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The Empire Strikes Back: China Daily Warns About Currency War, Blames Dollar

Tyler Durden's picture


You didn't think China was just going to do the rockaway and lean back, lean back, lean back. Nope - China Daily says: "A currency war is spreading as the dollar's value against major world currencies has continued to decline in recent days" and calmly confirms what everyone esle knows: "It is the dollar that triggered the currency war. Seemingly a market move, the depreciation of the dollar is actually active." Check to you, Tim Geithner and your currency manipulation report. What is remarkable, is how simply and accurately CD writer Li Xiangyang captures absolutely everything that Bernanke is trying to achieve.

From China Daily:

A currency war is spreading as the
dollar's value against major world currencies has continued to decline
in recent days. Some developed countries have begun to intervene in
their exchange rates. The recovery of the global economy will suffer a
negative impact if this trend is not checked.

It is the dollar that triggered the currency war. Seemingly a market move, the depreciation of the dollar is actually active.

U.S. Federal Reserve's statement that it might restart quantitative
easing — a policy central banks use to increase money supply — triggered
the depreciation of the dollar. The dollar's value against the basket
of currencies has decreased by 7 percent since the U.S. Federal Reserve
began talk of possible quantitative easing.

The move nominally
aims to further drive down the interest rate in America to prevent the
occurrence of a double dip.
But it will affect the value of the dollar
too, prompting the dollar's devaluation. In light of the history low
short-term interest rates in the United States, a further decrease in
the interest rate will drive the flow of short-term capital toward
markets of emerging economies, quickening the appreciation of their

Second, the U.S. government's strategy to double its
exports within five years needs the considerable depression of the
dollar. For America, boosting exports is a must in the post crisis era,
because it cannot pin its hope for economic growth on the prosperity of
its real estate market and consumption based on borrowing money.

boosting exports relying on the competitiveness of U.S. companies is
not realistic in the short term. Nor is it possible to be realized by
the strong demand of its trade partners. None of America's trade
partners — except those emerging economies — are able to achieve growth
independently. Judging from the course of history after World War II,
considerable depreciation of the dollar is the sole possible option that
enables America to realize the goal. In this sense, driving down the
value of the dollar has become an important choice in policy for the
United States to recover the sluggish economy..

The last but the
most important point is that in the long run the considerable
depreciation of the dollar will help America to transfer its debts to
others. If we say the international financial crisis nationalized the
private debts, then in the post-crisis era, the United State sees an
urgent need to internationalize its debts.

A great amount of bad
debts of American financial institutions have been converted to
government debt through government aid measures. In 2009, America's
fiscal deficit stood at 1.42 trillion dollars, 3.1 times the 2008 level.
The deficit ratio surged from 3.2 percent in 2008 to 10 percent to a
new high since World War II. The debt of the federal government
increased to 6.7 trillion dollars, representing 47.2 percent of its GDP.
In 2010, the fiscal deficit is expected to be around 1.32 trillion
dollars. How America retains economic growth while reducing the deficit
is a big problem for the country.

Historic experiences show
debt-to-GDP ratio is not directly linked with economic growth and
inflation (even devaluation) in most countries. But the United States is
an exception because the dollar serves as the world currency. For
instance, the ratio decreased from 121.2 percent in 1946 to 31.7 percent
in 1974. Of that number, inflation accounted 52.6 percentage points,
economic growth contributed nearly 56 percentage points and federal
surplus contributed negative 21.51 percentage points. Even if the United
States denies its motives to transfer their debts, it will unavoidably
happen in reality.

Given a sluggish economy and huge amount of
debts, driving the value of the dollar down is in line with America’s
interests, both in short term and in long term. The international
community ought to stay vigilant about the strong motive for active
devaluation under the guise of a market-based move.

By Li Xiangyang, translated by People's Daily Online

Who would have guessed those Chineses know exactly what the Fed is doing...

h/t Geoffrey Batt


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Fri, 10/15/2010 - 17:22 | 654056 Ragnarok
Ragnarok's picture

Then start openly selling Treasuries and start buying gold and let's be done with it already.

Fri, 10/15/2010 - 17:34 | 654099 Max Hunter
Max Hunter's picture

That's what i'm saying... Let's get it on..

Out of the ashes will come a new..

Fri, 10/15/2010 - 17:45 | 654121 Ragnarok
Ragnarok's picture

The fact that they don't tells you their economy (and by extension their control structure) is hanging on by a bees dick as well. M.A.E.D.

Fri, 10/15/2010 - 17:46 | 654132 Rahm
Rahm's picture

China, MAN UP, BITCHEZ!  Talk is cheap!!!

Fri, 10/15/2010 - 19:44 | 654411 Hansel
Hansel's picture

Talk is cheap +1.  We have a bunch of teenage girls who love to gossip running the world.  You're a currency manipulator.  No, you are.  No, you are and we really mean it this time... oh wait, just kidding.  STFU!

Fri, 10/15/2010 - 19:48 | 654423 knukles
knukles's picture


Fri, 10/15/2010 - 23:10 | 654816 Missing_Link
Missing_Link's picture

It's all for show.  The US and China are just trying to hide the fact that they're neck deep up each other's asses so the middle east won't see China's military buildup coming until it's too late.

Sat, 10/16/2010 - 09:48 | 655001 Crime of the Century
Crime of the Century's picture

 You didn't think China was just going to do the rockaway and lean back, lean back, lean back.

Exactly - and it's the America lean forward, lean forward, lean forward that's gonna hurt...

Sat, 10/16/2010 - 20:25 | 655720 Conrad Murray
Conrad Murray's picture

The pigdogs over at MSNBC have their idiot audience's lips wrapped so tight around their Statist shaft they don't realize what they're supporting:

Sat, 10/16/2010 - 08:48 | 654957 nmewn
nmewn's picture

Like totally...fer shur.

"The Treasury Department delayed a much-anticipated decision on whether to label China as a currency manipulator until after the U.S. congressional elections on November 2 and a Group of 20 leaders summit in South Korea on November 11."

See Timmy run.

Run run run...LOL.

Sat, 10/16/2010 - 16:32 | 655500 knukles
knukles's picture

Like uh, you know, uhhhh like, what would Snookie doooooo?

Tue, 04/26/2011 - 13:57 | 1208388 william.smith61
william.smith61's picture

Oil Pump Such a demand would cause me to immediately begin proceedings to withdraw from the EU.  But then, if I were in charge of Germany, I would have done that long ago.

Sat, 10/16/2010 - 14:51 | 655348 Dadoomsayer
Dadoomsayer's picture

I  agree so what if they know what the US is doing.  If you aren't willing to do something about it then shut the hell up.  China can't do shit about it till they have more people making 10k+.  That doesn't look like that will happen for a long long time.

Fri, 10/15/2010 - 17:39 | 654112 mynhair
mynhair's picture

+2, the chickenshits.

Fri, 10/15/2010 - 17:42 | 654118 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Puffin' a right!

Fri, 10/15/2010 - 20:15 | 654481 redvetttes
redvetttes's picture

start dumping the 30 year 1st

Long tmv

Fri, 10/15/2010 - 20:15 | 654482 redvetttes
redvetttes's picture

start dumping the 30 year 1st

Long tmv

Sun, 10/17/2010 - 07:53 | 656269 Sugar Bear
Sugar Bear's picture

Be aware , DXY @ 100   Coming soon....

Fri, 10/15/2010 - 17:22 | 654058 Shameful
Shameful's picture

Will be a hell of a thing when this kicks into high gear.  Waiting for China to really start unloading dollar based financial assets.  Let the Fed take the coveted #1 for holding treasury paper.  That surely must be a good sign for America's future...

Fri, 10/15/2010 - 18:31 | 654248 the rookie cynic
the rookie cynic's picture

I'm not a geo-political expert, but think about this:

A bold move would be to immediately sell all their U.S. bonds now, corner the gold market, and invade the Middle East and divide the rest of the oil with Russia.  They could probably pull it off if they thought we'd think twice about nuking Beijing and Shanghai and Moscow, but they're scared of Petraeus I imagine.

But why bother with a shooting war?  In the U.S. the  suicide-bankers are already in self immolation mode. Maybe they're content to let nature take it's course and win the war without firing a shot.

The Chinese have a lot of their wealth tied up in dollar, however. If the unload it too fast they risk shooting themselves in the foot, at least in the short-term.  Right?

It's more likely to evolve over time: Tim is engaged in a diplomatic shouting match at present, next will be tariffs, capital controls, and then maybe some military skirmishes.

China can wait. They're not bleeding, the U.S. is. (And all bleeding stops eventually, one way or the other.)

No one knows what could push the Chinese over the edge, however, but anything close to parity yuan-to-dollar or high tariffs and they will sell it all. They'll eventually tire of Ben's secondary inflation of their economy.

Quite a game of chicken. It's a question of who blinks first?

Fri, 10/15/2010 - 18:50 | 654300 Shameful
Shameful's picture

The smart play for China is to let the USA burn itself up.  Now if China was to kick the legs out from under the treasury by letting it slip "BTW we don't hold any more US treasury paper" then it would cause a response.  The Fed could go in with damage control but the dollar burns to the ground in fairly short order.  Now China would not invade the middle east.  No point in it.  They are far better suited with them as a trade partner and economic ally.  Like selling them weapons to fight the remainder forces from the US.  After all the US will not be able to support it's military machine and the banking oligarchs when the dollar gives way, guess one gets abandoned?

China has been unloading out of dollars and they can afford to take a hit.  Their economy has problems but with a way of nationalism from shaming the US would ease the peoples emotions and show the "wisdom" of the CCP.  "Our great leaders have outsmarted the Americans and done what the Soviets could not".  China is on a clock because as the US further destabilizes they are pushed to move their currency or suffer local inflation, and pushed to find new markets for goods.

Now it is likely that China will fight someone.  My guess is Taiwan or Vietnam.  It's a war they can win to distract their people, gain something tangible, and use some of the excess young men and industrial capacity.  It's also not an overly dangerous fight for them after the US has sunken fully into insolvency.

Fri, 10/15/2010 - 20:00 | 654451 Arkadaba
Arkadaba's picture

Wonder who the US will fight to "distract their people, gain something tangible, and use some of the excess young men and industrial capacity" - oh shoot, forgot already doing that.

Fri, 10/15/2010 - 21:17 | 654610 Bananamerican
Bananamerican's picture

"If they unload it too fast they risk shooting themselves in the foot, at least in the short-term.  Right?"

...if they wait too long the risk heads somewhat "north" of their feet;)

Fri, 10/15/2010 - 22:24 | 654746 laosuwan
laosuwan's picture

chinese are patient. they will let obama destroy america for them. china uses proxy armies, terrorist groups in phillipines, nepal, india. chip away at other countries territory and resources here and there but avoid direct conflict. one exception; they will invade taiwan someday because they have too many nationalistic young men with nothing to do at home; too much risk in that for the government. they will do a provocation and blame it on the us or taiwan as excuse to go in, but it will be a long time before china ever thinks of going back into vietnam. the last SE asian country on china's shopping list is Vietnam. Mostly likely they will take over Laos and Myanmar first. either by force or by force of money.

Fri, 10/15/2010 - 22:39 | 654769 Shameful
Shameful's picture

I mentioned Vietnam because it was on my mind because of the current dispute over the sea territory.  It need not be them, it just needs to be a target they can beat, so really anyone will do.  The best thing Taiwan could do it try to get some kind of autonomy arraignment like Hong Kong.  Because after the US can no longer project the CCP is really going to be eyeing them. I'm not for China doing any of this, just my read on the situation.

Sat, 10/16/2010 - 18:16 | 655587 Ludwig Van
Ludwig Van's picture


Who wouldn't complain about taking hits on margins you'd like to keep high? If the "newspiece" truly is a translation of one generally disseminated, it explains well and simply to comrades not just the impediment to a rapid rise in their living standard, but also who to blame, i.e. not us Red ruling guys.


I can't see China letting the U.S. burn. We're the terminal cancer patient who still takes their treatment, still racks up the bill, and still owes them. They'll keep us on life support for as long as it makes sense to them, which I don't see as strictly limited to economic sense.



Fri, 10/15/2010 - 19:34 | 654387 RecoveringDebtJunkie
RecoveringDebtJunkie's picture

The problem for China is that they rely on the US consumer to support their export-driven growth. The "growing" middle class in China has their savings tied up in stocks and RE that will lose a lot of value in coming years. Without US public spending, there is no US consumer, and so the Chinese need us to simultaneously finance our deficits at affordable rates but also prop up the dollar's value relative to the yuan. In this world, predicaments abound.

Fri, 10/15/2010 - 19:40 | 654398 Shameful
Shameful's picture

Would you work for an employer that pays you in IOUs?  And when the IOUs are due they offer you more IOUs?  When do you realize "Hey this guy is never going to pay me, I need a new job", or do you just work for them forever and build a hoard of worthless IOUs?  They know they are stuck, we will NEVER pay.  But they don't need that insane level of growth everyone says, the people will forgive much if the CCP looks like a winner.

Fri, 10/15/2010 - 19:49 | 654425 RecoveringDebtJunkie
RecoveringDebtJunkie's picture

That's what I'm saying... they know they are in a predicament, and are beginning to realize they just need to cut their losses and get out of this destructive relationship with the US. China has many problems to face, but they will probably end up significantly better off than we will simply because they have at least some courage and can face reality.

Fri, 10/15/2010 - 22:27 | 654751 espirit
espirit's picture

Tell me again what China needs from the U.S?

Fri, 10/15/2010 - 23:18 | 654825 RecoveringDebtJunkie
RecoveringDebtJunkie's picture

Noone really needs anything from anyone. China wants to continue high levels of economic growth like any other large country, and they have billions of people counting on that to some extent or another. It won't be pretty over there when that doesn't materialize, but at least they have an understanding of the problems and are starting to make some sensible preparations.

Sat, 10/16/2010 - 18:37 | 655609 Ludwig Van
Ludwig Van's picture

Communist rulers need the U.S. like old U.S. rulers needed the U.S.S.R, and like recent U.S. rulers need... well, hell, anyone will do -- if now devolved to thin gruel.

"Hey, little kid, where's your big brother?"

"I don't have a big brother."

"Uh-huh. Gimme your lunch."

"But it's all I have to eat today!"

"Be grateful you ate yesterday."



Sat, 10/16/2010 - 11:26 | 655092 trav7777
trav7777's picture

HUH?  WTF...China can face reality?

this is a nation that has a 30-year history of currency and export ponzi and who is building totally EMPTY cities just for the sake of building something!

They are even MORE disconnected from reality than anyone.

Sat, 10/16/2010 - 11:46 | 655110 BrosMacManus
BrosMacManus's picture

Truth to power Trav.

What's that old Trump addage? Something like "If I owe the bank $1 million, I have a problem. If I owe the bank $100 million, the bank has a problem."?

All this talk about China having us by the short hairs I think is a reflection of our own self loathing (of our political class, TBTF, consumer/debt-based existence), and not really a reflection of our desire, or reality.

Yes, I'm as sick of our current system as anyone, but projecting our desire for it to end with China taking center stage as the eminent world power seems foolhardy. As USA goes, so goes the world. Until, that is, the players pick sides and slug it out. Right now we, the Chicoms, EU, Russia and ME are just talking about how big each of our respective units are, without actually whipping them out and proving it.

Sun, 10/17/2010 - 16:51 | 657030 RecoveringDebtJunkie
RecoveringDebtJunkie's picture

Look, everyone has been caught up in the global debt ponzi scheme to some extent. China is no exception. But they also don't have a global empire that constantly uses military force to secure resources. They make bilateral deals and are also focusing on alt energy development and infrastructure. They actually have a manufacturing base, trade surpluses and are hoarding gold as well. Also, the economic commentary of Chinese officials that leaks out from time to time is infintely better than anything I've heard from the tools here.

Sat, 10/16/2010 - 12:47 | 655173 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Exactly.  In reality, China is already more powerful than the USA economically.  Their farms, mines and industrial capacity are all much bigger.  The main component of the USA's GDP is the service sector which largely depends on the debt ponzi scheme.  Personally, I think the GDP is in for a real thumping.  Probably on the magnitude of a 30% decline.  When the music stops playing, China is way better off because they have real wealth.

Sat, 10/16/2010 - 16:08 | 655475 Spalding_Smailes
Spalding_Smailes's picture

Come on ... China is a mess, fresh water anyone ... you may need it some day.

Sat, 10/16/2010 - 20:02 | 655695 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Problems of early industrialization.  No worse than the USA in the early 20th century.  The point is, they produce way more than us.  Not how they do it.

Sat, 10/16/2010 - 11:24 | 655085 trav7777
trav7777's picture

China doesn't have the military capability to mount  naval invasion of Hong Kong, much less the middle East.

They'll tire of Ben's inflation of their economy?  WTF do you think their 30 years' worth of currency manipulation through the dollar peg have done??!?!?

Sat, 10/16/2010 - 12:34 | 655163 BobPaulson
BobPaulson's picture

No. The US just needs an excuse to convert one of its few remaining assets into value. That asset is their massive arsenal. A broke country with a huge military is not a stable thing. Add to this the fact that weapon systems depreciate quickly, so using them is the best way to realize their value.

I'd say the one thing holding the US back from lashing out is that the public doesn't have the stomach for losses, but that can change if people start getting hungry and the government is able to spin a narrative of a great big looming enemy somewhere causing their financial woes.

Sat, 10/16/2010 - 12:45 | 655178 Lucius Corneliu...
Lucius Cornelius Sulla's picture

That option worked out great for Japan, Italy and Germany.  But most of the generation that suffered from it are dead now.  Maybe it is time for history to repeat itself.

Sun, 10/17/2010 - 20:08 | 657323 OddFieldIsStrong
OddFieldIsStrong's picture

"I'd say the one thing holding the US back from lashing out is that the public doesn't have the stomach for losses"

Hence the need for robotic soldiers, auto-navigation vehicles, UAV etc. Lashing out and winning is the easy bit however, governing a conquered state does need real human on the ground. Of course US could try looting, and holding onto strategic assets only, i.e. oil fields/mines/etc.  It could work, especially with an arsenal of nukes as the ultimate threat.

Sat, 10/16/2010 - 14:54 | 655352 Dadoomsayer
Dadoomsayer's picture

The fed just announced QE II.  If I were China I would just sell them all their paper back.  They might not get their 8% growth a year, but they will have internal growth as their middle class starts to grow.  And guess what the US just did, they just locked themselves out of the fastest growing economy in the world.  I would say the US has much more to lose than China.  If only China had the balls to do something about it.

Fri, 10/15/2010 - 17:27 | 654060 knukles
knukles's picture

Timmah;  Hey Ben we can just tell 'em; "Now rookie hele, who carring the wok brack.  No tickie no tradie.  No plefecshun of secluity intlest, no coupon payments."

Ben;  Timmy, you're a fucking moron. 

Fri, 10/15/2010 - 17:30 | 654083 SloSquez
SloSquez's picture

What the hell - Nice.

Fri, 10/15/2010 - 18:06 | 654165 knukles
knukles's picture

Timmah;  But Ben, they’re the ones gotta get paid, and we gots the cash. (Sniggering)  So they better buck up and be on the nicie-ricie to us, ‘cause we’re the ones holding all the cards.

Ben; Tim, have you ever heard of the Paradox of  Un-Full Decks?  Well, of course not Timmah, because I just made it up, but you can think about it while I retire to the potty.  (Unzipping his pants and plopping down on the Gold Commode expropriated from J. Thain’s MLPF&S office.)

Timmah;  Ben keep the door open.  We need to talk, seriously.

Ben;  Seriously?  About what, seriously?  Nobody's talked about a goddamned thing seriously here for 2 years now.  So why now?  Or haven't you noticed, there are no full decks anymore, Timmah?

Timmah; About China and (loud noise emanating from commode, sounding as if the veritable Trumpets of Gideon were sounding the Second Coming) What the fuck is that?  Ben?!?!  You OK?

Ben;  No Timmah, I’m a very long way from OK.

Timmah;  But Ben, his Messiah wants to know what we should do?

Ben;  (Giggling)  Timmah, you know what the problem with a trade war with China is?

Timmah;  No Ben (Exasperated, knowingly playing along) I do not.

Ben;  Five minutes after it’s over Timmah, ya’ wanna have another one.  (Bellicose laughter)\


Fade out to another lost weekend while the world goes to hell in a neoprene Mao jacket.

Fri, 10/15/2010 - 17:33 | 654096 Spalding_Smailes
Spalding_Smailes's picture

Better play nice or else ...

1. Of the USD 13.6 trillion of goods and materials traded worldwide per annum, 90% rely on letters of credit or related forms of financing and guarantees such as trade credit insurance. International shipping works on “letters of credit.” These financial guarantees are issued to buyers of bulk cargo by their banks. This system has greased the wheels of global trade for the last 400 years by transferring payments internationally from buyer to seller once shipments have been delivered. With the collapse of the credit market - and banks now sitting on their hands, refusing to lend - the fast-moving wheels of global shipping have come close to halt.

Fri, 10/15/2010 - 17:43 | 654124 Monkey Craig
Monkey Craig's picture

Could you please give a date and time for this? Global banks (including B of A, TD and Santander are still regularly issuing these Letters. Lines of credit are used for purchases of inventory too.

Fri, 10/15/2010 - 18:05 | 654150 Spalding_Smailes
Spalding_Smailes's picture


^^^ ...

No, this is from an article a few years back. I was just pointing out debt/credit markets control all. If China starts dumping, fear runs wild .... Import/exports stop, u.s.a is in better position to handle the crisis thats coming.

I think we ship china water also as her ships return home ...

We don't need most the crap china ships to us, they need us or someone to buy that crap cuz' they have way to much manufacturing, and lots of jobs that need to be created also ... 350 million coming online soon.


Fri, 10/15/2010 - 18:16 | 654209 Monkey Craig
Monkey Craig's picture

if we ship them water then either (1) they poisoned it or (2) we discover super cheap energy

Fri, 10/15/2010 - 18:34 | 654259 Spalding_Smailes
Spalding_Smailes's picture

near Xi an in central China, power-plant worker Zhou Jie stands on the mostly dry bed of the Wei River, remembering when he used to fish there before pollution made the catch inedible.

Dagar and Zhou show the daily struggle with tainted or inadequate water in India and China, a growing shortage that the World Bank says will hamper growth in the world s fastest- growing major economies. It also is pitting water-intensive businesses such as Intel Corp. s China unit and bottling plants of Coca-Cola Co. against growing urban use and the 1.6 billion people in China and India who rely on farming for a living.

Water will become the next big power, not only in China but the whole world,  Li Haifeng, vice president at sewage- treatment company Beijing Enterprises Water Group Ltd., said in a telephone interview.  Wars may start over the scarcity of water.

About 2.4 billion people live in  water-stressed  countries such as China, according to a 2009 report by the Pacific Institute, an Oakland, California-based nonprofit scientific research group. Water scarcity and pollution reduce China s gross domestic product by about 2.3 percent, the World Bank said in a 2007 report.

Doubling Demand

Water demand in the next two decades will double in India to 1.5 trillion cubic meters and rise 32 percent in China to 818 billion cubic meters, according to the 2030 Water Resources Group, a research collaboration between the World Bank, management consulting firm McKinsey & Co. and industrial water users such as Coca-Cola.

That will produce returns of 12 percent or more from investments in companies that treat or process water, said Arnaud Bisschop, who oversees $3.27 billion investments in the Water Fund run by a unit of Pictet & Cie in Geneva. The fund included stocks such as Beijing Enterprises Water and Hong Kong- based environmental protection company China Everbright International Ltd., according to data compiled by Bloomberg.

China s 1.33 billion people each have 2,117 cubic meters of water available per year, compared with 1,614 cubic meters in India and as much as 9,943 cubic meters in the U.S., according to the Food and Agriculture Organization of the United Nations.

The 1.2 billion people in India, where farmers use 80 percent of available water, will exhaust their fresh-water supplies by 2050 at the current rate, the World Bank estimates.

Sat, 10/16/2010 - 06:43 | 654908 i-dog
i-dog's picture

Water treatment is a problem that can be solved by investment and technology ... and China is not short of either.

To put your consumption figures into context:

"In Malaysia 100 people share each million cubic metres of water [readily available for human use]; in India, the figure is 350 and in Israel, 4,000."  Source: FAO

If Israel can do it, so can China.

Sat, 10/16/2010 - 07:08 | 654913 Freewheelin Franklin
Sat, 10/16/2010 - 11:12 | 655079 tip e. canoe
tip e. canoe's picture


Sat, 10/16/2010 - 11:29 | 655093 trav7777
trav7777's picture


The problem is that china is wantonly POLLUTING all their water.

Sat, 10/16/2010 - 16:10 | 655480 Spalding_Smailes
Sun, 10/17/2010 - 12:00 | 656562 gmrpeabody
gmrpeabody's picture

Ruined my breakfast.

Sat, 10/16/2010 - 18:23 | 655590 i-dog
i-dog's picture

As I said in my post, in a sentence you obviously couldn't comprehend, China has the means to clean up its water (though maybe not the will ... yet).

While you are busy chucking rocks around the glasshouse:

"the Centers for Disease Control (CDC) documented 251 separate disease outbreaks and nearly half a million cases of waterborne illness from polluted drinking water in the United States. Another study by the CDC and the National Academy of Sciences concluded that most illnesses caused by eating tainted seafood have human sewage as the root cause."

"Scientists believe as many as 3.5 million Americans get sick each year after swimming, boating, fishing, or otherwise touching water they thought was safe."

Sat, 10/16/2010 - 18:50 | 655616 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

This doesn't quite make sense to me. China does not have the will to better the lives of its own people?

Even while it has the means?

Why not? I have some ideas which I have shared on this but you might have more insight.

Your quote as also seems a bit lacking. How much of anything unpleasant, not to mention horrific shows up in the Chinese press about environmental disaster, dissidents disappearing etc etc etc?

For goodness sake, the nobel peace prize winner is in jail for espousing the view that freedom is a universal value. Oh, I know, I know, western hegemonic arrogance. Right?


Sat, 10/16/2010 - 19:12 | 655640 i-dog
i-dog's picture

"Oh, I know, I know, western hegemonic arrogance. Right?"

What the fuck has that got to do with an exchange on water quality in China? Stay focussed!!

Since you seem determined to head off on populist tangents, I'm done with this topic.

Sat, 10/16/2010 - 21:54 | 655795 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Sorry i-dog but my comments were clearly not limited to the sub thread on water (interesting or pertinent as it may be. In fact from a geopolitical perspective, China's control of Tibet puts India in rather a tight squeeze versus the future of its own water supplies, but I digress), I simply jumped in there. I thought the thread was more to do with the current heating up of the currency wars and China's official reactions, or some would say intransigence in the face of US pressure on a revaluation of the RMB. I would not say that my comments are populist in nature nor in that sense off on a tangent. (A fish) out of water, perhaps ... 

Sat, 10/16/2010 - 19:37 | 655657 tip e. canoe
tip e. canoe's picture

$bill, you wanna 1 up big bad china?    click on that on NEWater link above and figure out how to reverse engineer the process.   cuz we're all gonna need it over here soon very soon, if not already.

Sat, 10/16/2010 - 20:00 | 655693 i-dog
i-dog's picture

Exactly! And, since it incorporates reverse osmosis, it could also get rid of all the fluoride added to the existing water supply in the US that is contributing to the dumbing-down of the population.

Sat, 10/16/2010 - 21:59 | 655803 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Not my area tip e., but did have discussions with a guy once who was in the business and had patented some process, and did a little research as follow up. Don't know, is the Singapore method revolutionary or proprietary? Thought that reverse osmosis was a standard water treatment practice ...

Fri, 10/15/2010 - 18:23 | 654229 gunsmoke011
gunsmoke011's picture

We don't need most the crap china ships to us” –


 I must say I totally do not get this statement, or the mind set behind it! Have you by chance been to a Wal-Mart lately? Damn near everything we consume seems to come from China! I think this is just the sort of arrogance on the part of the U.S. that boggles the mind. Hell – China could give their manufactured goods to their own people and save the shipping cost – since they are never going to be paid back for the goods anyway. I just love it when I hear – China NEEDS Us to consume what they make – we really have them over a barrel! Try to imagine for one moment just what the reaction of the American consumer would be if they went to their local Wal–Mart and saw the shelves empty of all the things China ships to us – there would be nothing to buy! Somehow I don’t think that would be well received. Consider what the impact of not having China taking our worthless dollars and turning around and re investing them in Treasuries would be. There would be nobody left to buy our debt other than the FED – and that little shell game can only go on for so long. Interest rates would go to say 7 -8%, (IF WE WERE LUCKY) and the interest on our debt alone would become unserviceable. I just do not see the U.S. as having the upper hand in this relationship – quite the opposite.

Fri, 10/15/2010 - 18:43 | 654281 Spalding_Smailes
Spalding_Smailes's picture

 We dont *need* tv,blu-ray,cup holder,toys,another grill,fire pit,dry wall,cheap this worn out that, no durability... the list goes on and on and on.


Ask the 17% unemployed what they *need*.

You need food and water and general safety thats it really ... they need us much more than we need them.

Fri, 10/15/2010 - 19:01 | 654297 Spalding_Smailes
Spalding_Smailes's picture

China NEEDS Us to consume what they make – we really have them over a barrel! Try to imagine for one moment just what the reaction of the American consumer would be if they went to their local Wal–Mart and saw the shelves empty of all the things China ships to us – there would be nothing to buy!

How is china going to bring those country bumkins online(300 million off the farms) with the manufacturing overcapacity as is. They are fuck'd. How will china's aging poulation pick up the slack of our new normal when they have no safety net inplace, those people are not spending. The mindless now coming online will have no buying power, europe is scaling back, by by by ....

They need energy,food as inflation is going ape shit going forward,no?

See ya, game over. They are commies, they lie about subsidy/subvention of the manufactures ... The books/gdp are cooked like enron.


Fri, 10/15/2010 - 20:27 | 654501 gunsmoke011
gunsmoke011's picture

Yes - those stupid bumpkins - maybe they can learn a thing or two about accounting integrity from us since our companies never cook their books. I guess we shall see soon enough who needs who more - but our "New Normal" where we export toxic debt and spend way beyond our means is really not a game plan for long term success - as I believe we are getting ready to learn IN SPADES!!

Sat, 10/16/2010 - 06:52 | 654910 i-dog
i-dog's picture

+ 1.6 quadrillion, gunsmoke!

People, like Spalding, who make such inane statements as "China needs America to buy stuff" obviously rely on The Simpsons for their economic news and current affairs! Have they never even heard of emerging markets in the BRICs ... or such existing large markets as Europe or SE Asia?

China's rapidly rising middle class (which is already larger than the total population of the US!) wants just as many useless trinkets as the former American middle class does/did.

Sat, 10/16/2010 - 07:30 | 654926 sushi
sushi's picture

+ 1.6 quadrillion x 2

Who is doing the exporting from China?

Mostly American firms.

Who is responsible for 10% of China's exports?


Amazing the way Americans let themselves get whipped up by the oligarchs in Washington and at the same time rumble on about buying guns and lead so they can achieve "freedom."

Sat, 10/16/2010 - 09:26 | 654976 Spalding_Smailes
Spalding_Smailes's picture


China's rapidly rising middle class (which is already larger than the total population of the US!) wants just as many useless trinkets as the former American middle class does/did.


Can you provide anything to back up the purchasing power claims of china's middle class to take over for joe schmo' .. China is running out of clean water. The worker live in very small rooms like cattle and get treated like crap. It would take china 10 years to move away from exports into a consumer driven economy... The 300 million coming off the farms have what level of education, more mindless workers to put cheap crap together ...

Have they never even heard of emerging markets in the BRICs ... or such existing large markets as Europe or SE Asia?


Credit whores, dollar denominated debt, with hot money pouring in... can you say, bubble.


Let me know how china & her middle class deal with this in the future ... what jobs?


Sat, 10/16/2010 - 09:31 | 654981 i-dog
i-dog's picture

I'm talking from first-hand knowledge in China ... you're talking from your arse.

If you don't put down your hopium pipe, then five years from now you'll be paying 10 gold eagles to a white slave trader to smuggle you into China in a shipping container ... so that you can get a job as a chauffeur to a middle class Chinese family in Shanghai, Beijing, Shenzen or a dozen other major commercial centres.

Wake up to reality!

Sat, 10/16/2010 - 09:38 | 654988 Spalding_Smailes
Spalding_Smailes's picture


I'm talking from first-hand knowledge in China ... you're talking from your arse.



Link, please show me anything in regards to china taking over consumtion from usa ,european middle class over the next few months,it will take years ... try reading mike pettis for some insight on china and her woes ...

Sat, 10/16/2010 - 23:03 | 655870 chindit13
chindit13's picture

It may have been on Pettis' blog a while back I read that 99.5% of all Chinese earn less than 40,000 yuan per year (~$6200). After rent, food, commuting, and saving downpayment money for the hoped-for flat, that doesn't leave a whole lot of folks with much money to take over for the American consumer just yet.  That other .5% is going to have to do a lot of consuming. 

Sat, 10/16/2010 - 23:35 | 655900 i-dog
i-dog's picture

It could be true ... the "poverty" level was $90 a year, and "low income" was $125 a year in 2005! Only 2.8% are below poverty level -- cf. 12% in US and 11% in Germany (25% in India and Brazil), according to the CIA Factbook.

Still, they can soak up washing machines, flat screens and iGizmos at much lower prices than those landed on the Walmart shelves (and there are 1.3 billion of them!).

Saw the same progression from destitute refugee to middle class in Hong Kong, Taiwan and Singapore decades ago. I had stunning female professional employees who came to work from squatter huts on hillsides.

Sun, 10/17/2010 - 00:47 | 655986 Spalding_Smailes
Spalding_Smailes's picture


Take the most obvious example, the PBoC itself.  The central bank officially has about $2.5 trillion in reserves.  This by the way almost certainly understates its true position but let’s ignore that for a moment.  The PBoC has funded this position with an equivalent amount of RMB liabilities, which makes it very vulnerable to changes in the value of the currency.

Rate addiction

In fact there were strong rumors last year that the PBoC was technically insolvent as a consequence of the 20% increase in the value of the RMB against the dollar during the 2005-08 period of currency appreciation.  Weirdly enough, although the numbers are huge, it has proven difficult to convince anyone that the PBoC is not the richest institution in the world, and that it is actually very vulnerable to big losses (although I notice that Sovereign Trends’ Terrence Keeley, in an OpEd in the Financial Times Tuesday, seems also to have done the numbers).

The problem for the PBoC occurs not just because of the currency mismatch but also because it needs repressed funding costs to keep it profitable.  How much do the PBoC foreign currency assets earn?  I would guess probably between 3% and 4%, maybe less.  The RMB funding cost, on the other hand, is roughly between 1.5% and 2.5%.  This leaves the PBoC with a net positive carry of between 1% and 2%.

If the RMB appreciates by as little as 2% a year, in other words, the PBoC runs a negative carry on its assets.  Every further 1% increase in interest rates, or additional 1% rise in the value of the RMB, then, erodes its capital by at least $25 billion (annually, if it happens through an increase in interest rates).

Let’s assume, for example, that over the next two years we see a combined appreciation and interest rate increase of 10% (let’s say a 2% increase in interest rates and a 4% annual appreciation), which is, in my opinion, the absolute minimum that China must do to slow down the worsening domestic imbalances.  Assuming no change in the rate earned on reserve assets, which in fact may decline, this means that the PBoC’s net indebtedness would rise by over $250 billion, or roughly 5% of the country’s GDP.

These kinds of number quickly add up.  And of course it is not just the PBoC that has this addiction to repressed interest rates.  Many years of very low cost borrowing has created a huge dependency on low interest rates among SOEs, local governments, and other creditors of the bond markets and the banks (not to mention the banks themselves), all of whom are directly or indirectly funded by long-suffering households.

As I discussed in an entry several weeks ago, repressing the interest rate is the equivalent of granting hidden debt forgiveness.  It is probably a safe assumption that an awful lot of borrowers depend heavily on this hidden debt forgiveness to remain solvent, and would be unable to repay if rates rose to anywhere near a reasonable level (at least 400-500 basis points, I would guess, if we wanted to eliminate the overinvestment and repressed consumption consequences of financial repression).

In that case any attempt to raise interest rates to levels high enough to reduce China’s investment misallocation and to allow households to raise their consumption levels would come, in the short term, with a massive rise in bankruptcies and in government debt levels.  If nothing else the PBoC is probably under huge pressure from local governments not to raise rates.

The cocaine of cheap money

All this might sound like I am effectively recommending that the PBoC continue to repress interest rates, but of course repressed interest rates are what caused the problem in the first place.  To continue to do so simply makes the underlying problem worse, by piling on even more non-viable debt.  Rather than suggest that the PBoC must keep rates low, what I am really arguing, I guess, is that this is a very difficult trap from which to escape.

What can the authorities do?  If Beijing raises interest rates quickly, debt and bankruptcy will surge and growth will collapse – although the eventual rebalancing of the economy might happen much more quickly.

If they don’t raise interest rates, they can keep growth high for a while longer, but the amount of reserves and misallocated capital will continue rising, making the eventual cost of raising interest rates even higher.  The risk is a Japanese-style stalemate in which for many years the authorities are forced to keep rates too low because they simply cannot countenance the alternative, and during this time consumption growth continues to struggle.

Finally, if they raise interest rates slowly, they will slow growth while still suffering many more years of worsening imbalances, until rates are finally high enough to begin reversing the imbalances.  But for this strategy to work, they would need a very, very accommodative external sector – China’s domestic imbalances require high trade surpluses until they are finally reversed.

So there’s the dilemma: they’re damned if they do and damned if they don’t.  So far the authorities do not seem to be seriously considering raising interest rates, and my guess is that if the US successfully pressures them to revalue the currency, they will be even less likely to do so.

Michael Pettis

professor at Peking University’s

Fri, 10/15/2010 - 17:26 | 654069 LOVELIFE
Fri, 10/15/2010 - 21:49 | 654133 Monkey Craig
Monkey Craig's picture

Remy and terror squad - lean back, lean back

Fri, 10/15/2010 - 17:27 | 654071 -Michelle-
-Michelle-'s picture

Jenga!  Jenga!  Jenga!

Fri, 10/15/2010 - 17:27 | 654072 VegasBD
VegasBD's picture

Wow. Here we go....

Fri, 10/15/2010 - 17:27 | 654074 Steak
Steak's picture

Hey ZHers, please peep the Bill Gross Telegraphs QE2 article for a thread in the comments section for a lil dialogue about music and ZH.  also if you don't like me or what i do, please add to my junks in that thread, as i've amassed a formidable collection of them there.


Fri, 10/15/2010 - 17:28 | 654077 Tyler Durden
Tyler Durden's picture

just copy here

Fri, 10/15/2010 - 17:31 | 654087 SloSquez
SloSquez's picture


Fri, 10/15/2010 - 17:36 | 654102 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I am the fire starter!

Fri, 10/15/2010 - 17:51 | 654144 SloSquez
SloSquez's picture



Fri, 10/15/2010 - 18:38 | 654269 Steak
Steak's picture

for the sake of brevity i'll just summarize.  i strongly encourage other ZH readers to submit playlists of their own.  just PLEASE remember if you do to sanitize your youtube/google profile to protect your anonymity.  we are all united here as people seeking truth; music is one way to deepen these connections and provide additional scaffolding for the community being built here.  plus its just plain fun to rock, flow, bump, boogie and/or bounce.

ps: if the warm approach doesn't work i'd just like to remind y'all that i'll club a baby seal if i don't see a playlist from someone else next week :D

Fri, 10/15/2010 - 19:36 | 654389 SloSquez
SloSquez's picture

You never cease to amaze me Steak.  You're brevity and span is impressive.  BTW - baby seal tear's are very useful - from an industrial standpoint.

Fri, 10/15/2010 - 18:38 | 654232 Miles Kendig
Miles Kendig's picture

Drive on to the OBJ Ranger

Art is its own language.  The universal language.  Too bad so many will never appreciate that.  I had to be reminded myself as you well remember...

Sat, 10/16/2010 - 11:33 | 655099 tip e. canoe
tip e. canoe's picture

thanks for diggin up that memory the b-side of that.

back atya (nice homemade video attached):

Fri, 10/15/2010 - 20:43 | 654527 Orly
Orly's picture

Actually, I find you quite entertaining, Steak.



but i'll junkya n.e.wayz...

Sat, 10/16/2010 - 10:04 | 655018 lizzy36
lizzy36's picture

I junked you.

For exactly the opposite reasons you stated.

Keep em coming.

Fri, 10/15/2010 - 17:29 | 654079 LibertyIn2010
LibertyIn2010's picture

Unbelievably, all of that was written on Timmy's fortune cookie at lunch today.

Fri, 10/15/2010 - 17:41 | 654116 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Larry Summers sleeps with the fishes."

Fri, 10/15/2010 - 17:45 | 654128 Monkey Craig
Monkey Craig's picture

I feel like he sleeps with fat investment bankers.

Fri, 10/15/2010 - 17:54 | 654152 DaveyJones
DaveyJones's picture

they smell like fish

Fri, 10/15/2010 - 21:01 | 654559 Uncle Remus
Uncle Remus's picture

Sure that's not just the high-dollar - oh never mind.

Fri, 10/15/2010 - 20:10 | 654475 Arkadaba
Arkadaba's picture

I had to google "funny fortune cookies" and right away found Timmy's fortune:

You have an unusual equipment for success, use it properly.

Fri, 10/15/2010 - 17:29 | 654081 redpill
redpill's picture

How does one say "touché" in Mandarin?

Fri, 10/15/2010 - 18:24 | 654234 bankonzhongguo
bankonzhongguo's picture

I think it's: Nin cishang wo!

Mr. Durden.  Some Guo Biao China code here.

Fri, 10/15/2010 - 19:54 | 654442 DocLogo
DocLogo's picture


Fri, 10/15/2010 - 20:56 | 654562 Uncle Remus
Uncle Remus's picture


Fri, 10/15/2010 - 17:32 | 654088 Stevm30
Stevm30's picture

They know, yet they keep buying and holding dollars.

Fri, 10/15/2010 - 17:33 | 654090 knukles
knukles's picture

"Who would have guessed those Chineses know exactly what the Fed is doing..."

And we really wondered what?

Please Lord, help us for we are lost in Egypt knowing not what we do.

Fri, 10/15/2010 - 17:42 | 654120 Tyler Durden
Tyler Durden's picture
Fri, 10/15/2010 - 17:47 | 654134 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

No one ever told Ben you don't go full retard?  Boner move for Ben, he ain't never gettin' signed again.

Fri, 10/15/2010 - 19:34 | 654388 Bob
Bob's picture

IMO, he's always been a retard, but that movie took it to a whole new, utterly breathtaking level. 

Fri, 10/15/2010 - 21:33 | 654651 Hephasteus
Hephasteus's picture

I think he meant the "I'm the dude, playing a dude, disquised as another dude" part.

Sat, 10/16/2010 - 09:03 | 654967 Miss Expectations
Miss Expectations's picture

Me, too.

My chinese restaurant has a lot of shrimps.  Shrimps with garlic sauce.  Sesame shrimps.  Szechuan shrimps.  etc.  Guess what?  The waiters are Chineses.

Sat, 10/16/2010 - 10:16 | 655032 Hephasteus
Hephasteus's picture

It's not the waiters you gotta watch out for it's the lead farmers.

Fri, 10/15/2010 - 17:33 | 654094 putbuyer
putbuyer's picture

I'm liking the new links on the Blog Roll. Good job!

Oh!, and Geithner sucks!!!

Fri, 10/15/2010 - 17:34 | 654097 SloSquez
SloSquez's picture

Phuckit, I'm leaving the dollar.  For the people, by the people my ass.

Fri, 10/15/2010 - 17:38 | 654104 His Dudeness
His Dudeness's picture

Tyler's present location(via ankle bracelet):

46º 00’ 45.05” N

104º 56’ 18.11” E

Elev. 4608 ft



This is an essay exam, no copying your neighbor.

Fri, 10/15/2010 - 17:49 | 654136 Monkey Craig
Monkey Craig's picture


Fri, 10/15/2010 - 18:16 | 654208 knukles
knukles's picture

Ugtaal Sangiin Dalai temple.  Ah......

Sat, 10/16/2010 - 10:40 | 655058 His Dudeness
His Dudeness's picture

Excellent job, knukles!

That was just an initial test of the 'Tyler Is There System' (T.I.T.S.)

The military strike at that location this morning was NOT an accident, however. Ben's helicoptors were performing a routine military exercise. Move along.

Fri, 10/15/2010 - 17:37 | 654105 goodrich4bk
goodrich4bk's picture

So the Chinese peg their currency to a currency they know is declining.  Clever!  The dollar can go to zero and the Chinese will still be able to outbid us for work.

Fri, 10/15/2010 - 17:50 | 654142 saulysw
saulysw's picture

+1, I think this is a key point many people seem to be missing. This strategy effectively disables the debasement desires of the US, which they don't like, so they will turn around and call it "currency manipulation". What it is is a mirror, simply showing what the US is doing which is, of course, currency manipulation. They are the monkey on the US's back now.

Fri, 10/15/2010 - 17:40 | 654114 There is No Spoon
There is No Spoon's picture

Germany is able to export even with a strong currency so why do we need to depreciate for exporting? I think it's all about the "internationalizing debts" argument. Literally passing the buck. Currency war implies both sides are active, perhaps we can expect China to hit back. One morning Bernanke and Geithner will wake up to see usd/yuan over 7, and s&p futures limit down.

Fri, 10/15/2010 - 17:50 | 654129 hedgeless_horseman
hedgeless_horseman's picture

Germany is able to export even with a strong currency...

You might want to consult a EUR/JPY chart, or did you mean Japan is able to export even with a strong currency?

Fri, 10/15/2010 - 18:16 | 654207 There is No Spoon
There is No Spoon's picture

I meant Germany but I see your point. I wasn't thinking about German/Japanese trade. I think Germany has a trade deficit with Japan, maybe that's changing with the weakening euro/yen.

Fri, 10/15/2010 - 21:24 | 654626 Bananamerican
Bananamerican's picture

"Germany is able to export even with a strong currency"

yeah, but they have Rammstein

Fri, 10/15/2010 - 19:16 | 654347 fiddler_on_the_roof
fiddler_on_the_roof's picture

Germany can do that because all the rich show off idiots like to buy overpriced  BMW's, Mercedes even though they have less reliability than a Japanese Honda Accord. They just milk using brand name like a Armani.

Fri, 10/15/2010 - 19:33 | 654384 cxl9
cxl9's picture

Do you believe that reliability should be the sole criterion for selecting a car? Just wondering..

Fri, 10/15/2010 - 20:59 | 654568 Uncle Remus
Uncle Remus's picture

Depends on how long you think you might have to drive it, assuming you can get petrol for it.

Sat, 10/16/2010 - 05:45 | 654890 KevinB
KevinB's picture

idiots like to buy overpriced  BMW's, Mercedes even though they have less reliability than a Japanese Honda Accord.

What crystal ball do you get your reliability figures from? Mercedes and Porsche beat Honda, Toyota, Nissan, Mitsibushi, and Infiniti according to JD Power. Only Lexus has comparable figures for initial quality.

But, please, don't let facts get in the way of your fantasy.


Fri, 10/15/2010 - 22:42 | 654778 Double.Eagle.Gold
Double.Eagle.Gold's picture

Germany makes quality, US doesn't. What does the US produce that's know for quality?

Only thing I can think of is software and entertainment. We invent a lot of great technology, but none of it is fab'ed in the States anymore. Auto's have been crap for my entire life (50+ yrs). Maytag made a good Washer, till they were bought out. Now it's crap.

Only thing I can think of that we manufacture are weapons.


When Trust Matters

Fri, 10/15/2010 - 17:49 | 654138 mynhair
mynhair's picture

'Insanity' will be redefined soon.

Fri, 10/15/2010 - 17:50 | 654143 Goldenballs
Goldenballs's picture

I try to buy as little as possible made in China as they buy very little made here.I personally demand import controls and punitive taxes on all third world imports to save the economy asap.Bring on QE2,QE3,QE4,QE5,QE6,QE7,QE8,QE9,QE10,etc, make those $ an hour profit  Treasures of China,s worth less and less.They need us more than we need them.

Fri, 10/15/2010 - 20:27 | 654500 Arkadaba
Arkadaba's picture

Have you ever tried to buy clothes that were not made in China! Almost impossible unless you go for overpriced designer duds.

Seriously, both grandmothers knew how to sew - my mom - not so much. Whatever happens I do think there will eventually be a return to local economies even if temporarily. Time to start scouring Kijijii for those old Singer machines.

Fri, 10/15/2010 - 22:50 | 654789 Double.Eagle.Gold
Double.Eagle.Gold's picture

I wear nothing but Hawaiian Shirts, buy them from a US company that actually makes them in Honolulu.

Sat, 10/16/2010 - 19:23 | 655648 Arkadaba
Arkadaba's picture

You wear nothing but Hawaiian shirts - scary ;) Haven't you been arrested yet (joking).

Fri, 10/15/2010 - 17:53 | 654147 repo 105
repo 105's picture

All China has to do is call their Euro buddies and step in and buy the DX hard first thing Monday morning, the massive short squeeze and unwinds of the 98% bearish traders will take care of the rest. Sell into the panic and enjoy.

Fri, 10/15/2010 - 17:57 | 654157 silver surfer
silver surfer's picture

The Chinese consult the Oracle of change lets see what it says:)

IChing the book of change on currency war:

35. Chin / Progress

above Li The Clinging, Flame

below K'un The Receptive, Earth

Change at the top means:
Making progress with the horns is permissible
Only for the purpose of punishing one's own city.
To be conscious of danger brings good fortune.
No blame.
Perseverance brings humiliation.

This leads to


16. Yu / Enthusiasm

above Chên The Arousing, Thunder

below K'un The Receptive, Earth

Sat, 10/16/2010 - 11:38 | 655106 tip e. canoe
tip e. canoe's picture

did you actually throw the coins to get this reading?

Fri, 10/15/2010 - 17:58 | 654158 potatomafia
potatomafia's picture

question?  Why are we (usa) so concerned about our exports when we cannot even produce enough for our own consumption??  Why dont we focus on producing enough for our own consumption, and then worry about exports..  I think the last thing we need to worry about is having an overcapacity of production with no one to sell it to...

Fri, 10/15/2010 - 18:00 | 654167 mynhair
mynhair's picture

Answer:  cuz the goobermint and Fed are full of a bunch of morons.

Fri, 10/15/2010 - 18:35 | 654262 gunsmoke011
gunsmoke011's picture

Because the U.S. does not produce anything worth buying. Take our auto industry – nobody wants to buy them because they are of far lower quality than the Germans and Japanese manufacture. We no longer make any electronics, You want to buy some “Designer” jeans for 250 a pair – most people cannot afford them. The only thing America makes anymore are weapons designed to kill more people more efficiently – but when it comes to the day to day things that you consume or need to get by – we simply do not make them anymore. We are a service based economy where everyone is a “Consultant” or in the “Financial Services” Industry trading pieces of paper and hoping we can sell it tomorrow to someone who will pay more for it than we paid today. Really a pretty worthless enterprise when you stop to think about it.

Fri, 10/15/2010 - 22:39 | 654767 espirit
espirit's picture

I would really, really, really like to have some ordnance.

Uh, just in case ya know.

Sat, 10/16/2010 - 07:40 | 654933 overmedicatedun...
overmedicatedundersexed's picture

gunsmoke, you do not understand the brilliant CFR plan to change America into a Paper manipulator, high skilled intellectual, and financial center. Dependent on production of hard goods off was a great plan it should have worked it could have worked if only we did more of it and had better leaders..we failed FREE TRADE, and it's all the greedy public's screw them.

where have I heard that before..keep printing paper, signing paper, sending paper to all those barbaric countries who just make stuff.sarc off.

Fri, 10/15/2010 - 18:01 | 654170 alien-IQ
alien-IQ's picture

And THAT, ladies and gentlemen, is what we call a bitch slap!

Fri, 10/15/2010 - 18:02 | 654175 dhussey
dhussey's picture

"But the United States is an exception because the dollar serves as the world currency."

I just hope our guns haven't rusted to much by now... or that anyone is even still willing to fight to keep that "exception" in place, pretty much the staples that are hold this skyscraper together right now...

When the levee breaks ... oh boy...

Fri, 10/15/2010 - 18:05 | 654184 mynhair
mynhair's picture

Why print Treasuries, if the Fed is just going to take them in?
Why bother with this accounting BS? Just say they will be issued, and immediately defaulted on.
One sentence on the Web at 500 billionth the cost.

Fri, 10/15/2010 - 18:08 | 654190 The Alarmist
The Alarmist's picture

Debasing the currency seems like a rather expensive way to boost exports. I would have thought it might be better to make stuff that the rest of the world wants, but apparently the only commodity made with pride in the good ole USA these days is mountains of paper ... Deeds, Affidavits, 2000+ page financial reform bills, and trillions of FedNotes.

But there is still time for O and the gang to round up all that spare labour in the cities, march them into the fields and start growing rice for Asia.

Sat, 10/16/2010 - 11:51 | 655117 i-dog
i-dog's picture

The cotton plantation awaits!

Sat, 10/16/2010 - 19:41 | 655663 tip e. canoe
tip e. canoe's picture

not cotton dog, hemp baby hemp.

Fri, 10/15/2010 - 18:13 | 654200 Clancy
Clancy's picture

Currency Wars is an awesome book.


Currency Wars 2 is so awesome it will give you a brain anneurism.

Fri, 10/15/2010 - 18:16 | 654211 Quantum Nucleonics
Quantum Nucleonics's picture

In an overtly political move, Treasury postpones manipulator report till whenever, i.e. after the election so Democrats in high unemployment, manufacturing districts don't get beat over the head with Timmy's failure to brand China a currency manipulator.  (Of course Treasury can't label China as a manipulator after getting brushed back from the plate in this weeks weak treasury auctions.)

Wish I could do that in college or work, "Yea, I'm postponing your deadline on handing in that term paper/report till, eh, whenever."

Speaking of currency manipulators, shouldn't Treasury also label Japan, the EU, and itself as manipulators?

Fri, 10/15/2010 - 18:18 | 654216 mynhair
mynhair's picture

Can we export lawyers yet?   Pretty please?

Fri, 10/15/2010 - 19:41 | 654403 cxl9
cxl9's picture

Give it time, but yes. A lot of "back office" legal work: research, contract preparation, transcribing, document review, etc., is already being outsourced to other countries, particularly India (for their cheap, English-speaking labor). Expect this trend to continue, and the outsourced services to climb further up the "value" chain. But the end result might not bring the benefits you would hope: as the price of legal services falls, the result will be more supply, not less.

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