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China Takes Another Stab At The Dollar, Launches Currency Swap Line With France

Tyler Durden's picture




 

One more domino in the dollar reserve supremacy regime falls. Following the announcement two weeks ago that "Australia And China will Enable Direct Currency Convertibility", which in turn was the culmination of two years of Yuan internationalization efforts as summarized by the following: "World's Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade", "China, Russia Drop Dollar In Bilateral Trade", "China And Iran To Bypass Dollar, Plan Oil Barter System", "India and Japan sign new $15bn currency swap agreement", "Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says", "India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees", and "The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap", China has now launched yet another feeler to see what the apetite toward its currency is, this time in the heart of the Eurozone: Paris. According to China Daily, as reported by Reuters, "France intends to set up a currency swap line with China to make Paris a major offshore yuan trading hub in Europe, competing against London." As a reminder the BOE and the PBOC announced a currency swap line back in February, in effect linking up the CNY to the GBP. Now it is the EUR's turn.

More on this curious move by the Bank of France and the PBOC from Reuters:

"The Bank of France has been working on ways to develop a RMB liquidity safety net in the euro area with due consideration of a supporting currency swap agreement with the People's Bank of China," Noyer told the English-language newspaper.

 

The yuan's internationalization and bilateral financial cooperation could be among the main topics during French President Francois Hollande's visit to China in late April, the paper said.

 

French Foreign Minister Laurent Fabius paid a two-day visit to Beijing this week.

 

The planned swap line would be the latest in a string of bilateral currency agreements that China has signed in the past three years to promote use of the yuan in trade and investment.

 

It followed a similar step by the Bank of England to set up a reciprocal three-year yuan-sterling swap line with China.

It appears that France may be a far more strategic European hub for China than London:

In 2011 and 2012, the total value of offshore yuan-denominated bonds issued by French corporates was nearly 7 billion yuan, twice the value of bonds issued by their British counterparts, according to a report by Paris Europlace, an association that supports the French financial industry and promotes Paris as an international financial center.

 

A survey by the association, the China Daily reported, also showed that 50 percent of French companies have used yuan-denominated products and services.

 

European and U.S. officials have for years been pressing China to do more to open up the yuan to international markets, saying its artificial weakness was one of the key imbalances of the global economy.

Sadly, the last sentence is dead wrong. The question why China has been scrambling to internationalize the CNY has nothing to do with succumbing to Western demands at reflating its currency to appreciate it and thus to push its current account even lower in the country with the shallowest stock market and the most bank deposits (i.e., most prone to sudden, abrupt bursts of inflation), nearly double those of the US, and everything to do with preparing the world for the "final monetarism frontier", which will take place when the BOJ's reflation experiment fails, and last remaining source (at least before Africa, but that is the topic for another day) of credit formation - the PBOC - finally ramps up.

As we pointed out a few days ago when we discussed the accelerating Chinese credit impulse and its soaring 240% debt-to-GDP ratio:

What should become obvious is that in order to maintain its unprecedented (if declining) growth rate, China has to inject ever greater amounts of credit into its economy, amounts which will push its total credit pile ever higher into the stratosphere, until one day it pulls a Europe and finds itself in a situation where there are no further encumberable assets (for secured loans), and where ever-deteriorating cash flows are no longer sufficient to satisfy the interest payments on unsecured debt, leading to what the Chinese government has been desperate to avoid: mass corporate defaults.

 

At that point it will be up to the PBOC to do what the Fed, the ECB, the BOE and the BOJ have been doing: remove any pretense of money creation via the commercial bank complex (even if these are merely glorified government-controlled entities), and proceed to outright monetization of de novo created assets, thus flooding the system with as much money as is needed to preserve the illusion of growth. Naturally, with the Chinese stock market having proven itself to be a horrible inflation trap (and as a result the bulk of new levered money creation goes into real estate), the inflation explosion that would result would be epic.

And that, in a nutshell, is the reason why China is doing all it can to prepare for the moment when capital flows will soar once the PBOC no longer has the option to extend and pretend its moment of entry into the global reflation race. Yes, it will be caught between a rock (hyperinflation) and a hard place (a very hard crash landing), but the fact that neither of those outcomes has a happy ending will hardly stop the PBOC from at least preserving the alternative. That alternative will of course be to be ready and able to hit the switch when the BOJ's printer burns out, and someone else has to step in and fill its shoes in the global "money creation" strategy, which sadly is the only one the world has left.

Finally, the question then will be not if, or how long, the US Dollar will remain the world's reserve currency, when even the Developed world is forced to admit the PBOC's monetarist primacy over the Fed, but just how much unencumbered gold one has to hedge against what will be the final, global bout of hyperinflation, the one spurred by every single DM and EM central bank is forced to print for dear fiat status quo life, or else.

 

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Sat, 04/13/2013 - 21:54 | 3445732 Muessin
Muessin's picture

Wee fart in yooor jeneral direction, Ameréca!

Sat, 04/13/2013 - 22:19 | 3445772 Stuart
Stuart's picture

If the physical gold market in London was locked on Friday, as per this report, here is the smoking gun of an orchestrated takedown.   This needs to be exposed, if verified.

http://goldtrends.net/FreeDailyBlog?mode=PostView&bmi=1267250

Sat, 04/13/2013 - 22:19 | 3445774 SafelyGraze
SafelyGraze's picture

and in maine, they're declaring food independence

http://rickmick.com/sedgwick-maine-is-first-town-to-declare-total-food-s...

 

Sat, 04/13/2013 - 23:04 | 3445820 Ahmeexnal
Ahmeexnal's picture

The fact that Beijing made this deal with PARIS, and not with the ECB means one and only one thing: FRANCE IS BAILING OUT OF THE EURO AND GOING BACK TO THE FRANC.

Meanwhile, Rio Tinto's Kennecott mine has unexpectedly suffered a shutdown event. In a world where the state intervenes in the supply and demand (aka markets), this means the price of PMs will once again go down.

 

http://silverdoctors.com/10-of-us-annual-silver-supply-just-vaporized/

*BREAKING
4 million ounces of annual silver supply and 400,000 ounces of annual gold supply have just been vaporized landslided.
Rio Tinto’s Kennecott mine in Utah- the US’ 2nd largest silver mine and largest copper mine has just suffered a massive landslide which will likely shut down production at the mine for years as upwards of 1 billion tons of dirt and ore have collapsed into the basin. 
10% of US annual silver production just vanished. 

Sat, 04/13/2013 - 23:16 | 3445871 Peter Pan
Peter Pan's picture

This is called blowback!!

Sun, 04/14/2013 - 00:05 | 3445956 Supernova Born
Supernova Born's picture

Abuse it, you lose it.

Abused like a rented mule.

Sun, 04/14/2013 - 00:44 | 3445994 Rubbish
Rubbish's picture

I'm still trying to figure out when this whole thing blows.

 

I'll just keep making ammo.

Sun, 04/14/2013 - 07:48 | 3446206 Winston Churchill
Winston Churchill's picture

That depends on the Saudi's. and Emirates.An Iran escalation will give the

US an excuse for de facto ME occupations.Just a coincidence I'm sure that all

these distractions are blowing up elsewhere.Pax Americana is being stretched thin.

There are no coincidences in politics,especially geo politics.

Tyler is confirming my guesstimate of next year.They have to get the actual

trade settlement system up ,and running ,and proven for a year or so.

Sun, 04/14/2013 - 10:41 | 3446390 Fukushima Sam
Fukushima Sam's picture

Time for team US to play that North Korea card to destabilize Asia (China)?

Sun, 04/14/2013 - 11:02 | 3446444 Winston Churchill
Winston Churchill's picture

Or is team China doing it to give team USA more than it can handle ?

The disputed island with Japan, and now this ?

We will see who is pulling whose strings.

The Chinese appear to be playing GO, and the US checkers at this point IMO.

Sun, 04/14/2013 - 11:02 | 3446440 smlbizman
smlbizman's picture

these currency deals have been going on....what i question is the feds and their mouthpiece congress, non-response  to all this....

Sun, 04/14/2013 - 11:14 | 3446482 jekyll island
jekyll island's picture

At least China has all ready nationalized their banks.  That will spare the sheeple the TBTF reach around explanation TPTB used in the US

Sat, 04/13/2013 - 23:29 | 3445889 strannick
strannick's picture

A capitalist country in a currency swap with a communist country? China is lowering its standards.

Sat, 04/13/2013 - 23:39 | 3445907 akak
akak's picture

Well, I have always heard that the French invented 69.

Sun, 04/14/2013 - 06:15 | 3446159 Oldrepublic
Oldrepublic's picture

soixante-neuf

Sun, 04/14/2013 - 09:06 | 3446280 Davalicious
Davalicious's picture

My GF always thought that soixante-neuf was a bit of a mouth full.

Sun, 04/14/2013 - 09:10 | 3446284 knukles
knukles's picture

And auto-fellating

Sun, 04/14/2013 - 01:33 | 3446036 Joe A
Joe A's picture

Correction: France has a socialist model for its population and China has a communist model for hers. This however does not apply for their respective elites.

Sun, 04/14/2013 - 04:12 | 3446099 The Big Ching-aso
The Big Ching-aso's picture

The Froguan. A currency destined to leap over all others from the fire into the frying pan.

Sat, 04/13/2013 - 23:48 | 3445925 paddy0761
paddy0761's picture

Ahmeexnal

While this might be significant for silver prices, it is not so much so for gold. The high stock to flow ratio for gold makes annual production variance less significant for price.

http://youtu.be/M9A7CZgPld8?t=1m36s

 

Sun, 04/14/2013 - 00:02 | 3445952 Muddy1
Muddy1's picture

Thanks for the link, the pictures were VERY impressive.  Thankfully nobody was killed, or hurt.  

Sun, 04/14/2013 - 00:18 | 3445972 Abi Normal
Abi Normal's picture

Shutdown temporary...will still be able to mine and wont affect all ops.  Life goes on, manipulations and all...ugh!!! Not even a disaster is negative news...moar higher DOW/S&P, moar crushing of PMs, as that would be the true price discovery to expose Ben's real shorts...crayon pants and all, that batrastard!

Sun, 04/14/2013 - 05:06 | 3446118 Jendrzejczyk
Sun, 04/14/2013 - 00:58 | 3446007 seek
seek's picture

Rio doesn't happened to be owned by someone named Francisco D'Anconia, does it?

Sun, 04/14/2013 - 01:05 | 3446013 groundedkiwi
groundedkiwi's picture

not neccessarily. France still has a Franc that it deals in. 

http://m.thinkafricapress.com/?url=http%3A%2F%2Fthinkafricapress.com%2Fe...

Sun, 04/14/2013 - 07:17 | 3446189 Urban Redneck
Urban Redneck's picture

The BDF is Central Bank for TWO non-Euro franc currencies, both of which are used by countries whose #1 & #2 trade and FDI partners tend to be #1 China & #2 France (just more cutting out the extraneous NY bankster middleman, and more bang for the buck coupled with less headline risk then a dozen bilateral treaties that would feed into the China is taking over Africa meme)

Sun, 04/14/2013 - 01:17 | 3446026 Kirk2NCC1701
Kirk2NCC1701's picture

So, no BTFD, with nothing left to buy?

Sun, 04/14/2013 - 05:14 | 3446122 Ghordius
Ghordius's picture

Because otherwise the Bank of France is a mere subsidiary and puppet of the ECB?

DUH

When I write of the EuroSystem/ECB as being a (loose) confederation what does your highly hierarchical brain understand? Cricket music?

It ain't the FED, it ain't the US. Get it in your head, you have the wrong comparison framework for Europe

Sun, 04/14/2013 - 09:49 | 3446308 dow2000
dow2000's picture

Who is John Galt?

Sun, 04/14/2013 - 10:22 | 3446355 Blano
Blano's picture

Reduction of supply makes prices go DOWN????  Man I really need to bone up on this new math.

Sun, 04/14/2013 - 11:09 | 3446469 Rossalgondamer
Rossalgondamer's picture

Landslide = mattress?

Sun, 04/14/2013 - 12:48 | 3446686 Jack Burton
Jack Burton's picture

This mine being shut down by disaster is good news for my area. Northern Minnesota is home to newly discovered large copper, nickel and possible silver deposits, on the order of Canada's Sudbury deposits.

Already several mines are approved and wil soon begin development. Including what will be the world's largest underground mine. The projects are in the pipeline and physical working of the deposits are about to begin. Meanwhile the state of MN is fast tracking approval for more mines.

Any production short fall from this mine out west will only juice the profits of the new mines opening here. We will gladly pick up the slack!

Sat, 04/13/2013 - 22:50 | 3445821 Xibalba
Xibalba's picture

China>USSA

Sat, 04/13/2013 - 23:52 | 3445931 Schmuck Raker
Schmuck Raker's picture

@ SafelyGraze

This is a remarkably important development, as far as I'm concerned.

Thanks for the link, I hope more read it.

Sun, 04/14/2013 - 10:09 | 3446332 Mototard at Large
Mototard at Large's picture

I regularly do a coast crawl in New Brunswick, Maine and Vermont on the murdercycle.  I think this summer's trip might include a side trip to Sedgwick to see what the locals are up to.  Sounds interesting.

Sun, 04/14/2013 - 12:06 | 3446599 DosZap
DosZap's picture

and in maine, they're declaring food independence

http://rickmick.com/sedgwick-maine-is-first-town-to-declare-total-food-s...

 

This wont get far, they have regs in place to stop this.It's illegal.

Wait till the feddies crackdown on them.

 

Sat, 04/13/2013 - 22:49 | 3445819 Bicycle Repairman
Bicycle Repairman's picture

Thanks, Stuart.

Sat, 04/13/2013 - 22:51 | 3445822 PeakOil
PeakOil's picture

Fascinating.

London physical Gold market "bitcoined" - would not surprise me in the least. Anyone connected to the London market care to comment?

Sat, 04/13/2013 - 23:04 | 3445845 Mine Is Bigger
Mine Is Bigger's picture

Thank you.  It was an interesting read.

Sat, 04/13/2013 - 23:28 | 3445884 Stuck on Zero
Stuck on Zero's picture

One by one China is pushing direct Yuan trade with nations all over the world.  Soon Obama will announce dollar yuan swap line. </sarc>

 

Sun, 04/14/2013 - 01:04 | 3446010 palmereldritch
palmereldritch's picture

Snap quiz!

Name the Steven Seagal movie title that currently does not describe the state of the US dollar:

http://www.imdb.com/name/nm0000219/?ref_=fn_al_nm_1

 2009/I The Keeper (producer)

  2009 Driven to Kill (video) (executive producer)

  2009 Against the Dark (video) (producer)

  2008 Kill Switch (video) (executive producer)

  2008 The Marker (video) (producer)

  2007 Urban Justice (video) (producer)

  2007 Flight of Fury (video) (executive producer)

  2006 Attack Force (video) (producer)

  2006 Shadow Man (video) (producer)

  2006 Mercenary (video) (executive producer)

  2005 The Foreigner: Black Dawn (video) (producer)

  2005 Dragon Squad (executive producer)

  2005 Today You Die (video) (producer)

  2005 Submerged (video) (executive producer)

  2005 Into the Sun (producer)

  2004 Out of Reach (video) (executive producer)

  2003 Belly of the Beast (video) (producer)

  2003 Out for a Kill (video) (producer)

  2003 The Foreigner (producer)

  2002 Half Past Dead (producer)

  2001 The Path Beyond Thought (video documentary) (executive producer)

  2000 Prince of Central Park (producer)

  1998 The Patriot (producer)

  1998 Not Even the Trees (producer)

  1997 Fire Down Below (producer)

  1996 The Glimmer Man (producer)

  1995 Under Siege 2: Dark Territory (producer)

  1994 On Deadly Ground (producer)

  1992 Under Siege (producer)

  1991 Out for Justice (producer)

  1990 Marked for Death (producer)

  1988 Above the Law (producer)

 

....and why

Sat, 04/13/2013 - 22:30 | 3445788 ImReady
ImReady's picture

The slope is getting slipperier. 

Sat, 04/13/2013 - 23:46 | 3445921 willwork4food
willwork4food's picture

Please enlighten me why this article is here, besides the obvious reason to make the US hate China even more then Iraq when they were taking babies out of their incubators. Oh, wait Iraq wasn't doing that, but I digress.

Isn't FX a direct form of trading with another countries currency? If you are long EUR/USD then you are a tourraist and shorting the USD..right?

Sun, 04/14/2013 - 00:28 | 3445981 myne
myne's picture

This is exciting!

Several major currencies competing to be the second to collapse!

It's like watching a game of chicken between submarine captains where crush depth is relative to how hard they ram eachother and how much higher their opponents are.

It doesn't get much more ridiculous.

 

Sat, 04/13/2013 - 21:57 | 3445734 Yen Cross
Yen Cross's picture

  http://www.google.com/finance?q=USDCNY    China Yuan Hits Record High Against the Dollar - WSJ.com

  China is trying to increase internal demand. A strong yuan helps stave off inflation and increases purchasing power for importers. The fed. is f**ked. This is a slow motion train wreck.  :-(

Sat, 04/13/2013 - 22:06 | 3445747 fonzannoon
fonzannoon's picture

the argument goes ( i thought) that as other countries arrange for trade in currencies other than dollars, those dollars come flooding back to the U.S in the form of massive inflation. 

Something is not matching up.

Sat, 04/13/2013 - 22:08 | 3445750 Tyler Durden
Tyler Durden's picture

The final frontier: the Chinese "wealth effect" (but only priced in CNY) - coming to the monetarist system in 2014. What's that? Soaring pork inflation - why look over there, the SHCOMP just hit new all time highs!

Sat, 04/13/2013 - 22:33 | 3445790 ekm
ekm's picture

There has never been a "china miracle". It's just a MSM invention.

The legend goes that 300 million people were taken out of subsistence living in villages and became middle class in the cities.

Seeing how those workers at Foxconn are "middle class", I'd say the word SLAVE depicts the situation a lot better.

 

The truth is that 40 million people living on the shoreline where all the ports are who living very comfortably.

The rest of of the population is enslaved (at Foxconn at al) to maintain the lifestyles of these 40 million, nothing different from former communist russia and eastern europe.

Sat, 04/13/2013 - 22:41 | 3445804 newengland
newengland's picture

Add the pollution, Aids epidemic, and the Politburo's corruption. The China trade...with a Rothschild zionist central bank. 

Sat, 04/13/2013 - 22:54 | 3445810 ekm
ekm's picture

The whole system is based on some kind of slavery.

 

1) The only way for china to grow is to import commodities.

2) But the only way to import commodities is to overproduce anything at cheap price for export.

3) But the only way to produce anything cheap is to employ almost slave labor.

 

1) So, if people no longer want to be enslaved for nothing, they demand higher wages (which is now), then:

2) Higher wages means no more cheap products.

3) No more cheap products means reduction of commodities imports.

4) Reduction of commodities imports means no growth.

No growth means, people will have to go back to susbsistence living in villages, as opposed to factory slavery.

 

Choose one, no other option. Typical chinese.

Sat, 04/13/2013 - 22:59 | 3445832 Ahmeexnal
Ahmeexnal's picture

Now don't be a party pooper and please adhere to correct PC language.

We no longer tolerate the usage of the term "slavery".  The appropiate term which the commitee has approved for general usage is now "collectivism".

 

Sat, 04/13/2013 - 22:58 | 3445833 ekm
ekm's picture

LOL

Sun, 04/14/2013 - 00:14 | 3445964 lewy14
lewy14's picture

Since "the government" is just "us" - what "the government" does is just "what we choose to do together" - then if the government owns our smelly butts, then we're truly free!

I get it now. Totally.

Sun, 04/14/2013 - 01:37 | 3446038 Joe A
Joe A's picture

And your children are theirs but they don't call them 'child slaves' of course.

Sun, 04/14/2013 - 02:41 | 3446066 Die Weiße Rose
Die Weiße Rose's picture

that ding dong Tory bitch Margaret Thatcher used to call those slave-markets -

the newly reformed and democratic "free" global market-economy".

ding dong the bitch is dead !

hurrah !!!

the wizard of Oz

Sun, 04/14/2013 - 10:48 | 3446411 Agstacker
Agstacker's picture

Some people believe that the Wizard of Oz was actually an allegory of bimetalism (in the book, Dorothy had silver shoes, to walk on the 'yellow brick road') that leads to prosperity.

Sun, 04/14/2013 - 08:33 | 3446248 beefman
beefman's picture

or middle class

Sat, 04/13/2013 - 23:04 | 3445846 Bicycle Repairman
Bicycle Repairman's picture

How can China import any commodities, if the finite earth has been used up?

This message brought to you by your friends at www.peakeverything.com.

/sarc

Sat, 04/13/2013 - 23:08 | 3445855 ekm
ekm's picture

Peak Commodity legend is spread only by people who sit on top of those commodities.

Hence, Saudi Arabia loves the peak commodity idiocy, so does australia (or even Canada shhhhhhhhhh)

Sun, 04/14/2013 - 00:29 | 3445984 oddjob
oddjob's picture

Ever declining ore grades for all metals tell a different story.

Sun, 04/14/2013 - 00:54 | 3446002 ekm
ekm's picture

I'm talking about the globe. I don't think ore grades are declining all over the globe

Sun, 04/14/2013 - 03:31 | 3446087 akak
akak's picture

In fact, they are.

Most gold ores mined today, for example, would have been considered little better than tailings or gangue 50 or 60 years ago.

Sun, 04/14/2013 - 15:04 | 3447148 Real Estate Geek
Real Estate Geek's picture

Agreed.  And we wouldn't even bother to mine most taconite if we hadn't used up our hematite deposits back in WW2.

Sun, 04/14/2013 - 00:53 | 3445996 myne
myne's picture

I wouldnt bet on it.

Production is increasing every single year.

 

Using wikipedia, you can make a spreadsheet like this that forecasts when we run out of all known reserves.

Edit Goddamn formatting. It pasted nicely, but it displays like shit.

 

Year Coal production (m tonnes) Increase % Global reserves

2003 5301 - -

2004 5716 7.83 -

2005 6035 5.58 -

2006 6342 5.09 -

2007 6573 3.64 -

2008 6795 3.38 860938

2009 6880 1.25 854058

2010 7254 5.44 846804

2011 7695 6.08 839109

Average production increase - 4.79 -

Forecast

2012 8063 4.79 831046

2013 8449 4.79 822597

2014 8853 4.79 813743

2015 9277 4.79 804466

2016 9721 4.79 794745

2017 10186 4.79 784559

2018 10674 4.79 773885

2019 11184 4.79 762701

2020 11720 4.79 750981

2021 12280 4.79 738701

2022 12868 4.79 725833

2023 13484 4.79 712349

2024 14129 4.79 698220

2025 14805 4.79 683415

2026 15514 4.79 667901

2027 16256 4.79 651645

2028 17034 4.79 634611

2029 17849 4.79 616761

2030 18703 4.79 598058

2031 19598 4.79 578460

2032 20536 4.79 557924

2033 21519 4.79 536405

2034 22549 4.79 513856

2035 23628 4.79 490228

2036 24758 4.79 465470

2037 25943 4.79 439527

2038 27185 4.79 412342

2039 28485 4.79 383857

2040 29849 4.79 354008

2041 31277 4.79 322731

2042 32774 4.79 289957

2043 34342 4.79 255615

2044 35985 4.79 219630

2045 37707 4.79 181923

2046 39512 4.79 142411

2047 41403 4.79 101008

2048 43384 4.79 57624

2049 45460 4.79 12164

2050 47635 4.79 -35471

 

Sun, 04/14/2013 - 00:58 | 3446004 ekm
ekm's picture

Therea are unknown reserves

Sat, 04/13/2013 - 23:08 | 3445856 Ahmeexnal
Ahmeexnal's picture

The truth of the matter is that there has been no oil for several years now. Since there are no more dinosaurs roaming the earth, and oil is entirely the byproduct of dinosaurs, we have been living not even on the fumes of oil, but on a brand new invention brought about by the very same people who creaded paper gold: paper oil.

This is what China has been buying: paper oil. Paper, by its very own thermodynamic properties, is combustible, hence also a souce of energy.

Sat, 04/13/2013 - 23:10 | 3445858 ekm
ekm's picture

There is plenty of oil, just Saudis and Chavez wanted to make the world believe that there's not much left, but it's backfiring because it has led to others looking for oil elsewhere like oceans, fracking etc.

Sat, 04/13/2013 - 23:14 | 3445866 Ahmeexnal
Ahmeexnal's picture

My fault, my /sarc key is probably the one that has received more hits on my keyboard and hece is not functioning properly.

BTW, there is waaaaaay more oil than you can imagine.

I present to you: BitOil !!!

DIGITAL OIL, ENCRYPTED, AS GOOD AS REAL OIL -ACTUALLY EVEN BETTER, SINCE IT HAS NO NEGATIVE EFFECTS ON THE ENVIRONMENT, FULLY BACKED BY AN ALGORITHM (BASED ON THE EQUATION OF STATE OF OIL), AND CONTRARY TO BITCOIN, BITOIL CAN BE MINED IN UNLIMITED AMOUNTS.

Sat, 04/13/2013 - 23:20 | 3445874 ekm
ekm's picture

Joking aside, chinese have been quite smart doing barter with Iran, oil for plastic products, washing machines etc, thus.......bypassing USD....again.

http://www.zerohedge.com/news/china-and-iran-bypass-dollar-plan-oil-barter-system-and-deeper-dive-iranian-oil-bourse

 

Sun, 04/14/2013 - 00:17 | 3445970 lewy14
lewy14's picture

Inspired.

Sat, 04/13/2013 - 23:17 | 3445873 PeakOil
PeakOil's picture

At what cost? When EROEI gets to 1 it is game-over for oil.

Next?

Sat, 04/13/2013 - 23:38 | 3445879 ekm
ekm's picture

If the earth spends more energy to get less energy, the earth would have shrunk.

 

As for any calculation, garbage in, gargabe out.

Sat, 04/13/2013 - 23:28 | 3445893 Bicycle Repairman
Bicycle Repairman's picture

I just looked out my back door.  No dinosaurs.

We are so fucked.

Sat, 04/13/2013 - 23:39 | 3445908 ekm
ekm's picture

LOL

Sun, 04/14/2013 - 00:58 | 3446006 Mine Is Bigger
Mine Is Bigger's picture

Don't worry.  I see plenty of them here in NYC!

Sun, 04/14/2013 - 08:08 | 3446221 unrulian
unrulian's picture

there's plenty...just watch cpac

Sun, 04/14/2013 - 04:11 | 3446100 Fiat Envy
Fiat Envy's picture

Try looking at Walmart.

Sat, 04/13/2013 - 23:44 | 3445917 Freddie
Freddie's picture

I stopped watching the lying TV/Hollywood/Operation Mockingbird shit years ago. The leftist media loves China and the "China miracle" because the Chinese are disarmed slaves.   The govt can steal the Chinese farmers land, beat them up, kill them, ensalve them.  Obam's Amerika.  F TV F Hollywood and F O-Voters.

Sun, 04/14/2013 - 04:41 | 3446060 Kirk2NCC1701
Kirk2NCC1701's picture

ekm, newsflash for you... Spent enough time in China and its factories to know they have a better life than the hamburger flippers and so-called "wetbacks" (disgusting term!) in the so-called "Land of The Free".

/ Aaah! The truth, it burns!" /s

p.s. Have no idea how this post ended up here, when I clicked to respond to elm's comment on Chinese slavery on p.1.

Sun, 04/14/2013 - 06:42 | 3446177 Oldrepublic
Oldrepublic's picture

re kirk2

Factory Girls is a recent book by a foreign correspondent in China which explains how factory work is hard but it leads in many cases to a better life.

millions of people have left poverty behind and entered the Middle Classes

Sun, 04/14/2013 - 14:53 | 3447125 ekm
ekm's picture

Correct. They've asked for higher wages, they got higher wages, but they need commodities to grow.

As I said, higher wages = less commodities imports = no growth = back to poverty.

Sun, 04/14/2013 - 08:15 | 3446233 bunnyswanson
bunnyswanson's picture

Well, i just wanted to point out that the reason they are called "wet backs" is because the swim across the Rio Grande resulted in their getting soaked. If they were stopped by enforcement officers, the backs of their shirts would be touched to see if they were wet (damp material).  Gathering up those with the "wet backs" was the order.

Incident from many years ago.  Boyfriend was a renegade.  He was 18 and wild/crazy and did not pay the speeding tickets.  He was forced to do community service with a chain gang of various people in central California.  The men were instructed to mop up a floor where a water line burst at a park.  Two industrial wet/dry vacuum was nearby so my young friend said:  "Let the wet vacs do it."  A few of the others happened to be Mexicans and what they heard was:  "Let the wet backs do it."  Laughter erupted when he explained.

 

Sun, 04/14/2013 - 14:55 | 3447130 ekm
ekm's picture

As I said, again and again. They are not liking the slavery and have asked for higher wages. But higher wages means less commodities imports, which means no growth, which means back to poverty.

 

Bottom line:

Slavery work = Growth

Increase of standard of living = no growth = poverty

 

Choose one.

Sun, 04/14/2013 - 08:00 | 3446212 unrulian
unrulian's picture

Death....or Exile?

Sat, 04/13/2013 - 23:01 | 3445839 BigDuke6
BigDuke6's picture

It didn't really hit me how bad things could get until I read this about the Chinese buying european debt

http://www.telegraph.co.uk/finance/personalfinance/investing/9965215/Tim...

Gulp

Sun, 04/14/2013 - 00:27 | 3445982 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Good catch, big guy.  I feel better and better about my gold.

Sun, 04/14/2013 - 09:46 | 3446305 Room 101
Room 101's picture

Good catch @BigDuke6.  Gulp is right. 

Sat, 04/13/2013 - 22:45 | 3445808 Harbanger
Harbanger's picture

There's something disconcerting about a country that has a guy who klled 70 million of their own citizens on their currency.

Sat, 04/13/2013 - 22:46 | 3445812 ekm
ekm's picture

Read my comment further down.

Sat, 04/13/2013 - 22:54 | 3445823 booboo
booboo's picture

Well we have Hamilton on ours and his love interest the Central Banks are killing the world.

Sat, 04/13/2013 - 23:01 | 3445837 Yen Cross
Yen Cross's picture

     What currency? The yuan is a joke! 

  The 'yuan' is nothing more than a guage of how far the West has digressed. ( long Moon Base-1)

Sat, 04/13/2013 - 23:14 | 3445864 Harbanger
Harbanger's picture

The yuan isn't a joke, it's a weapon.  It's been purposely undervalued which has cost millions of jobs and helped de-industrialize the US.

Sat, 04/13/2013 - 23:24 | 3445881 Yen Cross
Yen Cross's picture

    I couldn't agree more Harbanger.   China has exploited exports to the "dead Ship" level, and now their last best chance is to let their precious"YUAN" appreciate.

Sat, 04/13/2013 - 23:40 | 3445909 screw face
screw face's picture

"There's something disconcerting about a country that has a guy who killed 70 million of their own citizens on their currency".

Read, 'On China'  by (Jah forbid) Henry Kissinger, did i say that, reveals insight regarding, the great dragon.

Have you heard about the latest i pad accessory, auto inflating, flotation devices.

Sun, 04/14/2013 - 09:53 | 3446316 Stuck on Zero
Stuck on Zero's picture

Congress and the Whitehouse deindustrialized the West.

 

Sun, 04/14/2013 - 06:36 | 3446176 BattlegroundEur...
BattlegroundEurope2011's picture

What has the FED been doing for the last 20years?

 

Sat, 04/13/2013 - 23:21 | 3445868 akak
akak's picture

 

There's something disconcerting about a country that has a guy who klled 70 million of their own citizens on their currency.

That is what you call typical Chinese Citizenism hypocritizenism. 
Its duplicitous and blobbing-up nature is eternal.

Sat, 04/13/2013 - 23:44 | 3445916 Anusocracy
Anusocracy's picture

So Mao killed four times the percentage of the population as Lincoln did. Yippee skippy.

Both of them were evil.

Sun, 04/14/2013 - 00:29 | 3445965 Harbanger
Harbanger's picture

You're equating the US Civil war to Mao's murder of 70 million of his own people through starvation, forced labor and executions?   Besides communism, what exactly do you like about Mao the visionary?

Sun, 04/14/2013 - 09:50 | 3446312 Room 101
Room 101's picture

More to the point, besides destroying the south, what do you like about lincoln the tyrant? 

Sat, 04/13/2013 - 23:46 | 3445924 Anusocracy
Anusocracy's picture

So Mao killed four times the percentage of the population as Lincoln did. Yippee skippy.

Both of them were evil.

Sat, 04/13/2013 - 23:57 | 3445944 Freddie
Freddie's picture

Abe Lincoln only murdered 1.1 million for the European bankster families. He then became a possible problem and they got rid of him.

Sat, 04/13/2013 - 22:38 | 3445801 newengland
newengland's picture

The poisoned chalice passes to China...

Sun, 04/14/2013 - 00:00 | 3445948 The Heart
The Heart's picture

If ZH had the investigative tools and arrest powers the fbi had, and the top of the pyramid was not corrupted, it would be the world's greatest crime solving organization on the planet. ZH Patrol! It only proves that there is no real law and order and thus, just another waste of taxpayers money.

Dead banks don't bark!

 

Sat, 04/13/2013 - 22:12 | 3445755 Yen Cross
Yen Cross's picture

      Takes time Fonz. China is the largest holder of UST behind the Fed. Japan is is a distant second, with around [1 $Trillion]. Everyone is dipping their toes in the water, so as not to make big ripples.

Sat, 04/13/2013 - 22:16 | 3445765 fonzannoon
fonzannoon's picture

it just seems so telegraphed. I totally get it, and it makes all the sense in the world. The fed has to know this is where it's going, I wonder what they will do about it.

Awesome to see Tyler put a time stamp on it. 

Sat, 04/13/2013 - 22:21 | 3445778 Yen Cross
Yen Cross's picture

    The Tylers are Bad Asses. Z/H is beacon of light in a class 5 hurricane. I'll bet every Rotten Dictator in the world reads Z/H, and goes batshit crazy that the serfs are made aware.

Sat, 04/13/2013 - 22:41 | 3445803 ekm
ekm's picture

It's a lot simpler than that.

 

If country X prints money well and above the demand for that money there are only two consequences:

1) Hyperinflation, IF THE MONEY IS ACCEPTED by the population

2) Rejection to use that money, IF THE MONEY IS NOT ACCEPTED.

 

The 2nd is happening with USD. On orders from both dems and repubs, the Fed has printed like crazy since 2000 dot.com crash, hence creating reserves in the process.

 

Reserves = Money cemetery = Money nobody wants, otherwise why would there be any reserves?

 

The Fed has trillion on its balance sheet, which means has trillions of dollars nobody wants, hence currency swaps bypassing USD

Sat, 04/13/2013 - 22:53 | 3445825 Yen Cross
Yen Cross's picture

     EKM, I think it's high time you enter politics and clean house! Your second calling is beckoning. +1 my friend

Sat, 04/13/2013 - 22:57 | 3445829 ekm
ekm's picture

You want me to become a government worker :)?

Sat, 04/13/2013 - 23:02 | 3445843 Yen Cross
Yen Cross's picture

  Does 'Emperor EKM' sound better? lulz

Sat, 04/13/2013 - 23:05 | 3445849 ekm
ekm's picture

Ah, the dream of every male.............

Sun, 04/14/2013 - 09:53 | 3446317 Room 101
Room 101's picture

You can sit around and bitch, or you can have fun with TPTB.  Politics is one avenue for having fun. 

Sun, 04/14/2013 - 12:25 | 3446633 willwork4food
willwork4food's picture

Emperor ekm: {{Yawns & claps}} " I believe I will have the virgin tonight Yen Cross. Please prepare her"

Sat, 04/13/2013 - 23:33 | 3445899 Arkadaba
Arkadaba's picture

I thought that this would happen in 2008 or shortly afterwards with the beginning of the QE. It didn't. US still has the biggest military in the world. The country still has biggest GDP. 

I think the rest of the world is weary of the US dollar - but don't know .. . where the cracks will form

Sat, 04/13/2013 - 23:40 | 3445903 ekm
ekm's picture

Correct.

US Military has become like Benny's reserves. They are all over the world but ........not used.

 

If military is not used, nobody fears the military.....hence wars happen from time to time.

Sun, 04/14/2013 - 00:19 | 3445974 disabledvet
disabledvet's picture

well forget "attacking the dollar reserve currency status" (looks like France is getting ready to exit the euro)...is this a shot over the bow of US national security? "these things can spiral out of control and there is nothing anyone can do to put the genie back in the bottle." (Hunt for Red October.)

Sun, 04/14/2013 - 00:26 | 3445977 ekm
ekm's picture

If all the world goes with swaps, it's basically world barter, a crash of world trade, it's basically and really unending wars.

Sun, 04/14/2013 - 07:33 | 3446197 Urban Redneck
Urban Redneck's picture

No the whole world uses swaps right now for trade and can continue to do so, but the NY FED holds the extremely profitable and enviable title of sole tri-party agent.  The question is what does the US do when its sheeple can no longer ignore rising prices because inflation export trade becomes less profitable because of the loss of its monopoly? 

Sun, 04/14/2013 - 10:06 | 3446330 centerline
centerline's picture

I wager that change will happen rather quickly as well, compounding the problem.

Sun, 04/14/2013 - 11:55 | 3446557 oak
oak's picture

ur, well said, sir.

Sun, 04/14/2013 - 00:00 | 3445950 Schmuck Raker
Schmuck Raker's picture

Yen Cross, I think you're wrong. Japan now holds more UST than China.

I'm sure you are far more knowledgeable than I generally, but I think your data is lagging a bit.

Sun, 04/14/2013 - 02:32 | 3446064 Debugas
Debugas's picture

indeed ,China is finally figuring out that they are better off kicking out of their island lazy US "kaboo" consumer which produces nothing but chinese people have to work to feed it for empty promises (T-bills)

Sun, 04/14/2013 - 10:17 | 3446344 Mototard at Large
Mototard at Large's picture

With respect, I suggest this may not be the train wreck you believe.  At least not for China. The Chinese people have seen several fiat currencies come and go over their 5000 year history.  And they have seen PM based currencies come and go as well.

By contrast, the US Fed has been around for 100 years and has no experience or even a conception of what a fiat currency collapse looks like.  Nor is there any work that I am aware of that would suggest the Fed has a plan on how to deal with such a calamity.  Most current Fed policy appears to be based on a light reading of recent history and a lot of stuff done by quants and academics.

My suggestion here is that China can concieve of a fiat currency collapse as they have lived through it several times. As such, my interpretation is that they are actively playing both sides of the fence.  They will attempt to profit from the current monetary system and sustain it as long as they can as it is in their best interests to do so. However, they are also preparing to survive and take advantage of situation where the US dollar and US bonds lose their attractiveness as a reserve currency and a place of safe haven.

Train wreck for us, opportunity for them.

Sun, 04/14/2013 - 12:36 | 3446655 Winston Churchill
Winston Churchill's picture

Bingo.

The Chinese are not sure if there will be a deflationary collapse before hyperinflation

in the US.

They are keeping cash, and buyig gold, to hedge both ways.

They are going to pick up everthing for pennies on the dollar in either, or both events.

Sat, 04/13/2013 - 21:59 | 3445737 howenlink
howenlink's picture

I love it.

Sat, 04/13/2013 - 22:01 | 3445740 MrSteve
MrSteve's picture

And with whom would the French not swap bodily fluids if it felt good? The ECB is tied to the hip with the FED supporting eurolands' banks with branches in the USA. The FED has been liquifying those entities since 2008.

No one in Brussels is going to upset the sprouts by going rogue on the FED who is their only lifeline in a storm. The Low Countries and France are the new bellweathers in northern Euroland. Holland's banks are in dutch and the Belgians are divided between Flemish Dutch and Walloon French traditions and that is pure poison in this economically divisive era. Spain and the PIIGS are goners, who is next "Over There" as Cagney on film asked the musical George M. Cohan question..

Sat, 04/13/2013 - 22:32 | 3445779 Pure Evil
Pure Evil's picture

Maybe everyone missed this little flake of gold while only perusing the 10 oz gold nugget aisle......

"......alternative will of course to be ready and able to hit the switch when the BOJ's printer burns out, and someone else has to step in and fill its shoes in the global "money creation" strategy......"

Tsk, tsk, this implies collusion at the highest levels on both sides of the Pacific Rim.

Sat, 04/13/2013 - 22:26 | 3445782 orez65
orez65's picture

Hollander is a socialist.

His behavior does not need to make sense.

Sun, 04/14/2013 - 12:00 | 3446586 bichat
bichat's picture

Who is Hollander?!

Sat, 04/13/2013 - 22:05 | 3445745 newengland
newengland's picture

Friday was another desperate attempt to defend the USD against all alternatives.

Ho hum. No matter. I'd still rather be here than slave camp China, and dystopia France. 

Buy gold, silver, land. Defend the Constitution.

Sat, 04/13/2013 - 23:44 | 3445920 BigDuke6
BigDuke6's picture

I smell the squid

“The first thing you need to know about Goldman Sachs is that it's
everywhere. The world's most powerful investment bank is a great vampire
squid wrapped around the face of humanity, relentlessly jamming its blood
funnel into anything that smells like money”

- journalist Matt Taibbi, profiling the bank for Rolling Stone magazine in
2009

Sun, 04/14/2013 - 11:09 | 3446468 TeamDepends
TeamDepends's picture

Amen.  This is precisely why we started the chain of Aliens quotes on another thread.  This fight is going to be brutal.  Our enemy is both ugly and completely without empathy.

Sat, 04/13/2013 - 22:08 | 3445749 Stuart
Stuart's picture

The SOBs locked out the physical buyers of gold on Friday in London to prevent them from taking advantage of the fire sale and deny their support of the price.   Friday was a total market hatchet job.  A planned take down.   I want heads to roll.   This crap market rigging has to stop.   Read this.  Make sure no sharp object near by. 

http://goldtrends.net/FreeDailyBlog?mode=PostView&bmi=1267250

Sat, 04/13/2013 - 22:27 | 3445787 Pure Evil
Pure Evil's picture

Yep, looks like a shit show fer shure. Will anyone be willing to part with inventory if the streets run red with blood on Monday?

Sat, 04/13/2013 - 22:36 | 3445800 scatterbrains
scatterbrains's picture

Will we see 3 or 4 consecutive days of margin hikes deployed from their tool bag of tricks ? I can imagine 1350ish before it's all said and done.

Sun, 04/14/2013 - 01:40 | 3446041 Kirk2NCC1701
Kirk2NCC1701's picture

Bring it on MFers! Got fiat trash for cold, hard bullion flash. [Dr. Evel laughter]

Sat, 04/13/2013 - 22:09 | 3445752 jbvtme
jbvtme's picture

looks like we got inflation coming at us in the cost of human organs...

Sat, 04/13/2013 - 22:11 | 3445754 NoDebt
NoDebt's picture

Oh, my.  Wherever are we going to export our inflation now?  Well, fair's fair.  China needs somewhere to export ITS inflation too, I suppose.

Sun, 04/14/2013 - 17:01 | 3445880 earleflorida
earleflorida's picture

'Sino-Africa: Beggard-thy-Neighbour?'

here is where China's inflation goes... and, it's a good thingy? To Russia and too Africa just to name a few places. I'm talking the entire African continent!

since Mar/2000 china and africa had trade between the two at ~ $10Bn... fast forward to Sept/2012 and the trade between the African Continent and China has now eclipsed the $200Bn mark! not bad?     http://www.atimes.com/atimes/China/CHIN-01-040413.html        "Where the Yangtze meets the Congo" by Brenda P. O'Reilly [4/4/2013/

 

Sat, 04/13/2013 - 23:34 | 3445886 earleflorida
earleflorida's picture

deleted

Sat, 04/13/2013 - 23:28 | 3445890 earleflorida
earleflorida's picture

BINGO!!!

"Xi, Putin shares bed with their own Dreams'  by M.K. Bhadrakumar [4/12/13]   @  Greater China  

YuanPetro's via, 'from russia with luv'?! 

*Politic's makes for strange bedfellows? hmmm...

http://www.atimes.com/atimes/China.html

Sat, 04/13/2013 - 22:12 | 3445756 Hulk
Hulk's picture

Sacre bleu Bitches !!!

Sat, 04/13/2013 - 22:15 | 3445762 Antifaschistische
Antifaschistische's picture

Don't forget, at the end of the day this isn't about currencies.   That's only the visible part.

It's that China focuses on making "things" that the world wants.  and because of that, the world wants to use these currency swaps to buy "stuff".   And yes, China makes more than the crap sold at WalMart.

America on the other hand, has decided that decades ago that manufacturing is dead and that "service" is the way of the future.   When you travel around cities in China that few humans have ever heard of, you see people making things...that will end up on a truck, that will end up on a train, that will end up on a ship that will take it to various parts of the world.

THATS really the war we've lost.  It's not like 70 years ago where every single village in Africa had a tractor that was made in America...

FIAT is just the conduit to get the stuff.

Sat, 04/13/2013 - 23:53 | 3445928 earleflorida
earleflorida's picture

NAFTA & CAFTA

good ole clinton?

we, i mean they... get all the manufacturing jobs going south of the border-- and, we get all of the 'undocument's' as a bonus coming north? 

what's another four [4] trillion do$$ar's added to the unbenefits of our sobering debt? it should read, 'North America Free Immigration Treaty', NAFIT

fuck it

and, GATT, and CAFTA,...

Hillary 2016 ' the best whore your peso's can buy, amigo

Sun, 04/14/2013 - 01:48 | 3446045 Kirk2NCC1701
Kirk2NCC1701's picture

Not so fast, cowboy. It was none other than Tricky Dicky Nixon who started with China, at the 'advice' of Henry Kissinger. Even during the end days of Vietnam, when Kissinger was haggling, er Negotiating for a peace, that TPTB saw the China potential.

Sun, 04/14/2013 - 13:17 | 3446780 earleflorida
earleflorida's picture

sorry compadre... but the catalyst was walmart that bank'd the clinton's roll?

Sun, 04/14/2013 - 18:02 | 3447600 Antifaschistische
Antifaschistische's picture

Okay....I didn't like NAFTA either, but that isn't why Africa, Australia, Chile, Peru, France, Russia, etc...want 'stuff' that China makes.   America could have turned isolationist.  Maybe we would have been better off.  But the world would have moved around us and we would have given them more of an incentive to do so.

In the long run, there is no substitute for human productivity and America's culture of "the biggest parasite (at both ends of the economic scale) wins" punishes the productive and rewards the parasite.  Cultural/Economic cannibalism....and we can't stop it, until there's no meat left.

Sun, 04/14/2013 - 00:34 | 3445987 Deo vindice
Deo vindice's picture

Very well put, Anti...

+1 from me for defining the big picture with such succinctness.

Sun, 04/14/2013 - 00:38 | 3445990 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

Antifaschistische

China makes Hub & Bearing Assemblies (auto parts for wheels of cars) that we are selling big time in Peru.  Our Chinese supplier makes them for Japanese, Korean and American vehicles.  So, yes, we want their stuff.  They are still taking our US$ by wire transfer...

No one in America makes most of these pieces...

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