2011 - 23:39 | 1039341 reader2010
reader2010's picture

Not exactly. Bernanke's owners want China's RMB to be a part of the soon-to-be-created world currency. If China rocks the boat by going alone with other countries, you should expect nasty large-scale wars with China. Soro just hinted that in his recent FT video interview. 

 

http://www.youtube.com/watch?v=pz8L6hyZngI

Thu, 03/10/2011 - 23:51 | 1039388 buzzsaw99
buzzsaw99's picture

They try to raise the price of my undies and it's on bitchez!

Fri, 03/11/2011 - 04:34 | 1039880 jeff montanye
jeff montanye's picture

exactly.  whereas the nineteenth century saw the british empire fight the good fight to keep the chinese addicted to opium and the pound, the twenty first must see the american empire go to war over keeping them addicted to hopium and the dollar.  what better use of blood and treasure (well, not literally treasure...)?

Fri, 03/11/2011 - 06:34 | 1039947 malikai
malikai's picture

Any shooting war between the US and China will result in certain catastrophic loss for both. The next empire may very well be Djiboutian in the world of post China-US war.

Fri, 03/11/2011 - 09:00 | 1040108 Translational Lift
Translational Lift's picture

No one in their right mind would get into a ground war with China and their 1.3 Billion population.  The winner will be the one that pulls the nuke trigger first!

Fri, 03/11/2011 - 05:37 | 1039908 Weisbrot
Weisbrot's picture

does that mean after the Chinese become the world currency the FRB will print their fiat? (just as they counterfit so many US items)

Fri, 03/11/2011 - 11:07 | 1040438 dracos_ghost
dracos_ghost's picture

Given that the yuan is pegged(aka a foodstamp), the FRB already is printing their fiat.

Fri, 03/11/2011 - 08:38 | 1040069 Snidley Whipsnae
Snidley Whipsnae's picture

Not exactly, not exactly... What Soros said was that the US wants China's participation in the IMF to increase. The IMF is a puppet of the US.

Soros also confirmed Triffin's Paradox, but he failed to lable it as such.

China has it's own organisation, the SCO, and is more interested in boosting the strength and prestige of the SCO.

No one is going to start 'a large scale war with China'... China has an impressive nuclear arsenal, the war would be fought in the SE Pacific within striking distance of China's most effective weapons, and no one would win such a conflict...the result would be mutually assured destruction.

The current 'war' is economic and will remain so. As China gains economic clout it will pull more nations into it's sphere of influence...while Western Socialist Soverigns gradually, or not so gradually, decline, and lose influence.

PMs are the key factor in the economic war and all central banks recognize that fact. The worlds central banks are not holding, and adding to, their PM reserves for no reason.

 

Fri, 03/11/2011 - 14:37 | 1041483 reddog
reddog's picture

You have it tight but for one thing.

 

Would that western nations were Socialist;

they would be working for their larger populations

and not just the new robber barons.

Fri, 03/11/2011 - 15:04 | 1041640 reader2010
reader2010's picture

The weakest link for China is energy, food and water. It aint gonna end in an orderly fashion when the shit hits the fan. Indeed, China is the biggest Paper Tiger.

Thu, 03/10/2011 - 23:07 | 1039244 rapier
rapier's picture

Once commercial quantities of RNB exist offshore then it will start trading.  At which point how can they 'manange' the exchange rates, meaning dictate them, any longer?

I don't believe they can but maybe I'm wrong.  Anybody have any opinions?

Also it probably isn't much an issue short term but I wonder what the effect on global liquidity will be when Chinese based credit finds its way out into the world?

Fri, 03/11/2011 - 06:36 | 1039948 malikai
malikai's picture

The exchange rate could be eaily managed by controlling the gold/silver/whatever ratio to currency. Be sure the Chinese would do this, and it would not stop inflation, it would only be better managed than the current system, which is to say it would be slightly less evil than the current system, but not by much.

Thu, 03/10/2011 - 23:00 | 1039245 Oh regional Indian
Oh regional Indian's picture

Yup. But I think China is more likely readying the world for soomething other than the dollar, but probably not the Yuan. You have to have a lot more than gold backign to become a global reserve currency. China has waaaaaay too many internal problems to deal with.

The US will fire a shot from the shoulders of EMEA into the heart of CHina when the time is right. Till then, keep on jawboning.

It's the IMF we have to keep our eyes on, it's the other hand.

ORI

http://aadivaahan.wordpress.com/2011/03/09/axis-of-evil-doing/

Thu, 03/10/2011 - 23:46 | 1039370 slewie the pi-rat
slewie the pi-rat's picture

hi, ori, you shithead! i had to look up "EMEA":

}Paste{ : Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. ...{

so, of course, you are right, again...  but this is pretty crypto:  "The US will fire a shot from the shoulders of EMEA into the heart of CHina when the time is right. Till then, keep on jawboning." 

once, in asia, when i was in the wrong place at the wrong time with the wrong people, i had the opportunity to observe chinese gamblers.  and vietnamese, also, but the chinese, down along the river were something to behold.

the depiction in "the deer hunter" where, along that very river, as the story goes, there is the Russian Roulette Casino, is quite accurate as far as the gambling goes.  i have been escorted thru rooms like that.  terry & the pirates, big time.  not a show of weapons, either, just a heluva lotta action, and people looking like badbad leroy brown all over the place.  piles of 'money' and great drama.

if the chinese are looking at 4.9% inflation, and here the ice is thin, indeed, but IF, ori, the chinese inflation is 2X the USA inflation, those riverboaterZ are devaluing their currency twice as fast as uncle sugar and the FED!  and they are playin for huge pots all over the place.  they got the printer goin, they got the fractional thing goin, they gotta just love the kinda "plays" that get aired on zeroHedge.  in a few years, they will wipe everybody else completely out.

unless...

well, thanks 4 the new acronym, whatever it was...

 

Fri, 03/11/2011 - 01:21 | 1039629 reader2010
reader2010's picture

You don't need to visit Asia to see those actions. Because all you need to do is to visit Vegas.

Fri, 03/11/2011 - 01:38 | 1039664 Oh regional Indian
Oh regional Indian's picture

Hey Slooie, thanks for the brain fart.

if I may add to the mysteriousness:

Taking a higher perspective, it becomes quite obvious to the trained eye which way tensions are buildiing with-in a system. Once the limits and locus are determined, it's fairly simple to exptrapolate....

The arrow will fly for sure, a Broken Arrow perhaps.

How rouge!

;-)

ORI

Fri, 03/11/2011 - 12:35 | 1040225 Green Leader
Green Leader's picture

You know what I think regarding the next global reserve currency--and its Biblical relationship.

Indeed, the is IMF the one doing the tricks. They have distracted the world with all this Amero, Bancor, SDR, talk when the Denario is coming up. But, by the time it comes, we will have the devil on our backs, feeling his breath on our shoulders.

Fri, 03/11/2011 - 15:39 | 1041795 Oh regional Indian
Oh regional Indian's picture

I feel it GL. Looks like we are in for a little fire and ice.

ORI

Thu, 03/10/2011 - 23:02 | 1039250 tellsometruth
tellsometruth's picture

neato

Thu, 03/10/2011 - 23:05 | 1039259 4D
4D's picture

Hmm, and retail sales were only up 15% on expecations of 19%, only 11% year on year.

No wonder CPI wasn't too bad, the people are running really short of cash!

 

PPI was way above forecast at 6.6%, so another wave is coming anway. 

Good luck with the switch to a consumer economy!

Thu, 03/10/2011 - 23:09 | 1039263 waterdog
waterdog's picture

Sounds like an ugly fight for the spoils following the death of the only person in the family that had money. Those who were not at the funeral are at the homestead putting name stickers on the furniture.

China is screwing with monkey man because it can. All central banks are lost. No country is going to accept a communist country's currency as a benchmark.

 

Thu, 03/10/2011 - 23:15 | 1039285 Harlequin001
Harlequin001's picture

China is  sitting on a mountain of nothing.

That's what happens in a default, just ask a Bernie Maddoff investor,...

Thu, 03/10/2011 - 23:16 | 1039286 Oh regional Indian
Oh regional Indian's picture

No country is going to accept a commie benchmark. True.

Unless we're all communists? Seems to the our 'planned" future, yes?

ORI

Fri, 03/11/2011 - 02:26 | 1039756 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

ORI:

As you often do, you cut to fundamental issues here.

I assume you don't mean "commie" "communist" with all the connotations that has for the typical American. I assume you mean "oligarchy" "dictatorship" "fascism" "corporate over individual" "new world order" etc.

There is no getting around this planned future neatly. Sometimes I find it hard to suffer the fools who frame the present in old thinking, old memes, old strawmen issues. Yes, there are ancient issues plauging the world right now. But Marx, Joe McCarthy, Lenin, "commies"... these are bullshit piñatas for fools to swing at while the real issues are being decided behind the fools' backs.

I've been thinking about writing something publishable about this issue of the Chinese model versus the American model. Addressing both the perceived images of America and China and the reality.

Fri, 03/11/2011 - 05:09 | 1039892 Bob
Bob's picture

You likewise cut to some fundamental issues here, including the fools heroically fighting the Cold War.  Please write that article!

Fri, 03/11/2011 - 05:31 | 1039898 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

The news tonight is scaring me.

Hope the world is here when I wake up... I live in several kill zones (big city, pacific rim, no bunker, not much food, etc)...

Is this Friday the day?:

http://www.youtube.com/watch?v=WI8dfFN7H1w

Fri, 03/11/2011 - 05:48 | 1039920 Bob
Bob's picture

Nah, it's all good until the bernank stops printing. 

Fri, 03/11/2011 - 15:28 | 1041743 reddog
reddog's picture

Reality is good; most function on faith.

Hope to read it soon.

Fri, 03/11/2011 - 15:45 | 1041813 Oh regional Indian
Oh regional Indian's picture

Yes GFM, I did mean the "real' communists, the steel fist in the collective glove.

I think a genuinely insightful take on American style Capitalism vs. Chinese style communism would be really well received. Write away and do share.

ORI

Fri, 03/11/2011 - 01:42 | 1039673 bankonzhongguo
bankonzhongguo's picture

There are many new machines in China, all being run by a disposable/replaceable workforce that operates at 5% of US labor costs and zero environmental laws.

When you have the likes of Buffet, Soros and Murdoch all marveling at a State run like a Corporation, you can see TPTB will send their money to any regime under any circumstances.

One need only look to the growth of CYN denominated Corporate bonds from HK to see where this is going.

I used to feel the same way about China 15 years ago. Not anymore.

I have seen too many deals where the Chinese will just pull the rug out from under any direct investor, but the MTV generation will pour their faith into China, Inc.

If MINFIN and PBOC are serious about a reserve currency, they have to strike while the iron is hot.  Back the CYN with gold, silver, copper, rare earths and then relativize the EUR and USD as an average of the two then weighted with the PM.  Be the XDR.

If one yuan is backed by just a micro-gram of gold, the world will begin to orbit Zhongguo. Do the Chinese have the balls to go Austrian?

You guys can go down the road of the IMF/FRB, and continue to be just as exploited as from the Opium Wars, or create a real reserve currency - backed by - Real Reserves.

 

Fri, 03/11/2011 - 15:56 | 1041854 Non Passaran
Non Passaran's picture

That's a very good question. I think they won't go Austrian because the fear of problems at home is greater than the desire to do well internationally (or in the long term). What politician would discard a tool that allows him to "fine-tune" domestic economy when it (or he) needs a little boost? ;-)

Thu, 03/10/2011 - 23:09 | 1039264 Harlequin001
Harlequin001's picture

And does anyone really have more confidence in the yuan than the dollar.

Perhaps the paper quality is improved...

Thu, 03/10/2011 - 23:16 | 1039283 Misean
Misean's picture

Given the news on cotton used for currency, it's clear that at least they go through the bother of actually...printing.

Fri, 03/11/2011 - 05:41 | 1039913 Weisbrot
Weisbrot's picture

more confidence in effency over corruption, you tell me.

Fri, 03/11/2011 - 07:11 | 1039962 falak pema
falak pema's picture

If there is any truth in the macro report of Raoul Pal posted here on ZH, China's big banks are worse in debt than the TBTF-all-americans! WOW, oh wow!

Thu, 03/10/2011 - 23:12 | 1039275 bob_dabolina
bob_dabolina's picture

Tim Geithner sucks

Thu, 03/10/2011 - 23:17 | 1039288 william the bastard
william the bastard's picture

You should know.

Fri, 03/11/2011 - 00:01 | 1039407 bob_dabolina
bob_dabolina's picture

Tim Geithner sucks

Thu, 03/10/2011 - 23:22 | 1039297 Spalding_Smailes
Spalding_Smailes's picture

 

Farewell to the China price March 2011: Firms operating in China must reassess their business models in the light of impending wage inflation, says Harris & Moure's Steven M. Dickinson

By Steven M. Dickinson

The China price has dominated world markets for over a decade, but its reign is coming to an end as government planners pursue wider economic change. There are two principal objectives: First, to shift from an export-led growth model to one more reliant on domestic consumption; and second, to move the manufacturing sector up the value chain into product categories with more of an emphasis on technology than cheap labor. It all points to a dramatic increase in wages for Chinese workers, which will wipe out the longstanding cost advantage of manufacturing in the country. Salary gap Even though China has a large GDP, this is simply due to the fact that it has a large population. On a per-capita basis, the country ranks 99th out of 183 nations. It is no surprise, therefore, that wages are low.  But salaries in China aren't just low, they are abnormally low. Typically, a country's minimum annual wage is 58% of its per capita GDP; in China it is 25% of per capita GDP, good enough for 158th place out of the aforementioned 183 nations.  The gap between the GDP and minimum wage rankings – 99 versus 158 – is perhaps the most telling statistic. For the majority of countries, there is a close correlation between the two rankings; the disparity in China's case points to grossly inequitable income distribution.  This is borne out by the Gini coefficient numbers, a widely accepted measure of economic disparity. China's coefficient is 0.47 on a range of 0 (perfectly equal) to 1.0 (perfectly inequal), putting it 83rd out of 134 countries measured.  According to Gini, China's level of income inequality is higher than in almost every industrialized country in the world. Foreign fallout The obvious easy target is foreign-owned enterprises and privately owned export-orientedmanufacturers. Wages are already increasing in these sectors and it appears that the process has only just begun. Governments in Guangzhou, Shanghai and Beijing are already experimenting with mandatory union collective wage bargaining, with the hopes of 80% coverage within three years.  While the end result is of course unknown, Liu's proposal for a doubling of worker wages within five years appears to be entirely reasonable. In fact, the increase could be much more significant in the foreign and export-oriented sector. What does this mean for foreign firms? Much of the attractiveness of China as a location for manufacturing has relied almost entirely on abnormally low wages. Recent estimates indicate that on average labor accounts for about 50% of the cost of manufactured goods globally; in China this figure has been as low as 10% over the past 10 years. As wages increase, the attractiveness of China to low-end factory owners will fall.  The raw numbers Recent studies have shown that: • Wages of civil servants are abnormally high. The average salary of a civil servant in China is six times the minimum wage, compared to a global average of two times. • Management level salaries in state-owned enterprises (SOEs) are abnormally high. The average SOE manager in China makes 98 times the minimum wage, compared with a global average of five times. • Within the state sector itself, wage disparity is abnormally high. An SOE banker on average earns 3,000% more than his counterpart at a construction company, compared with a global average disparity of 70%.
The pressure is compounded by costs of necessary items being abnormally high relative to wages.  • The UN recommends that it should be possible for an average worker to purchase a home with three to six years of annual income. In Beijing, it is estimated that the average worker would have to toil for 74 years just to buy a place in a suburban multi-story condo block, unfinished, unfurnished and without any amenities. • The cost of electricity is a good index of the basic utility costs for urban residents. The average cost of 1,000 kilowatt-hours as a proportion of the average monthly wage in the US, South Korea and Japan is 2.67%, 3.19% and 8.19% respectively. In China, by comparison, it is 30.68%. • The US Department of Agriculture estimates that the average Chinese family spends 28% of its total monthly income on food. While this compares favorably with other developing countries, the number is far higher than America's 6.1%. Food prices remain the key driver of inflation in China, rising 10.3% year-on-year in January as the newly revised consumer price index rose 4.9%. The figure is well above the traditional central government target of 3%, and even above its revisedtarget of 4% for 2011. This makes wage growth an even more pressing social issue.For other businesses, the situation is less clear. Even taking into account impending wage inflation, it will be many years before Chinese salaries rise anywhere near the level of the developed world. And a wage increase commensurate with China's overall economic development will not, on its own, make the country an unattractive place in which to do business.  On the other hand, it may well be possible that abnormally low wages have masked other, more fundamental issues related to manufacturing in China. For example, recent data suggests that the economy is remarkably inefficient and its workers unproductive. Once the artificial inducement of low wages is removed, it is entirely possible that these inefficiencies will cause some businesses to decide that operating in China makes no economic sense.  This kind of analysis needs to be done immediately, since there is little question as to the direction of wages over the next five years. http://www.chinaeconomicreview.com/industry-focus/in-the-magazine/articl...

 

Thu, 03/10/2011 - 23:23 | 1039305 Misean
Misean's picture

I sure hope you're getting paid for all the spamming you do.

I'd ask you to be polite and just post a link, but I suspect that is beyond your capacity.

Thu, 03/10/2011 - 23:27 | 1039317 Spalding_Smailes
Spalding_Smailes's picture

I really don't give a shit what your opinion is ... Book it.

Thu, 03/10/2011 - 23:30 | 1039322 buzzsaw99
buzzsaw99's picture

Richard?

Thu, 03/10/2011 - 23:35 | 1039333 Misean
Misean's picture

Yes, rude blowhards rarely care about politeness or propriety. Though, I'd not book from you, as I've come to the opinion you do NOT get paid for spamming. Is it a fetish?

Thu, 03/10/2011 - 23:42 | 1039356 Spalding_Smailes
Spalding_Smailes's picture

No, I just don't like Communist ....

Who named you the police of Zero Hedge ? If you don't like my post, don't read it ....

 

 

Thu, 03/10/2011 - 23:50 | 1039381 Misean
Misean's picture

Well, see, that was my whole point. If you wouldn't spam like a monkey flinging his feces at the crowd, it would be quite easy to roll past you. Capiche?

It has nothing to do with me being the police, but with you being impolite.

Fri, 03/11/2011 - 00:08 | 1039392 Spalding_Smailes
Spalding_Smailes's picture

Like I said, what does my original post have to do with being impolite. You tossed out the insults first, not me ...

 

Spam, like Turd dropping web/blog links on another blog ( about 100 times ), spam like that, stealing readership, I'm sure Tyler loved that ....

 

What happened ??? Did your keyboard break, I asked a really easy question ? You can type away dropping insults but when Spalding asks a viable question after you drop insults, dead silence, utter hypocrisy on your part ...

Fri, 03/11/2011 - 00:09 | 1039429 Misean
Misean's picture

Are you a complete illiterate? Nothing you post is your material. You copy and paste it. Post a bloody link if your feeble little mind thinks it is important and move on. If you can muster it, fling a sentence or two in your own words.

Further, I tossed out no "insults". You decended straight into four letter words.

Links are not spam. Slamming the comments with inches of the nonsence your facile brain thinks important is. You're like the drunk hovering over the jukebox at a bar with a roll of quarters loudly calling out each song. It's flat out annoying and rude.

But, as I said, it's pointless to ask an immature bore to not be an immature bore.

Fri, 03/11/2011 - 00:27 | 1039442 Spalding_Smailes
Spalding_Smailes's picture

You asked if I get paid and then proceeded with a lecture, like I said, who are you to set the limits on how someone post ?

 

O.K.. Lets talk money velocity in relation to inflation .... You first ...

I'll talk all day about finance with you.

Lets go big mouth ..... Your the child on a finance blog who rips this and that but you can't talk about the interworking of the financial system .... So your just talking out your ass ....

Fri, 03/11/2011 - 01:56 | 1039697 traderjoe
traderjoe's picture

I have to say, Spalding, I cringe when I see you on a string. Your copy-and-paste lobs, then monotonous and thread hijacking efforts to convince everyone that you are right - is boring, and a complete waste of the carbons it takes to upload them. Maybe one of these days I'll apply for Spalding_Smiles and follow you around parroting your inane comments and hollow challenges. 

Oh, and ask your therapist about your habit of referring to yourself in the third person?

 

Fri, 03/11/2011 - 02:02 | 1039708 Spalding_Smailes
Spalding_Smailes's picture

Another clown. Hollow challenges, how about you big mouth, tell me about money velocity in relation to treasuries and inflation implications because of this ? Or are you going to just run your mouth also, this is a financial blog not a gold bug gang bang...

Fri, 03/11/2011 - 02:02 | 1039713 traderjoe
traderjoe's picture

I thought you'd be back quickly. Hit the re-fresh button often? As of this moment, you already have 19 posts on this thread alone. We should have a ZH over/under line for you. I'd say 25 for this article. 

Fri, 03/11/2011 - 02:09 | 1039719 Spalding_Smailes
Spalding_Smailes's picture

Nice subject change.

Another clown tossing out one liners with no clue on finance .... Tell me about velocity, bitch ...

You have the financial insight of a tick ... Trader Joe using charts like a chump, reading the web looking for clues because you know fucking shit about world finance ... You need others knowledge for your trades, a bitch.

Fri, 03/11/2011 - 02:17 | 1039744 traderjoe
traderjoe's picture

No, the subject was your annoying splaying of posts across almost every article. Droning on and on. I think you've merely proved my point. Permanent Ignore...

Fri, 03/11/2011 - 02:23 | 1039746 Spalding_Smailes
Spalding_Smailes's picture

Good. You proved mine also .....

You tried answering a post that did not involve you and started dropping insults, so I asked you a simple economic question....Your a clown. Keep your pie hole shut and don't respond to my post.

Thu, 03/10/2011 - 23:50 | 1039383 Spalding_Smailes
Spalding_Smailes's picture

 

In 2010, China’s currency, the renminbi, picked up pace toward becoming a world currency. In June the Chinese government extended its renminbi trade settlement scheme to include 18 provinces and cities, as well as Guangdong province and Shanghai, which are now allowed to handle all international service transactions and imported goods’ purchases. Also, around 70,000 mainland-based entities were approved to settle deals in Chinese currency for their exported goods, up from just a few hundred before. If Hong Kong is any indication, these reforms seem set to greatly expand the renminbi’s international role.

Despite these developments, capital controls remain enough to confine China’s currency to a fairly limited role worldwide. The millions obtained through these bond issuances must still be approved by Chinese regulators before circulating in the mainland. Although Standard Chartered bank estimates that RMB 411 billion (USD 62 billion) was used to settle trade in 2010, this is mere pittance compared to China’s USD 2,973 billion in total trade for the year. Imports accounted for around 80% of this renminbi-settled trade, which leaves only 5% of China’s USD 1,578 billion worth of exports transacted with Chinese currency—this proportion most likely attributable to goods destined for Hong Kong for re-export.

It remains to be seen if the international momentum displayed by the renminbi will continue through 2011. Despite much progress, its widespread use internationally remains a more distant prospect.

http://www.chinasourcingblog.org/

 

Fri, 03/11/2011 - 00:15 | 1039440 tmosley
tmosley's picture

And nobody really gives a shit about what you say or do, so you are wasting your time here.

Book it.  lol

Fri, 03/11/2011 - 00:21 | 1039447 Spalding_Smailes
Spalding_Smailes's picture

Then why are you my personal troll ? 

Because I rip your communist brothers, is that it ... ? Skip my post like you said you would 10 days ago.

You keep posting leave, and you keep chasing me around, thread after thread like a child .... How old are you 17-18 ?

 

Fri, 03/11/2011 - 00:44 | 1039532 zaknick
zaknick's picture

You ARE a troll. You're not opining like regular folks; you push somebody's agenda.

Fri, 03/11/2011 - 00:53 | 1039544 Spalding_Smailes
Spalding_Smailes's picture

No I'm not, I live in Chicago, work for myself printing ( worked for a family prepress business for 15 years ) • and now trucking goods I need to do two things so I can get ahead in life... 

I push a different viewpoint, you don't agree so you attach the " agenda label ". 

If I'm wrong step up and debate me on anything I post, two sides to every story ....

Thu, 03/10/2011 - 23:30 | 1039319 buzzsaw99
buzzsaw99's picture

lulz

Thu, 03/10/2011 - 23:28 | 1039315 Element
Element's picture

Come on, how can ANYONE take the suggestion of China conjuring a global reserve currency seriously, when they don't even have the financial, economic, legal, social, political or alliance networkx credibility necessary to float their currency off the dollar peg, without it immediately cratering?

Fri, 03/11/2011 - 00:01 | 1039404 dumpster
dumpster's picture

Element
 it seem that you are way out of your element

china is buying the resources of the world .

not with guns , not with taking over the oil fields  of the mid east  , Egypt.. yes my friend this is an uprising created by the jewish state the CIA ,the western powers for the oil.

china is now as we speak working to create a gold backed currency, along with russian interests ,, Parts of euro land are also taking part in a currrency backed by gold

so grab your ankles . and until the usa comes screaming to the table to have a gold backing for international trade hyjacked by nixon defrauding the world ,

you will think not capable as they become the leading economic power in the world . as the worms turns and the cycles of history point the finger into the east ,

inflatiion in china at 4%  Here in the good old usa inflation is probably 8%  with 22% unemployment

15 trillion in present spending , 102 trillion in future obligations .

 

and china setting on boat loads of notes that they trade for goods ,

 

 

 

Fri, 03/11/2011 - 00:39 | 1039477 Element
Element's picture

I fail to see how reconciliation of trade in gold constitutes a Chinese global reserve currency. Sorry, that's just gold, not Chinese gold as reserve currency.

As for Chinese production, it's almost universally crap quality, of ... well, ...crap. Sorry. Which is why their credibility (that I mentioned) is so low and a Chinese de-pegged buck replacement would fall to the centre of Earth in the biggest economic crater we've seen.

I do not share your confidence in Chinese inflation stats ... or any Chinese stats ... part of their chronic credibility issue.

As for China being a near term global economic leader I think that's total horseshit (no offence) just look at GDP per capita between the Japs and Chinese, and look at the desirability and quality of their respective products. I can not think of any Chinese product I would like to buy over a Japanese product.

More to the point, there’s not a single thing China makes I would not be able to do without, very happily in fact, with regard to Japan and Korea, that’s not the case.

As a result of this, I would trust Japanese currency and trade over Chinese currency and trade (and politics) any day
Try and tell me the Chinese have the 'better' economy, and GDP, and I'll laugh in your face. Genuine economic activity is not a function of credit bubbles ... well, GDP is ... but look what credit bubble GDP did to Japan. Why the hell does ANYONE think china will defy the same outcome?

I'm not against China's place, and role, etc., not at all.

I just don't buy this extravagant bullshit that keeps getting repeated about Chinese economic development and progress and mega future global ‘superpower’ gobshite. It’s fantasy and propaganda with little substance.

 

EDIT: I forgot, buying someone elses country/resource base (if they are dumb enough to let them) means little for it will be nationalised, in time, if necessary. Bird in a hand or bird in a bush. Without a REAL superpower military and a REAL superpower global alliance network, anyone can default or nationalise China's purchases. I assure you, the Chinese will collapse first, before the pending debt-deflation that was delayed in 2008-09 is allowed to resume.

Fri, 03/11/2011 - 00:59 | 1039569 meatball
meatball's picture

Crap quality? You know Apple products are made in China, right? There are several tiers of factories.

No doubt the quality of life in China still has a long way to go to catch up to the West but at least they don't have debts up to their eye balls.

Fri, 03/11/2011 - 01:33 | 1039612 Element
Element's picture

Like I said, nothing I want, or need. Of course I don't deny their large scale micro-electronics production, it's there because the workforce are little more than slaves, on a corporate hamster wheel, and open police state repression is the only thing that keeps their production of Apple Corp (etal) going.

You really think that's going to continue, per status quo?

Major entrenched en-echelon economic, social political, financial credibility problems do not make for a reserve currency.

 

EDIT: I should point out, this applies to the USA as well

Fri, 03/11/2011 - 01:34 | 1039623 Spalding_Smailes
Spalding_Smailes's picture

They funded the treasury purchases with yuan debt and they use capital controls ... M2 growing at 20% per year now.

 

........ " We remain critical vis-à-vis the unlimited China optimism that seems to be the current consensus. The Chinese economy has grown by almost 10% per year in the past ten years. According to Bloomberg, the consensus expects real growth of 7.7% p.a. for the next 20 years, which we regard as drastically over-optimistic. The extrapolation of historical growth rates is dangerous, as a look through history books shows. Sometimes this boundless optimism reminds us of Japan at the end of the 1980s. 20 years ago the Japanese GDP accounted for 18% of global GDP – today the share has fallen to 8%. The daily news reports about billions worth of takeovers and investments by the Chinese underpin this picture. An interesting detail: Hong Kong has passed Tokyo as most expensive office location.

 Artificial stimulus of this sort naturally comes with quicker results in a centrally controlled economic system. State-held companies accounting for almost 30% of aggregate output can be forced to invest, as banks can be forced to lend. China is currently inflating its money supply by a more substantial degree than any other nation ; M2 increased by almost 20% in November y/y and at the moment amounts to 185% of GDP. On average M2 has increased by 18.8% p.a. in the past decade, while GDP has been growing at 10.9% annually. China currently has the highest M2/GDP ratio worldwide. " ...............

http://oilprice.com/Finance/Economy/A-Chinese-Black-Swan.html

Fri, 03/11/2011 - 01:33 | 1039651 reader2010
reader2010's picture

Apple products, as Apple puts it, are ASSEMBLED in China by a Taiwanese company. Nothing is MADE in China. 

Fri, 03/11/2011 - 01:39 | 1039668 Spalding_Smailes
Spalding_Smailes's picture


Workers in southern China, who say they were assembling Apple laptops and iPhones, have become seriously ill after using a dangerous chemical.

The Number Five People's Hospital in Suzhou has been treating workers who breathed in vapours from the chemical n-hexane. According to the workers, the chemical was being used in the production of Apple products and has left them unable to walk. The ABC's Foreign Correspondent snuck into the Number Five People's Hospital to visit a group of women who were working in a very small, badly ventilated factory. They say they were using n-hexane to glue and polish the logos on Apple products - at least they assumed they were not fakes.


One had kept some of the logos they were using to prove that they were working on Apple products and showed them to the ABC. After breathing in the chemical's vapours, they became dizzy and numb and eventually they could not walk. "At first the symptoms were pretty obvious. My hands were numb. I could hardly walk or run," one woman told the ABC.

http://www.abc.net.au/news/stories/2010/10/26/3048024.htm

Fri, 03/11/2011 - 01:58 | 1039701 reader2010
reader2010's picture

No shit. Apple is doing them a favor.

Fri, 03/11/2011 - 03:02 | 1039814 Maos Dog
Maos Dog's picture

LOL this stinks of bullshit - 

 

OMG - Dying... gasp.. gasp... CANT INHALE gasp.. gasp... let me grap some Apple logos on the way out

Fri, 03/11/2011 - 00:34 | 1039494 zaknick
zaknick's picture

I have read about these machinations within the SCO countries and parts of Europe. I wonder how that plays out versus SDR. China seems intent on pushing forth the Yuan (and with Gold backing and a fairly large cadre of oil producing countries recognizing -Iran,the Stans in Central Asia, Russia- I could see it survive -especially versus the hyperinflating doellar).

Somebody commented on this up above saying Soros alluded to war v. China if they don't go along with SDR. China cannot be defeated by the US. RAND Corp wargamed it and the US lost repeatedly.

This multipolar world talk might be getting interesting.

Fri, 03/11/2011 - 02:16 | 1039672 reader2010
reader2010's picture

Not exactly. All you need to do is to allow Taiwan to become independent. When China starts invasion, an embargo will be enforced by NATO.  So effectively we cut off their oil flow and food flow. Putting those spying Chinese nationals in this country in our FEMA camps to assemble Apple products instead. Here comes your NWO.

Fri, 03/11/2011 - 04:00 | 1039863 StychoKiller
Thu, 03/10/2011 - 23:33 | 1039327 gwar5
gwar5's picture

China is moving at lightening pace. Amazing. They're not waiting for the US or Western fiat to fail, they're being proactive. At some point there will be an en masse move out of the USD.

Like overnight, there will be a move out of the USD. 

Thu, 03/10/2011 - 23:35 | 1039338 Element
Element's picture

Ok, but where they going?

Thu, 03/10/2011 - 23:40 | 1039354 Misean
Misean's picture

Gold,  silver, oil, land, machine equipment, foundries...you know, stuff.

Thu, 03/10/2011 - 23:47 | 1039374 Element
Element's picture

Yep, just not into chinese bucks.

Fri, 03/11/2011 - 01:08 | 1039589 reader2010
reader2010's picture

They're provoking a new world war, and they expect that too. Take a look at their defense spending.

Fri, 03/11/2011 - 02:10 | 1039729 Vlad Tepid
Vlad Tepid's picture

I don't equate challenging the status quo with provoking a new world war so (whoaaa...I almost said "I don't accept your premise").

China's defense spending?  For a nation of their size and population it's peanuts per capita. They spend way more repressing their own people.  For a totalitarian nation to have a prayer of external conquest they have to have their own house in order first.  This is why the Nazis attacked the Soviets and not the other way around. Sorry, but China hasn't been militarily expansionist since the Han Dynasty.  

BTW If defense spending is your measure of aggressive intentions what does the US's $600 billion a year tell you about the Mandarins in Washington?

Fri, 03/11/2011 - 02:29 | 1039761 reader2010
reader2010's picture

That's true because I heard they spend around 15% of their annual GDP on repressing their own people. The Chinese are buying Russian military hardware and technology big time as we speak. I heard they're building their first aircraft carrier based on the Russian design. On the other hand, Washington's $600B defense budget is in fact a wealth transfer vehicle for the owners of this country. 

Fri, 03/11/2011 - 09:01 | 1040110 BigJim
BigJim's picture

You're absolutely right that the US' military budget represents a wealth transfer vehicle for the MIC... but the US banksters get the best military on earth in return.

So China is building a aircraft carrier... we have, what, 10? Plus all the NATO carriers. In a conventional war, China would be finished in a few days. Obviously, there's no way the US could invade China, but that wouldn't be necessary if 90% of their military hardware had been destroyed.

Of course - would a war stay conventional if China's military were being wiped out? Which is why I can't see the US provoking a war with China any time soon. We could stir up trouble in Tibet and in the Uighur regions. But then they could start supplying the Taliban some anti-aircraft missiles, could block any further Iran sanctions in the UN, start supplying Sunnis in Iraq with weapons, etc, etc...

People say that 'China' doesn't have imperial ambitions. But I think its attitude to Tibet and Taiwan (and other regions where its rule is resented) point to its rulers being as expansionist as any other State's. They just don't have the capability to invade large swathes of territory and keep the home population suppressed at the same time.

Fri, 03/11/2011 - 09:21 | 1040164 Vlad Tepid
Vlad Tepid's picture

Russian sub and AS/SA missiles are something to be concerned about for anyone looking down their barrels (tubes), but don't get too worked up about the carrier.  These are smallish and designed specifically for brown water coordination with land based aircraft and "bastion" protection around the Bohai and South China Seas.  If you're looking for something to be afraid of look no further than here:

http://www.defensenews.com/story.php?i=5327852

These are serious business and obviate an expensive navy or even a fleet-in-being.

Fri, 03/11/2011 - 00:04 | 1039417 trav7777
trav7777's picture

horseshit...China is printing even faster than the bernank is.

China's market is opaque and they flat out steal shit.  You're going to trust them with a reserve when they encourage knock offs and IP theft?  How many fraud stock listings is it going to take before this yuan reserve bullshit ends?

Fri, 03/11/2011 - 00:08 | 1039421 TruthInSunshine
TruthInSunshine's picture

Exactly.

Chanos is going to have a fantastic call with his short China thesis.

China is the world's largest paper tiger.

Fri, 03/11/2011 - 00:16 | 1039445 Misean
Misean's picture

Stealing IP? You mean like Samuel Slater?

Fri, 03/11/2011 - 00:34 | 1039499 TruthInSunshine
TruthInSunshine's picture

I have nothing against the Chinese People - NOTHING.

But it's just fact that their culture is monolithic and the opposite of inventive, and that they're engaged in a massive campaign of corporate and military espionage on American soil at this very moment (do some research on all the cases that are in the public domain, but which the U.S. Government is loath to broadcast too loudly for diplomatic sensitivity reasons), because they have an innate inability to innovate or develop anything original.

China is the world's factory at this time because of worker ant slaves, working for peanuts, with a government that cuts all taxation, red tape and pollution control, in order to steal as much technology from transplant factories and R&D centers as possible (much easier to steal IP over there than here or in Germany or Japan or England).

 

Fri, 03/11/2011 - 00:56 | 1039559 Misean
Misean's picture

Yes, it's all very Dickensian, as one might expect. But it doesn't answer my question.

I don't doubt the thuggery of the Chinese or any other government. The reality is that it is not as in control as people in the U.S. like to trumpet.

Fri, 03/11/2011 - 01:09 | 1039594 reader2010
reader2010's picture

for your stated reason, Airbus moved their shop out of China entirely.

Fri, 03/11/2011 - 02:24 | 1039751 Vlad Tepid
Vlad Tepid's picture

I agree with everything trav said. But you have to be careful falling into overly simplistic cultural tropes when scoping an adversary TIS.  To say that Chinese culture is the opposite of inventive is simply not true.  The historical nature of technological spread in every instance in history could be boiled down to espionage, theivery, dishonesty etc.  True innovators always end up being robbed at some point.  We can start with sericulture in ancient China and we can certainly agree that they safeguarded their secrets better than we have ours. The steam driven factory machinery that made Britain the first and best industrial power "somehow" made it to Belgium then "somehow" made it to Germany and the US.  Same is true for dreadnoughts, aircraft carrier technology, nuclear technology - all the strategically important stuff.  The Japanese know better than anyone that you NEVER invent anything yourself - you befriend the inventor long enough to perfect their innovation and price them out of the market. The Chinese simply don't have the patience or the diplomatic acumen of the Japanese,but they have learned the lesson.

The point is, this forum is a great place for real intellectual discourse (sometimes...) and I don't want to see our energies going into unnecessarily blinkered thought channels.  Don't get pissed at China - that's a waste of energy. Figure out how to one up them or out do them.

Fri, 03/11/2011 - 00:30 | 1039480 Element
Element's picture

As usual Trav, spot on.

Fri, 03/11/2011 - 01:13 | 1039605 dumpster
dumpster's picture

its not a matter of trust a gold backed currency puts the trust in gold as a international pricing point , and puts down the USA currency con game

you may be eating from the horse barn soon

some how the game of trust is misplaced so your trust the fed .. good boy suck on this tit

and sing  hallelujah

Fri, 03/11/2011 - 03:36 | 1039618 TruthInSunshine
TruthInSunshine's picture

Trust should be put properly in things - ANY things - having inherent value, which is not fiat these days.

Fiat could theoretically have long term inherent value, if the fiat printing machines weren't controlled by Keynesians, steeped deep in training and belief in 'Modern Money Mechanics' and fractional reserve banking theory, which has as its core tenant that the economy can't possibly grow unless increasingly larger (exponentionally so, in many cases) chunks of debt aren't printed (money is debt and debt is money in the fractional reserve world) and then gobbled up and assimilated by government, businesses and consumers.

So, as long as the dogmatic Keynesians are manning the fiat printers, fiat has no hope, because so much of it will be printed that any taxpayer-based pledge of repayment is ultimately meaningless.

Fri, 03/11/2011 - 01:21 | 1039624 Element
Element's picture

You seem determined to presume that the pointing-out of the pointlessness and futility of a Chinese reserve currency proposal, equates to some sort of support for the USA 'conjob' status quo.

Has anyone suggested that?

Fri, 03/11/2011 - 09:24 | 1040172 BigJim
BigJim's picture

China's market is opaque and they flat out steal shit.  You're going to trust them with a reserve when they encourage knock offs and IP theft? 

The US had no respect for IP 'law' for most of its existence, too.

Plenty of free-market theorists think most IP law actually harms wealth creation... you can read some more on this subject here:

      http://us1.campaign-archive2.com/?u=bf16b152ccc444bdbbcc229e4&id=1a1afc1...

I'm not promulgating that view, mind. I haven't given it much study as yet, but the issue isn't as black-and-white as a lot of people seem to think.

Fri, 03/11/2011 - 00:07 | 1039420 TruthInSunshine
TruthInSunshine's picture

My God, China is playing right into Bernanke's hands.

Fri, 03/11/2011 - 00:09 | 1039424 KickIce
KickIce's picture

Why not just flood the market with their debt?  Japan would most certainly follow.  The dollar is toast and the rest of the world is scrambling for a new currency.  Welcome to the NWO.

Fri, 03/11/2011 - 00:15 | 1039446 user2011
user2011's picture

Reading some of the comments makes me smile. When it comes to commies, we United States of America are more commies than the USSR. We are not republic because our politicians and systems broke many constitution. We are not really democratic because we are run by bankers and special interests. We are commies because our government spy on us more than KGB.

I still can't believe Chinese want to make their currency reserve currency. They have unemployment issue to begin with. Yes they can fill some of the low skill jobs. But there isn't much opening for it's college graduates. Students go to university for nothing.

Fri, 03/11/2011 - 00:47 | 1039535 Spalding_Smailes
Spalding_Smailes's picture

If your not doing anything wrong, who cares if the government spies on us ...

Look at the shit hole we live in, drugs, child molesters , killings, the anti American muslim scum, I'm glad they are searching for all the scum. America is filled with tons of wacko's ...

Fri, 03/11/2011 - 00:55 | 1039556 KickIce
KickIce's picture

Like this government concerns itself with morality, unless it's a olitical oponent, the majority of spying is done for political purposes.

Maybe if they spent as much time going after child molesters as they do Tea Party members, Christians and veterans.

Fri, 03/11/2011 - 01:04 | 1039582 Spalding_Smailes
Spalding_Smailes's picture

I can't quantify the spying ....

 

But if your not harming anyone, you should not be spied on. But the bar at which that is set, is a problem, yes. I think all child molesters should be shot on site, no questions asked, the way the scum run under the legal systems umbrella once caught, is laughable ...

Fri, 03/11/2011 - 01:14 | 1039610 KickIce
KickIce's picture

That's just it, our government is corrupt so you can't expect them to use technology correctly.  Why people continue to want to give them more power is beyond me.

Fri, 03/11/2011 - 01:29 | 1039641 Spalding_Smailes
Spalding_Smailes's picture

I look at it like this. Every country is dirty but the USA is still in the top tier of places to live. You can do anything you want in the USA. Many other countries you are told what to do or some other drawbacks ...

 

I hear what your saying though, all the top bankers and the bums like Summers and Rubin, Mozilo  should be in prison.

Fri, 03/11/2011 - 09:09 | 1040127 BigJim
BigJim's picture

You can do anything you want in the USA. Many other countries you are told what to do or some other drawbacks ...

The America you're describing hasn't existed for a long time. Get out and see the world, amigo, then you might see your own country with a little more nuance.

Fri, 03/11/2011 - 01:32 | 1039655 trav7777
trav7777's picture

idiot...so it bothers you not that the government is infested with corruption?  You STILL trust them to spy on everyone?

Who is going to spy on THEM to interdict the payola, bribes, kickbacks, and graft?

Fri, 03/11/2011 - 01:55 | 1039676 Spalding_Smailes
Spalding_Smailes's picture

What government has oversight by the people in the last 100 / 500 / 2,000 years ? Russia, Brazil, China, Saudi Arabia, West Africa, Ottoman Empire, Mexico, the Achaemenid Empire, Songhai Empire , Roman Empire ect ....???

 

Who's the idiot ?

Fri, 03/11/2011 - 02:03 | 1039715 TruthInSunshine
TruthInSunshine's picture

"If your not doing anything wrong, who cares if the government spies on us ..."

 

Good God. Help us all.

Fri, 03/11/2011 - 04:07 | 1039864 StychoKiller
StychoKiller's picture

Jefferson was wrong, all men are NOT created equal.  Some received little, to nothing between their ears!

Fri, 03/11/2011 - 07:21 | 1039970 falak pema
falak pema's picture

they make up for it further down...or think so, anyway.

Fri, 03/11/2011 - 09:04 | 1040115 Husk-Erzulie
Husk-Erzulie's picture

"If your not doing anything wrong, who cares if the government spies on us ..."

I was giving smails the benifit of the doubt until that comment.  Only an ignorant tool could make a comment like that.  In fact it is the oft heard refrain of ignorant tools everywhere when they obeserve the gross infringment of their neighbors rights.

Fri, 03/11/2011 - 09:16 | 1040147 BigJim
BigJim's picture

If your not doing anything wrong, who cares if the government spies on us ...

The problem is that its your government that determines what is 'wrong'. So if you want to smoke the 'wrong' kind of plant (for instance), you could be in very big trouble indeed, despite the fact it's not harming anyone else. Other examples of things US 'representatives' have considered wrong in the last 100 years:

drinking alcohol

owning gold

sex with people of a different ethnicity

sex with people the same gender

driving 58 miles per hour on a motorway

etc, etc.

Still think that's not a problem?

Fri, 03/11/2011 - 00:20 | 1039454 user2011
user2011's picture

If Chinese dollar shall become reserve currency, US dollar will drop to the bottom. After debt restructured, all the outsourced jobs will come back to America, because of relative cheap labor with high education and good developed infrastructures.

Fri, 03/11/2011 - 00:30 | 1039479 Mark Noonan
Mark Noonan's picture

Well, yeah...but it doesn't even have to take that.  Just a bit of rationality in our economic policies would swiftly have the US economy blowing China's out of the water...

Fri, 03/11/2011 - 01:06 | 1039586 glenlloyd
glenlloyd's picture

You must mean devaluing the dollar more, because at its core that's the only tool there is, whether you disguise it in some fashion or not that's all there is.

The Fed is at zirp and creating new money / credit via POMO, i.e. they're printing as fast as they can, but clearly it's not improving the situation, which says we've reached the end.

Fri, 03/11/2011 - 01:17 | 1039614 KickIce
KickIce's picture

How about ending the Fed, putting some bankers in jail (along with several politicians), applying laws uniformly, ending bailouts, and defining free trade as everyone plays by the same rules?

Fri, 03/11/2011 - 01:28 | 1039638 Mark Noonan
Mark Noonan's picture

I actually think more in terms of a gold standard for currency, end the Fed and strip away the taxes and regulations which impede making, mining and growing things in the United States.

Fri, 03/11/2011 - 00:30 | 1039474 Mark Noonan
Mark Noonan's picture

I really doubt anyone should pay too much attention to Chinese government plans - no one really knows what is going on over there, least off all the leaders of China, who are almost certainly not being told the truth by their underlings.  The whole thing is spinning out of control in a whole series of bubbles as the greed officially endorsed by the Chinese government runs its natural course - you can't do good by doing bad; and encouraging profligacy and get-rich-quick was a bad thing for China's governmen to do.

Fri, 03/11/2011 - 00:34 | 1039492 three chord sloth
three chord sloth's picture

Ding! Ding! Ding! Winnah!

The sky is high, and the emperor is far away.

Fri, 03/11/2011 - 02:26 | 1039759 Vlad Tepid
Vlad Tepid's picture

+1949

I couldn't agree more.

Fri, 03/11/2011 - 00:35 | 1039484 Spalding_Smailes
Spalding_Smailes's picture
China and the New Middle East

Blake Hounshell comes on China Policy Pod to talk about China’s new Middle East calculations in the wake of the democratic wave sweeping the region. As the leadership in the Arab world changes, Beijing must reconsider how it is positioned, whom it befriends and how “the Arab street” feels about China is the wake of radical regional changes.

Based out of Qatar, Blake joined China Policy Pod by phone. He is the managing editor of Foreign Policy Magazine. You can follow him on Twitter @BlakeHounshell

Podcast link : Play in new window 

http://chinapolicypod.com/

Fri, 03/11/2011 - 00:54 | 1039558 poydras
poydras's picture

The Yuan is likely to become a trade currency.  Ask yourself whether you would hold Yuan as a longer term store of value.  Few will trust a fiat currency once the govi debt bubble pops.  Few will trust a banker led proxy.

 

Fri, 03/11/2011 - 01:13 | 1039607 reader2010
reader2010's picture

All massive credit boom in financial history eventually ended up in blood and tears. China's no exception. Is this time really different?

Fri, 03/11/2011 - 00:59 | 1039571 AldoHux_IV
AldoHux_IV's picture

In an ideal world and one that may have to be the only way going forward as the current system has so proven it cannot be sustained, monetary order and central banking need to be revolutionized.  Another reserve currency is not going to solve the problem of economic imbalances and perhaps having one is the problem in the first place.  I would say time would be better served to dissolve the current system of central banks and policymakers that choose to make this world only slaves to their ever unending greedy vices.

Fri, 03/11/2011 - 01:29 | 1039643 tjfxh
tjfxh's picture

Wake me up when they drop the dollar peg, drop controls, institute a legal system, and demonstrate that they can handle crises. Otherwise, ho hum.

Fri, 03/11/2011 - 01:35 | 1039657 trav7777
trav7777's picture

maybe they can back the yuan with toxic rivers or black lung cases

Fri, 03/11/2011 - 01:45 | 1039679 Element
Element's picture

Their only hope to 'bounce' back from the Bernank is to recruit a new middle-class ASAP, when they have finished screwing and bankrupting the current middle-class with debt and corruption, the one thing the Chinese do have is lots of middle-class aspirants, that want more.

Can't blame them for that.

Fri, 03/11/2011 - 01:35 | 1039659 gwar5
gwar5's picture

When China gets enough domestic consumer demand they won't need the West except to buy resources.

China can drop the peg with a gold backed currency, WRC or not, and buy up the world's resources cheaply with a strong currency and gain another insurmountable competitive advantage to offset any rise in wages.

That's what we should be doing.

Fri, 03/11/2011 - 01:46 | 1039682 Element
Element's picture

When China gets enough domestic consumer demand they won't need the West except to buy resources.

 

Which is another way of saying that we have them by the balls, and they better not question it.

 

Fri, 03/11/2011 - 01:54 | 1039694 Korg
Korg's picture

China is fucked. They are on the Weimar treadmill with rising wages and prices and a Govt that will do anything to avoid riots and revolution. they will print money even faster then Bernak if they need to. Plus they are NOT a world military power...yet. And may never be, its not in their blood really.... If you want the reserve currency you have to also rule the world militarily, its always been that way, always will. Just look at the last 500yrs of history. You think the British puond was dominate for so long because they speak funny???

Fri, 03/11/2011 - 02:17 | 1039732 Element
Element's picture

Yep, and the Chinese have the wrong politics and institutions and international stance, required to garner broad international political support for the vital global network of allies necessary to constitute a genuine global superpower. (in fact, it's questionable that the USA can maintain this ... in which case the whole 'age' of superpowers is actually over ... there will be no 'replacement' ... unless one ... is needed again)

The Chinese are very far from being a global great power. They are a large regional power with nukes. I seriously doubt they are going to be more than this any time in the next 50 years.

Japan is probably more credible, conventionally, and also has more plutonium in its national stockpile than the USA and Russia combined, (if it came to that). And that's something most people don't realise about Japan, push them the wrong way and you'll get a massive nuclear arsenal, in a country that can launch satellites and advanced space probes.

The reality is that Japan is a regional match for China, and actually has more credibility and potential so I don’t see why people, (especially in NATO) presume China will get an easy rise - or ANY rise to ACTUAL global great-power status. It is not a sure thing, by any means.

(plus we have Japan by the balls as well, if they went to the dark side)

Fri, 03/11/2011 - 02:40 | 1039785 Vlad Tepid
Vlad Tepid's picture

I agree with your analysis about the long-term survivability of Japan.  It is refreshing to hear someone (else) who realizes that Japan is far more flexbile than people imagine, and have proven this half a dozen times through history.  

I totally disagree with your "by the balls" comment on Japan AND China however. So that I understand your argument:  we buy a lot of crap from them, therefore they depend on us to finance themselves?  Or is it:  We've dumped so much debt on them that unless they dance to our tune we'll...what?  Trash our own currency more? *I've got a gun to my head! Don't make me use it!*

Japan and China are both far too realpolitik to fall for any of our ham-fisted, juvenile "traps" or ball grabs or whatever.  Element, my friend, the pusher isn't nearly as addicted to the addict as said addict thinks he is.  

Fri, 03/11/2011 - 03:06 | 1039807 Element
Element's picture

It's not the finance I mean, Vlad, as with China, its volume high-grade mineral resources Japan doesn't have.

The Japanese have tried to free themselves from energy dependence via breeder reactors,hence their enormous plutonium stickpile, despite aversion to nuclear due Hiroshima, etc. And they will of course push ahead with electric cars and trains to maximise this. But their production economy requires the resources to make the excellent products they rely on selling to us, and the cars and trains they want to export.

Finance and currency all comes back to what you have, and what you don't, and thus need to trade to get, hence we can rein-in Japan if it ever came to that, which I really doubt would ever be needed.

Sorry for the crudeness of the term 'by the balls', I just wanted to slam the sort of argument that says, "well when China is domestic demand driven they won't need the rest of the world anymore and can do whatever they want."

That day will not come, their economy is now totally dependent on the outside world and always will be, if they want such an economy.

Fri, 03/11/2011 - 09:30 | 1040180 Vlad Tepid
Vlad Tepid's picture

Ok, now I see where you're coming from.  For the record, I disagree with you about China though I still not 100% sure why after pondering the idea for the past 2 years.  But you cannot disregard the purchaing power of the largest market in human history.  Since the East India Company, we've been trying to break in and for the most part (2000 years) the Chinese have prospered well with themselves for customers.  That's for another thread though. :)

Regarding Japan, they are resource starved.  Anyone who tries to actively prevent them from the resources they need though will (if history is any judge) be in for some serious troubleand I think that's the point you were making so we see eye to eye here.  The real test of this is to see how Japan plays its hand in the Northern Isles dispute. 

Fri, 03/11/2011 - 02:24 | 1039750 tony bonn
tony bonn's picture

the bankster-plutocrats have pillaged america on their way to china....china was foreordained as the next super power in 1972. the plutocrats saw the cheap labor and huge markets as mammon-nirvana worship....besides, markets love totalitarianism....

fuck you fink.

Fri, 03/11/2011 - 02:33 | 1039772 reader2010
reader2010's picture

no, it was in 1969.

Fri, 03/11/2011 - 02:46 | 1039794 jmc8888
jmc8888's picture

Well it's not China, but Japan just had a huge ~8.8 Earthquake + Tsunami, that's not going to be good for markets tomorrow either.

Tomorrow is going to be interesting.

Fri, 03/11/2011 - 03:03 | 1039810 Element
Element's picture

Is that for real?

 

Oh crap , you weren't kidding

http://www.abc.net.au/news/stories/2011/03/11/3161866.htm

Fri, 03/11/2011 - 03:22 | 1039833 Selah
Selah's picture


ZeroHedge has been asleep at the wheel on this one!

Destruction in Honshu is incredible.

 

 

Fri, 03/11/2011 - 03:10 | 1039820 Yen Cross
Yen Cross's picture

I respectfully request your help my zero hedge posters. forexopen.com and news.com.au Thank you for your help!

Fri, 03/11/2011 - 03:11 | 1039822 Yen Cross
Yen Cross's picture

PS the trendline on usd/jpy is below 83.25

Fri, 03/11/2011 - 03:15 | 1039826 Yen Cross
Yen Cross's picture

The forex open page neeeds some help. Thank you my friends.

Fri, 03/11/2011 - 03:37 | 1039842 TruthInSunshine
TruthInSunshine's picture

The Yen will be decimated.

 

I've NEVER seen anything like this Tsunami or the fires breaking out. It's like a science fiction movie.

Fri, 03/11/2011 - 03:43 | 1039848 John McCloy
John McCloy's picture

Literally looks likes an Emmerich film. I'm beginning to think the poles might actually be shifting.

Fri, 03/11/2011 - 03:48 | 1039850 TruthInSunshine
TruthInSunshine's picture

I swear that the tsunami waves look like something from 'The Day After Tommorrow.'

 

And then, the fires...incredible fires.

 

Fri, 03/11/2011 - 03:54 | 1039856 John McCloy
John McCloy's picture

Tyler finally gets some long needed rest and the fucking world ends around him.

Fri, 03/11/2011 - 05:01 | 1039887 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

+1

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