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The USD Reserve Exodus Continues - Australia Diversifies Reserves Into China

Tyler Durden's picture




 

As we have discussed numerous times over the past year, there is a quiet movement among the world's central banks to diversify their reserves away from the pejorative USD. Whether it is direct trade linkages, hording physical precious metals, or simply buying foreign sovereign debt, there is a trend emerging. The latest defection, as BusinessWeek reports, is Australia's plan to invest about 5% of foreign currency reserves in China. The decision "represents the first time that the RBA will have invested directly in a sovereign bond market of an Asian country other than Japan," the country's deputy governor noted, adding that this step was an "important milestone" to "stronger financial linkages" leaving Australia "better positioned to benefit from the shift in global economic growth towards Asia." Of course, palling up to its closest trade partner is a big driver, but in a somewhat barbed comment on the strength of the AUD, Lowe noted, "quantitative easing that has taken place in a number of countries is having a significant effect on exchange rates of freely floating currencies... which is clearly making for difficult conditions in certain parts of the Australian economy."

 

Via Bloomberg BusinessWeek,

Australia’s central bank plans to invest about 5 percent of its foreign currency reserves in China as it deepens ties with the world’s second-largest economy, Deputy Governor Philip Lowe said.

 

The decision “represents the first time that the RBA will have invested directly in a sovereign bond market of an Asian country other than Japan,” Lowe said in a speech today in Shanghai. “It reflects the broader economic relationship between China and Australia and our increasing financial ties.”

 

...

 

“By opening their capital markets to central banks like Australia’s, China is taking a step in liberalization for foreign investors,” said Martin Whetton, "... The bigger question will be if this is followed by investments from other central banks.”

 

...

 

The move is “another important milestone in deepening our financial and economic linkages with China,” Australia’s Treasurer Wayne Swan said in an emailed statement. “Strong financial linkages between our economies will ensure that Australia is even better positioned to benefit from the shift in global economic growth towards Asia.”

 

...

 

The move reflects “greater diversity of our investments”

 

The Australian dollar became the third major currency to directly trade with the yuan on April 10, after the greenback and Japan’s yen.

 

...

 

Chinese investment in Australia has risen more than five- fold since 2006 and reached about A$20 billion at the end of 2011

 

...

 

“One current example of this is related to the very high value of the Australian dollar, which is clearly making for difficult conditions in certain parts of the Australian economy,” he said. “The quantitative easing that has taken place in a number of countries is having a significant effect on exchange rates of freely floating currencies

 

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Wed, 04/24/2013 - 09:34 | 3492419 Tinky
Tinky's picture

Good.

Wed, 04/24/2013 - 09:35 | 3492424 Pladizow
Pladizow's picture

Sha-na-na-na-na......

Wed, 04/24/2013 - 09:39 | 3492434 13thWarrior
13thWarrior's picture

Meet the banksters who set gold prices.

http://www.goldfixing.com/today'sprices.htm

 

Wed, 04/24/2013 - 09:39 | 3492447 MillionDollarBonus_
MillionDollarBonus_'s picture

If you want to gain a deeper understanding of why the stock market is performing so well, here are some of the green shoots on the radar that long term investors and economists are analysing very closely:

  1. Record number of college educated Americans, which many top economists believe to be a major factor that will benefit America’s economy in years to come
  2. The continued subjugation of the VIX, which negates claims about a potential ‘market crash’
  3. Record low mortgage rates and a strong housing recovery
  4. Record low inflation, which leaves plenty of room for further purchase programs and monetary easing
Wed, 04/24/2013 - 09:43 | 3492463 GetZeeGold
GetZeeGold's picture

 

 

.....or they're just printing money our of thin air and buying equities with it.

Wed, 04/24/2013 - 12:47 | 3493320 RafterManFMJ
RafterManFMJ's picture

Occam's razor sez...

Wed, 04/24/2013 - 09:45 | 3492474 ejmoosa
ejmoosa's picture

I have always thought I would eat more often at McDonald's if I could converse with a college graduate while waiting for my Mystery Nuggets and Fries.

Wed, 04/24/2013 - 09:48 | 3492476 ParkAveFlasher
ParkAveFlasher's picture

That's genius, kind of like a "Hooter's" for smart, gregarious people.

Wed, 04/24/2013 - 09:53 | 3492510 DaveyJones
DaveyJones's picture

Ah, the nuggets

that's one mystery you do not want to solve

Wed, 04/24/2013 - 10:01 | 3492547 krispkritter
krispkritter's picture

They should be sued for false and misleading advertising for calling them 'Chicken McNuggets'.  They should be forced to rename them 'McWhat? Nuggets'  

Wed, 04/24/2013 - 10:05 | 3492561 DaveyJones
DaveyJones's picture

they should just be sued

for calling it food

Wed, 04/24/2013 - 19:12 | 3492887 notbot
notbot's picture

China is a train wreck.. Diversify out of the dollar? Yes. Into the Renminbi? You're joking.

You're investing in a real estate co that develops large-scale empty cities and malls, just b/c the CEO is an empire builder. 

Remind me...didn't central banks bottom tick gold?

Wed, 04/24/2013 - 10:08 | 3492582 Bastiat
Bastiat's picture

Chicken What-the-Fuggits

Wed, 04/24/2013 - 10:21 | 3492642 Groundhog Day
Groundhog Day's picture

I had a conversation with a former Mcdonald's employee who worked in the manufacutering facility.  His quote "the things i've seen, you couldn't pay me to eat that crap"

Wed, 04/24/2013 - 12:52 | 3493352 Oldballplayer
Oldballplayer's picture

Parts is parts....

Wed, 04/24/2013 - 09:49 | 3492484 DaveyJones
DaveyJones's picture

MDB you're sarcasm is brilliant

what scares the shit out of me is that you sound exactly like my television

Wed, 04/24/2013 - 10:17 | 3492621 azzhatter
azzhatter's picture

I've wondered if MDB is secretly a CNBC employee?

Wed, 04/24/2013 - 10:45 | 3492763 Rustysilver
Rustysilver's picture

azzhatter,

He works for the White House: or he's a moron. Sorry for being redundant.

Wed, 04/24/2013 - 10:19 | 3492631 gtb
gtb's picture

You won't be scared if you turn off the TV and quit reading his crap.

Wed, 04/24/2013 - 09:53 | 3492500 Dangertime
Dangertime's picture

Don't forget record defaults on college loans.

 

And record low inflation...Gas from .99 cents to $3.85 a gallon in 13 years.  Gotta love low inflation.

Wed, 04/24/2013 - 09:56 | 3492519 DaveyJones
DaveyJones's picture

don't worry energy is an inconsequential discretionary commodity

it's not like people kill for it.

Wed, 04/24/2013 - 09:58 | 3492536 FreeNewEnergy
FreeNewEnergy's picture

MDB, yes, I see the strong housing recovery. People around here are, as soon as they think they're "even," put their house up for sale and bolt to a rental unit. This trend should continue until the 3% down FHA suckers default and the wash, rinse, repeat cycle starts all over again.

Recovery now. Insolvency later.

Wed, 04/24/2013 - 10:15 | 3492601 Go Tribe
Go Tribe's picture

1. Bubble

2. Bubble

3. Bubble

4. Bubble

Wed, 04/24/2013 - 11:09 | 3492878 caShOnlY
caShOnlY's picture

1. Record number of college educated Americans, which many top economists believe to be a major factor that will benefit America’s economy in years to come

No jobs available for the highly indebted college educated Americans.

2. The continued subjugation of the VIX, which negates claims about a potential ‘market crash’

Massive money creation by FED eliminates risk in market and put massive risk on USD. NOTE*** see PRECIOUS METALS DEMAND!

3. Record low mortgage rates and a strong housing recovery

No jobs and stagnant incomes and lack of buyers except for hedge funds and Wall St. "hedging" against the currency collapse.

4. Record low inflation, which leaves plenty of room for further purchase programs and monetary easing

The record low inflation is DEFLATIONARY, depression, all is hidden by money printing and governement spending(foodstamps, etc.).  Car loans are up to 97 months correalates with low income and part time job creation.

One big blip on the RADAR:  Global banking, financial, economic collapse is on the way. 

 

Wed, 04/24/2013 - 09:45 | 3492470 kliguy38
kliguy38's picture

Bullion Banks already defaulting on gold delivery......stay tuned ast the "smart money" with "allocated" gold in these bullion banks resort to shitting themselves....Soon they will be getting on their helicopters and flying to Zurich, London, and Paris to find out just WHO has swindled them......THEN they will send in "Frank"

Wed, 04/24/2013 - 09:52 | 3492496 LawsofPhysics
LawsofPhysics's picture

"THEN they will send in the tanks" - fixed.

Wed, 04/24/2013 - 14:42 | 3493890 BattlegroundEur...
BattlegroundEurope2011's picture

 

Meet the banksters who set gold prices.

http://www.goldfixing.com/today'sprices.htm

 

bump.

 

Send them a little message ;)

Wed, 04/24/2013 - 10:06 | 3492575 GoldForCash
GoldForCash's picture

5 percent today...95 percent Tommorow

Wed, 04/24/2013 - 10:16 | 3492618 Groundhog Day
Groundhog Day's picture

Aussie's are now on the terrorist watch list.  All of them

Wed, 04/24/2013 - 10:23 | 3492655 Groundhog Day
Groundhog Day's picture

Additionally, they are bowing to their true chinese masters

Wed, 04/24/2013 - 12:32 | 3493271 MonsterBox
MonsterBox's picture

5%...meh.  Awake me when they're in for 50%.

and fuck you, Ben

Wed, 04/24/2013 - 09:34 | 3492420 stinkhammer
stinkhammer's picture

fuck you Ben

Wed, 04/24/2013 - 09:41 | 3492455 dcohen
Wed, 04/24/2013 - 11:23 | 3492977 NotApplicable
NotApplicable's picture

You're just plain evil.

Wed, 04/24/2013 - 09:58 | 3492528 NorthPole
NorthPole's picture

+1

 

You're a karma whore, aren't you?

Wed, 04/24/2013 - 09:35 | 3492426 LawsofPhysics
LawsofPhysics's picture

They stopped printing Yuan?  fiat is fiat is fiat.  Fuck you Ben and all Central Wankers.

Wed, 04/24/2013 - 09:53 | 3492501 krispkritter
krispkritter's picture

I hope that rat bastard Ben is the last rat left on the sinking ship, USS Dollar...would be great to see the rest of the rats swimming off to their own respective sinking ships too. The world would be a better place with fewer of these blood sucking parasites...

Wed, 04/24/2013 - 12:55 | 3493358 RafterManFMJ
RafterManFMJ's picture

Nah it'd be better to watch the mass of drowning rats chew each other to bloody pieces, bleeding, drowning, and sinking.

Wed, 04/24/2013 - 09:36 | 3492430 DaveyJones
DaveyJones's picture

it's almost as if...they don't trust us

this is the war we can't win

because we planted our own bombs

and they're bigger than a backpack

Wed, 04/24/2013 - 09:39 | 3492442 LawsofPhysics
LawsofPhysics's picture

Indeed, financial "products" of mass destruction.  The same puppet masters at work either way, fuck em.

Wed, 04/24/2013 - 09:46 | 3492464 DaveyJones
DaveyJones's picture

Why, when we read history, do these "gentlemen" do this over and over and over

don't answer that

just turn to the chapter where we punish them 

Wed, 04/24/2013 - 09:38 | 3492437 Debugas
Debugas's picture

it is normal to have some reserves in currencies/bonds of the trade partners you are buying products from

Wed, 04/24/2013 - 09:40 | 3492448 LawsofPhysics
LawsofPhysics's picture

Exactly.  This is the more important issue.  Fiat is fiat, but trade is the real issue.  When goods and services stop crossing borders, troops will.

Wed, 04/24/2013 - 09:41 | 3492445 DaveyJones
DaveyJones's picture

the perjurative USD

Wed, 04/24/2013 - 09:39 | 3492450 Investor-1
Investor-1's picture

There is so much going on on the currency markets the last few years. It's a paradise for forextraders! I copy good forextraders and that works great! Made me a lot of money.

Wed, 04/24/2013 - 09:39 | 3492451 caimen garou
caimen garou's picture

hey ben how does it feel to be the hated kid on the block, you blockhead!

Wed, 04/24/2013 - 10:09 | 3492581 DaveyJones
DaveyJones's picture

cell block, we hope

Wed, 04/24/2013 - 09:46 | 3492460 Sheeple Shepard
Sheeple Shepard's picture

 

 

"Australia’s central bank plans to invest about 5 percent of its foreign currency reserves in China" 

 

 

Gotta be USD right? So the Chinese promise a stable (Gold backed?) currency to convince C.Bs to buy their government bonds. They then recieve USD as payment for bonds and use these USDs to buy Gold? The US is getting screwed big time if this happens for any length of time or in any high volume. 

 

Wed, 04/24/2013 - 10:11 | 3492587 DaveyJones
DaveyJones's picture

as far a screwing is concerned, you have the er and the ee all mixed up 

Wed, 04/24/2013 - 09:46 | 3492468 buzzsaw99
buzzsaw99's picture

Ben to Muppets: Get back in the kitchen!

http://www.youtube.com/watch?v=yJXH2QL5PvY

Wed, 04/24/2013 - 09:46 | 3492471 rosiescenario
rosiescenario's picture

Wondering when some of the oil exporters will be pricing oil in gold....and by that I mean actual gold?

Wed, 04/24/2013 - 09:48 | 3492481 Sheeple Shepard
Sheeple Shepard's picture

Col. Gaddafi was the first and probably last to try that little experiment. 

Wed, 04/24/2013 - 09:49 | 3492489 GetZeeGold
GetZeeGold's picture

 

 

Word is Iran is getting away with it.

Wed, 04/24/2013 - 09:52 | 3492498 Sheeple Shepard
Sheeple Shepard's picture

If by getting away with it you mean within a gnats crotch of getting Nagasaki'd, your right.

Wed, 04/24/2013 - 15:41 | 3494190 Panafrican Funk...
Panafrican Funktron Robot's picture

China/Russia are fans of Kish.  M.A.D. = Iran will be fine.

Wed, 04/24/2013 - 10:12 | 3492594 DaveyJones
DaveyJones's picture

the petro dollar vs the petro gold is the only real war going on here

place your bets accordingly

Wed, 04/24/2013 - 10:24 | 3492662 dick cheneys ghost
dick cheneys ghost's picture

The Saudi's love that yellow shiney stuff........

Wed, 04/24/2013 - 11:22 | 3492976 e-recep
e-recep's picture

the fuckers couldn't stop iran's gold/oil trade with turkey, now could they?

Wed, 04/24/2013 - 19:42 | 3495227 StychoKiller
StychoKiller's picture

Turkey?  What about ham?  Anyone up for a club sandwich?

Wed, 04/24/2013 - 09:56 | 3492527 krispkritter
krispkritter's picture

I thought Hussein was the first? I think Ghaddafi thought he was too small a player too be noticed, until someone noticed.  Then he got swatted like our old pal Saddam.  'It's not nice to fool Mother(fuckin') Bankers'

Wed, 04/24/2013 - 10:21 | 3492633 DaveyJones
DaveyJones's picture

well said. If by banker's, we mean western bankers, they will lose in the end. It may take time, God knows how much time, but the game board has tilted , the resources, population and, most important, economic engines are elsewhere and with it comes power. THe only thing these criminal bastards yield is power and as every day passes, it is more and more abstract. 

Wed, 04/24/2013 - 10:21 | 3492643 Debugas
Debugas's picture

nah Hussein was actually trying to sell for Euros not gold...

Wed, 04/24/2013 - 10:51 | 3492661 DaveyJones
DaveyJones's picture

he could have been selling them for seashells but the result would be the same.

Wed, 04/24/2013 - 10:22 | 3492657 Urban Redneck
Urban Redneck's picture

I think King Abdulaziz had him beat by the better part of a century.  The US Mint even made special good coins for the payments, before the Saudis tried bi-metalism and then pure fiat.  We should be due for a Rinse, Repeat rotation on the wonderful cycle of history in about a decade or so...  

http://www.coinlink.com/News/gold-silver-bullion/unusual-items-us-mint-gold-disks-made-for-oil-payments-to-saudi-arabia/

Wed, 04/24/2013 - 12:57 | 3493369 RafterManFMJ
RafterManFMJ's picture

Lessons were learned. The next country that gives it a go will be protected by the Chinese / Russian Atomic Umbrella.

Wed, 04/24/2013 - 10:16 | 3492608 Go Tribe
Go Tribe's picture

Putin sooner or later.

Wed, 04/24/2013 - 14:42 | 3493886 Kirk2NCC1701
Kirk2NCC1701's picture

It's already been tried, only with currency.  Think Saddam Hussein (Euros for oil), Kaddafi (pan-African money, backed by gold).  Look where they, their oil and their gold ended up.  Iran would have been attacked already, were it not for the 'protection' it gets from Russia (and China).

At this point the Fed would have to change its wicked ways or start WW3 and a nuclear winter.  The Fed's true masters prefer Mediterranean climates over N-winters.  So you can bet your last FRN that the Fed will conjure up some 3rd option that keeps them in power.

Wed, 04/24/2013 - 09:45 | 3492473 dick cheneys ghost
dick cheneys ghost's picture

The ultimate death of the Dollar will be blamed on 'radical islamic jihadism' and the American people will buy it hook, line and sinker.

The script is being written right before our eyes.....

Wed, 04/24/2013 - 10:30 | 3492665 GoldForCash
GoldForCash's picture

Take down will be with an Internet banking virus that we gave them when we interrupted their nuclear program with our virus.

Wed, 04/24/2013 - 11:21 | 3492973 Toolshed
Toolshed's picture

For real. Notice all the problems at nuke plants recently? Coincidence? Maybe........maybe not. Our Dear Leaders seem to think that the Iranians are stupid. Maybe they are, but not nearly as stupid as our Dear Leaders. And even if the expertise to effectively modify the stuxnet virus does not exist in Iran (unlikely), I assure it exists in spades in China and Russia. Gosh.....what could go wrong?

Wed, 04/24/2013 - 09:47 | 3492478 ejmoosa
ejmoosa's picture

Every tme I buy more PMs I am continuing my exodus of the US Dollar.

 

When a dam breaks, it starts as a trickle....

Wed, 04/24/2013 - 09:48 | 3492480 Chupacabra-322
Chupacabra-322's picture

The Federal Reserve Charter expires on December 31, 2013 at 11:59 P.M.

 

The Illusion and deception can continue if the Charter gets re certified.  It must be voted on by Congress.  Will they re cerifiy the Charter?

Well, they passed it the first time during a Christmas Holiday.

Will this be a TBTF Bank Holiday or Fasle Flag Re Certification Federal Reserve Charter to continue the Illusion?

 

“The illusion of freedom will continue as long as it's profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.”
-Frank Zappa

Wed, 04/24/2013 - 09:51 | 3492492 reader2010
reader2010's picture

If they don't, they get shelter in place.

Wed, 04/24/2013 - 11:22 | 3492965 Zwelgje
Zwelgje's picture

The charter became open ended in 1927.

Wed, 04/24/2013 - 14:33 | 3493781 Chupacabra-322
Chupacabra-322's picture

Been doing some reserach.  Here's the link:https://en.wikipedia.org/wiki/McFadden_Act

The McFadden Act is a United States federal law, named after Louis Thomas McFadden member of the United States House of Representatives and Chairman of the United States House Committee on Banking and Currency, enacted in 1927 from recommendations made by the comptroller of the currency Henry May Dawes.

The Act sought to give national banks competitive equality with state-chartered banks by letting national banks branch to the extent permitted by state law. The McFadden Act specifically prohibited interstate branching by allowing each national bank to branch only within the state in which it is situated. Although the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 [1] repealed this provision of the McFadden Act, it specified that state law continues to control intrastate branching, or branching within a state's borders, for both state and national banks.

 

In the End.  Gold, Silver, and Natural Resources which you posse in any Couuntry, whether it be in a Federal, State, and Local Community under the guise of "National Security" and "The Chicago School of Economics" ( Global Criminal Cabal (Bankster/Intelllegence) Crime Syndincate. Will be confiscatied by the Tolatitarian Authoritarian Police State. 

Written by "Classified Woman" The Sibel Edmonds Story

And,

"Confessions of an Enoncomic Hitman" wtitten by John Perkins. 

And "The Shock Doctrine"

written by Naomi Cline.

 

 

Wed, 04/24/2013 - 14:48 | 3493926 Kirk2NCC1701
Kirk2NCC1701's picture

"Will be confiscatied by the Tolatitarian Authoritarian Police State."

Confiscate THIS!  [grabs his Phaser]  My precious Precious is way beyond their reach.  Fuck 'em!

Wed, 04/24/2013 - 09:47 | 3492482 q99x2
q99x2's picture

F U Bernanke, JP Morgue and Bankfeind too.

How you like me now What are you going to do.

Holder put you above the law. Ain't going to stop no zombie from getting you.

F U Bernanke, JP Morgue and Bankfeind too.

Wed, 04/24/2013 - 09:48 | 3492483 reader2010
reader2010's picture

The writing is on the wall. Be prepared.

Wed, 04/24/2013 - 09:50 | 3492495 orangegeek
orangegeek's picture

The AUD is not a member of the USD Index.

 

I bet they would like to be.

 

There's been a few past ZH articles - Chinese debt is 230% of GDP.  Here's one below: 

 

http://www.zerohedge.com/news/2013-04-17/chinese-auditor-warns-out-contr...

 

 

Wed, 04/24/2013 - 09:57 | 3492524 The Proletariat
The Proletariat's picture

Hmm.....I wonder if the U.S. needs to embark on some "Humanitarian" efforts in Australia to help them recover from their recent monetary decisions....mate

Wed, 04/24/2013 - 10:02 | 3492551 Sudden Debt
Sudden Debt's picture

HAHAHAHAHA!!!

LOVE IT!!

IT SHOWS THERE'S STILL ENOUGH PEOPLE WITH A BRAIN IN THIS WORLD!!

Wed, 04/24/2013 - 10:02 | 3492558 AnAnonymous
AnAnonymous's picture

5pc... the exodus.

People are fleeing the USD to gold, they hold 5pc of their assets in gold...

Wed, 04/24/2013 - 10:16 | 3492607 Seychelles
Seychelles's picture

Uh-oh, time to buy gold, for sure.

Wed, 04/24/2013 - 10:53 | 3492792 monad
monad's picture

Thats great news. Now the USA can withdraw military support from the region and focus on our own problem governments.

Wed, 04/24/2013 - 10:58 | 3492813 Dubaibanker
Dubaibanker's picture

19 countries have tied up to trade directly with the Chinese exporters and financial institutions, with a total aggregate amount of USD 320bn or for about CNY 2 trillion on a rotating basis. http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130326000117&c...

The above clearly indicates that China will continue to rise because almost every major export nation has signed up with China to stabilise the global economic and monetary system if the US debt explodes or US keeps on placing unilateral sanctions which hurt other nations who also have a right to self protect or if US implements tough laws like FATCA or it pressurises China to appreciate yuan or pressurises Switzerland to change privacy rules etc. Now, even the Eurozone has decided not to blindly follow USA but do whatever it takes to help their citizens in the Eurozone by trading with China in their own currencies instead of the USD.

This is a transition period that we are living and passing through.

Ultimately, it is also possible to gain from this growth of China whereby one may invest in Yuan. Fact is yuan has risen for 11 years in a row and this year I expect it to grow by 3-4% since last year it grew only by 1%.

Wed, 04/24/2013 - 11:54 | 3493119 LawsofPhysics
LawsofPhysics's picture

And when all China's customers are flat broke?  Who will they be exporting to then?  You really think that this centrally-planned, state-run, single-party systme isn't devaluing their paper?  Good luck with that. 

Wed, 04/24/2013 - 12:52 | 3493350 Dubaibanker
Dubaibanker's picture

Point taken. However, what do you think happened, LawsofPhysics, when GBP lost its lustre or Gold standard stood withdrawn, they did decline in value, however, they still stand well today and it appears like a blip in the long term. China is not silly, just like any businessman with a brain, to sell to broke customers. They will produce less or just like today's banks will lay off sufficient bankers, to become profitable or remain profitable. China's per capita's GDP has risen many times since opening up in 1978 and all sorts of foreigners line up to enter but are restricted like in banking or aviation or insurance or even health care sectors. Rwanda's per capita GDP has also increased since the genocide stopped or for that matter of Sri Lanka since the last few years when the Tamil militants concluded the war. Iraq is doing well, at least economically as is Afghanistan (politics aside) and so are most parts of Africa. All this due to rising GDP giving the Govt and its citizens no incentive to fight each other and be gainfully employed thus making the prosperity last longer, which is exactly what happened in America since World 2 or in Korea and Japan until it started falling apart firstly in Japan and lately in US.

My view is that if per capita GDP and GDP per se rises, the country and its govt has every single incentive to make things grow faster which makes economic sense for more investors to pile on and improve governance, create employment, increase tax revenues, improve real estate values etc. Trick is that unlike Dubai or Spain or Florida or Iceland or Cyprus, to control the flows of hot money and/or foreign investors, because if they leave, then all hell breaks lose.

China has been there for thousands of years and will remain so while US is the agglomeration of immigrants for the last 200 odd years and creates multiple fold value due to their advanced education system among other factors.

Question is: If Immigration stops or reverses, will US be the same as it is today, in 100 years from now?

Wed, 04/24/2013 - 14:58 | 3493940 Kirk2NCC1701
Kirk2NCC1701's picture

They will then trade in Yuan.  You won't, but they will.

Don't be blind to your own position: money is a Medium Of Exhange.  As long as they exchange real goods & services, ANY agreeable medium will do (as history shows).  Provided you control its production rate, i.e. synch it to the real growth of the real GDP.  Otherwise you've started the same problem all over (as history shows).

Got Gold, got BTC, got Yuan?  Sorry, we only take FRN's at the devalued exchange rate of ____.  :-)

Thu, 04/25/2013 - 00:51 | 3496237 Dubaibanker
Dubaibanker's picture

I completely agree, Kirk.

For the record, I never said to go 100% yuan.

Yuan should be a part of a portfolio where USD has the highest allocation as on date. Shorting yen, Long on MXN, Long on RUB, Long on Gold are also part of that allocation currently but not more than 5-7% each at best. Neutral on most currencies like BRL and SGD and THB etc. By being long in USD we invariably become short on INR and ZAR or EUR and other weak currencies.

We go where the growth is, take the appreciation and convert back into base currency, except into EUR, where it must remain in USD to protect its purchasing power versus the base EUR.

Yuan is a long term slow and steady gainer due to its geo political rise supported very strongly by a USD 500bn (at 7.7% GDP growth rate) annual rise in its GDP now being the second largest at approx USD 6 trillion in size. Yuan just makes sense to have as on date before it stabilises in the coming years and stops gaining in sync with its GDP rise and political and military rise plus the trade and export growth. I am currently not worried about its decline but in future, maybe...just maybe.

Wed, 04/24/2013 - 11:08 | 3492881 ChookChoker
ChookChoker's picture

Utter bullshit. The greatest effect on Australias economy recently is the Bankster's (JPM/GOLDMAN's) very recent blatant takedown of the paper gold market. Fuck them. The obvious base price at the current time is $1300 per oz. If they smash it below that a significant number of larger mines close down and very soon after supply/demand fundamentals kick in.

Obama's meeting with the Banksters on Thursday the 11th followed immediately by market, commodities and Gold market collapses was not a coincidence.

If you want an investment tip put a bit of cash into grain futures. Western Australian farmers are bleeding heavily after a few bad years with reliable sources reporting a likely reduction in production of at least 30%. This is a basic calculation based on the number of farmers not recieving funding from Banks this year.

As soon as the general populace can't buy a loaf of bread the focus will change. If  I console myself with utterings of "I told you So" my reward for vigilance will be negligible. I am buying agricultural land with every spare dollar. Good luck to the rest of yoy...

 

Wed, 04/24/2013 - 13:46 | 3493575 earleflorida
earleflorida's picture

'Xi and Zuma vow to prioritise Sino-South African Relations"  3/27/13

*Note: the entire continent now has agreements pending

http://www.scmp.com/news/china/article/1200232/chinas-xi-meets-south-africas-zuma-ahead-brics-summit

Ps. of special interest is the carry-trade in yaun/renminbi between china and africa reaching ~ US$60bn. in 2012, nearly a third of total [US$180bn.] china-african trade.

Ps2.   so now we have the african and australian continents engaging china for a consenting, premarital lovefest orgy-- a cohesive and coagulating nwo nuclear-family... forever tethered to their adopted surrogated siblings,... India, Brazil, and Russia?!

Ps3. china currently is working on a second aircraft carrier that will in all likelihood be seafaring in a couple of years or less, at a fraction of the cost to the cash-strap'd/crunched unSequestored Craft/MIC!?   

 

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