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After Creating Dollar Exclusion Zones In Asia And South America, China Set To Corner Africa Next

Tyler Durden's picture


By now it really, really should be obvious. While the insolvent "developed world" is furiously fighting over who gets to pay the bill for 30 years of unsustainable debt accumulation and how to pretend that the modern 'crony capitalist for some and communist for others' system isn't one flap of a butterfly's wings away from full on collapse mode, China is slowly taking over the world's real assets. As a reminder: here is a smattering of our headlines on the topic from the last year: ""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", 'The USD Trap Is Closing: Dollar Exclusion Zone Crosses The Pacific As Brazil Signs China Currency Swap", and finally, "Chile Is Latest Country To Launch Renminbi Swaps And Settlement", we now get the inevitable: "Central bank pledges financial push in Africa." To summarize: first Asia, next Latin America, and now Africa.

Yep: the Yuan may not be the reserve currency by default, but at this rate China will have bilateral, read USD-bypassing relations, with all countries in Asia, South America and shortly Africa (where none other than Goldman Sachs has been pushing harder than anyone). Once the entire world is trading in CNY, it will be merely a matter of flipping the switch and all those fancy three-letter economic theories that explain why the uber-welfare state works just becayse the US can print an infinity+1 in debt, will all suddenly find themselves completely and totally bidless.

From China Daily:

China is to promote the yuan's use in settling trade and investment with Africa, and encourage the more active development of Chinese financial institutions across the continent, a senior central bank official said on Friday.


Li Dongrong, assistant governor of the People's Bank of China, said Africa has the capability of becoming a new hub of international capital flow, and the yuan's use there should be further improved in accordance with rising demand for the currency there.


"We will continue to encourage domestic financial institutions to increase their presence and business across the continent," Li told delegates at the Forum on China-Africa Financial Cooperation in Beijing, adding that the cooperation potential between the two sides is huge, as Africa's economy continues to take off.


According to Li, yuan-denominated settlement between China and some African countries has already started, with 4.3 billion yuan ($156.5 million) worth of settlement made with South Africa and 2.3 trillion yuan with Mauritius, for example.


The popularity of using the yuan has been increasing in Africa, and more central banks are considering including the currency in their reserve portfolios, reported various governors of African central banks at the forum.

For China, Ghana is not Spain. It is far, far more valuable.

Millison Narh, second deputy governor of the Bank of Ghana, said the bank's board of directors has decided to use the yuan as part of its settlement and reserve currencies in January, but has yet to finalise details with the People's Bank of China


"We have looked at the currency rate risk management of the reserve portfolio. I think the yuan has performed very well, supported by the huge international reserves of China. It makes sense to use the yuan as both the settlement currency and the reserve currency."


More African central banks will make similar decisions, and in five years about 20 percent of African central banks' foreign reserve portfolio would be yuan assets, he said.

So is Zambia:

Michael Gondwe, governor of the Bank of Zambia, added that his country is yet to decide on including the yuan in its foreign reserve assets, but it is expecting increased usage of it to settle trade between China and Zambia.


Franklin Kennedy, a non-executive director of the African Export-Import Bank, said he believed using the yuan on the continent was "a natural evolvement - it has to happen", and expects more African central banks to include the currency in their foreign reserve portfolios.

Of course the French, who are not used to being snubbed in what is rapidly becoming a second Congress of Berlin, only this time one without any European participation, are not very happy:

One trade finance manager at Societe Generale (China) Ltd, who declined to be named, said he has seen little demand among traders to settle deals in yuan, because there is no sound channel to make investment or purchases in yuan after holding the currency.

As for the truth:

Babacar Ndiaye, the former president of the African Development Bank, said he saw "no reason" why traders would refuse to settle transactions in yuan "when the trade flow increases" between China and Africa.


"It is logical that very soon more and more central banks of Africa will follow Nigeria to include the yuan into their reserves," he said


He added at present it is just the beginning, and central banks would also prefer to buy treasury bonds from China in the future if possible.

But... but... if the whole world suddenly realizes that the CNY is the defacto reserve currency and "would also prefer to buy treasury bonds from China in the future if possible"... who does that leave as natural buyers for US paper? Aside from the Fed of course...


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Sun, 07/15/2012 - 13:20 | 2617657 VonManstein
VonManstein's picture

Good. people in the west have a severe case of normalcy bias and are too scared too admit its over. its the leaders fault but the populations have become pathetic. Information is free and accesible and whoever hasnt been preparing for this, to some extent, deserve to get shafted.

China will be king

Sun, 07/15/2012 - 13:44 | 2617743 The Monkey
Sun, 07/15/2012 - 14:50 | 2617957 This just in
This just in's picture

Ate at China King last night.  Love the dumplings.

Sun, 07/15/2012 - 14:59 | 2617984 akak
akak's picture

Funny how there never seem to be any pigeons in the vicinity of Chinese restaurants.  Or stray dogs and cats, for that matter.

Sun, 07/15/2012 - 15:02 | 2617998 CrazyCooter
CrazyCooter's picture

This is something I think about because at my age "what the next money is" pretty much makes or breaks my ability to care for myself in oldage through working my ass off now.

So, with that caveat, let me throw my carrots in the stone soup as it were.

Jim Rickards did a long series of audio interviews over at KingWorldNews. 54 to be exact. They tended to be 15 to 20 minutes minimum, some as long as an hour. You can get them all by patiently going through the KWN interview archive page. Starting with this series in chronological order is very educational and interesting.

This parallels his book subject matter, but goes off on many, many tagents never discussed in his book. If you liked Currency Wars, this is a freebie and must listen material.

He has an interview where he basically describes the "outcomes" of fiat implosion. In short (if I didn't screw this up), they are:

  • Chaos
  • SDRs
  • Gold
  • Multiple reserve currencies

Given that China has no gold (it all belongs to the west in general - at least at the central bank/government level), I do not see Yuan replacing the Dollar so much as the Yuan competing with the Dollar.

My thinking is like this; as a new reserve currency comes onto the stage, the Dollar will get beat into shape by market forces. And the Dollar will feel the pain necessary to keep it relavent, or it will die. I don't think its handlers would let it die, so that implies "market forces" type corrections in behaviors by its handlers.

I watch these developments as closely as I can (thanks ZH for the growing history of links). Gold is a good bet, but multiple reserve currencies may very well be where things are heading, at least for a while.



Sun, 07/15/2012 - 15:24 | 2618072 cranky-old-geezer
cranky-old-geezer's picture



Two thoughts:

1) Stop falling back on what other people say.  Educate yourself about the subject, present your own views.

2) Death of USD will not be just for monetary reasons.  It will actually be more for hatred reasons.  Many nations around the world hate and despise what the US government is doing, especially in Asia, which just happens to be where the new currency (and trade clearing system) will come from that knocks USD off its throne. 

Other nations will gladly walk away from USD and "sign on" to that new currency (and trade clearing system) because they also hate and despise what the US govt is doing.

This massive hatred around the world against the US govt and USD doesn't show up on forex charts nor any sort of charts.  That's why chart watchers won't see it coming.


Sun, 07/15/2012 - 15:45 | 2618139 Freegolder
Freegolder's picture

Actually, China has much gold, they mine their own, and import a lot through Hong Kong, much of it from the USA.

But the currency with free-floating physical gold reserves in abundance is the Euro.

You are right, gold is a very good bet!

good luck.

Sun, 07/15/2012 - 16:19 | 2618240 Amish Hacker
Amish Hacker's picture

"given that China has no gold..."

Actually, while it is true that China holds a smaller percentage of its exchange reserves in gold than many other countries, China has also been the world's largest producer of gold for the past 5 years.

Be suspicious of numbers claiming to be the real level of Chinese central bank gold buying. China has been understating this number for years, with occasional revisions upwards. While the exact number is unknown, it's clear the CB has been aggressively converting some of their UST's into gold, and private citizens in China have surpassed India as the world's largest gold consumers.

So, put these data together with the article on the expansion of the yuan as a trade-settling currency, and the outlines of a global strategy begin to emerge. China is planning ahead for major, global changes; we're assuming we'll be able to maintain our current, privileged status forever. Place your bets.

Mon, 07/16/2012 - 08:31 | 2619709 Diogenes
Diogenes's picture

The dollar is already dying. China is buying gold all the time, from their own mines plus foreign sources, and encourages their people to buy it too.

Sun, 07/15/2012 - 15:13 | 2618040 Tom Green Swedish
Tom Green Swedish's picture

DaGong has China rated at Triple A.


I say let them pretend they are not a third world shitbasket. Let them use their own shit money which is essentually pegged to the dollar to trade.  WHen they reach their level of prosperity sucking up every last resource on the planet we will all know who to blame.  Not China, but the USA and Europe.  We are the ones feeding this pile of crap. 

Sun, 07/15/2012 - 15:58 | 2618176 akak
akak's picture

Get it on, bang DaGong, get it on.

Sun, 07/15/2012 - 16:37 | 2618296 Snidley Whipsnae
Snidley Whipsnae's picture

Interesting monitor this Chinese bank governor has...

"Li Dongrong, assistant governor of the People's Bank of China, said..."

I wonder if that is a nickname given to him by his spouse?


Sun, 07/15/2012 - 16:11 | 2618210 The Monkey
The Monkey's picture

China has absolutely huge industrial capacity and human resources. It is extremely export dependent and especially vulnerable to slowing global growth. At the same time US corporate margins are at extreme highs.

The "this time is different" crowd sees margins at a permanently higher plateau, but, we have already spotted one of the elephants in the room.

Sun, 07/15/2012 - 16:52 | 2618338 RafterManFMJ
RafterManFMJ's picture

But... but... if the whole world suddenly realizes that the CNY is the defacto reserve currency and "would also prefer to buy treasury bonds from China in the future if possible"... who does that leave as natural buyers for US paper? Aside from the Fed of course...


Why YOU WILL! Kiss that 401k goodbye, and say hello to Freedom Bonds! Uncle Slaver wants you - and your stash of sweet 401k cash.

Sun, 07/15/2012 - 13:22 | 2617659 economics9698
economics9698's picture

And when the fiat dies in America and the troops are all called home there will be another colonization of Africa, or worse.  China is not into political correctness.  If I was going to bet Africa will be colonized, genocide, second Chinese country/continent established in the 21st century.


Sun, 07/15/2012 - 13:57 | 2617736 LULZBank
LULZBank's picture

Very true.

Americans and Europeans have killed, tortured and comitted genocide in Africa and elsewhere in a politicaly correct way. The victims always felt privileged for getting such a treatment.

Chinese on the other hand are very evil and undemocratic. Nobody wants to get abused and killed by them!

Sun, 07/15/2012 - 14:01 | 2617807 economics9698
economics9698's picture

The Chinese are very intolerant of foreigners.  If they get a chance they will clear out what they consider pest from the continent.  They have done it in the past.  60 million dead, not a problem for the Chinese.  

Sun, 07/15/2012 - 14:06 | 2617821 LULZBank
LULZBank's picture

Like the Native Americas? And Aborigines in Australia and NZ?

Sun, 07/15/2012 - 14:22 | 2617886 LowProfile
LowProfile's picture

More like Tibet.

Sun, 07/15/2012 - 14:39 | 2617929 LULZBank
LULZBank's picture

Tibetans are "terrorists" and "savages."

Sun, 07/15/2012 - 14:42 | 2617937 economics9698
economics9698's picture

Yes exactly like manifest destiny in America.

Sun, 07/15/2012 - 14:54 | 2617973 LULZBank
LULZBank's picture

For teh LULZ!!!!

Manifest Destiny was the 19th century American belief that the United States (often in the ethnically specific form of the "Anglo-Saxon race")[1] was destined to expand across the continent. It was used by Democrats in the 1840s to justify the war with Mexico; the concept was denounced by Whigs, and fell into disuse after the mid-19th century.


After the mid-19th century, it was evil Commies and in the late 19th century the Manifest Destiny flew into Twin Towers.


Sun, 07/15/2012 - 15:09 | 2618024 CrazyCooter
CrazyCooter's picture

Um, forgive my ignorance, but can I get a list of benevolent governments in history that were compassionate (or at least gave a shit) about peoples residing on the resources it needed to sustain/grow itself?

My list is precisely zero entries long, so clearly I have missed something given there is contempt towards the lion for killing for food. The second amendment was genius for this reason as it acknowledges this simple truth.

On the issue of one is less brutal than the other, I agree, however lets be clear we are talking about which abusive boyfriend is best ...



Sun, 07/15/2012 - 17:29 | 2618428 John Sixpack
John Sixpack's picture

Alexander in Egypt.

Mon, 07/16/2012 - 06:29 | 2619575 AvoidingTaxation
AvoidingTaxation's picture

Swiss Cantons, with the jointly controlled conquered territories

Sun, 07/15/2012 - 15:12 | 2618037 LULZBank
LULZBank's picture

Hold the FUCK on!

So it was the Manifest Destiney for American expansion and genocide in the continent of America and Promised Land for Israeli expansion and genocide in the Middle East?


Mon, 07/16/2012 - 00:39 | 2619385 prole
prole's picture

LulzBank your moral equivalency exercise is pathetic.

It's as if you and us all of us can plainly see you are lying and being a pissant.

I don't believe you believe what you are writing, you must just be thinking: Got to keep the faithful stupidified with this nonsense.

Mon, 07/16/2012 - 04:01 | 2619505 LULZBank
LULZBank's picture

prole - Shut the fuck up with your strawmen and allegations.

Who the fuck is "all of us" that can plainly see me?

Sun, 07/15/2012 - 14:46 | 2617947 akak
akak's picture

Oh, and don't you know that (in contrast to all non-Communist Chinese-propagandistic history) they practiced widespread slavery in Tibet before the armed forces of the People's Republic of Blobbing-Up Offuscationalizingistism generously "liberated" them? 

I guess one is supposed to feel grateful for being "liberated" just in time to be genocided.

Sun, 07/15/2012 - 14:55 | 2617979 LULZBank
LULZBank's picture


I guess one is supposed to feel grateful for being "liberated" just in time to be genocided.

Like people in Iraq and Afghanistan?

Sun, 07/15/2012 - 15:16 | 2618018 akak
akak's picture

Yes, something like that.

But not just like that either, as I do not see millions of Americans being resettled (many of them against their will) in lands formerly occupied by Iraqis and Afghanis, unlike the Han Chinese colonization of Tibet.

But at least, as an honest if unwilling subject of the American Empire, I am willing to openly and directly condemn my rulers for their statist crimes --- unlike the hoard of mindless and boot-licking Chinese agitpropbots swarming online forums such as this one.

Symmetry, dude, symmetry.

Sun, 07/15/2012 - 15:19 | 2618057 LULZBank
LULZBank's picture

Phase, not symmetry, dude.

Few hundred years from now, some of the Chinese will also be turning honest unwillingly, in its dying days like you.

BTW, when you invade and settle down in occupied lands, you atleast keep the local resources and treasures among the locals. Not like "colonies" where you rob and steal the wealth and let the natives either die of hunger and starvation or give them weapons and Psyops to kill each other off.

When you settle down, keeping prosperity and law and order among the occupied land is also in your own interest and also you share the destiny with the locals.

I am not Chinese, FYI.

Sun, 07/15/2012 - 15:20 | 2618066 akak
akak's picture

Apologize for totalitarian imperialism much?


Apparently, yes.

Sun, 07/15/2012 - 15:30 | 2618092 LULZBank
LULZBank's picture

totalitarian imperialism?

How do you define that?

I was comparing 2 kinds imperialisms, not justifying either, but I guess running out of arguments make you go stupid?

Sun, 07/15/2012 - 15:36 | 2618117 akak
akak's picture

You were apparently (if not clearly) trying to whitewash and apologize for the brutal and unjustified Han Chinese conquest and colonization of Tibet.

If you disagree with that assessment, then forthrightly come forward and condemn those actions of the Communist Chinese as the crimes against humanity that they are ---- WITHOUT reference to the crimes of the similarly imperialistic ruling US cabal. 

Sun, 07/15/2012 - 16:34 | 2618236 giovanni_f
giovanni_f's picture

china is evil but unlike the u.s. does not send out monsanto-paid by hillary clintons to lecture the world on human rights. And now shut up, stronzo.

Mon, 07/16/2012 - 03:58 | 2619501 LULZBank
LULZBank's picture

You didnt answer my question moron.. and started off with your bullshit.

P.S. In US its a "cabal" like something foreign and unnatural which infiltrated good honest US citizenry. BUT in China, teh culprits are identified.. its the Communist party or the Han dynasty... or just the "Chinese." .. LULZ!!!

Sun, 07/15/2012 - 16:55 | 2618346 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Before the Chinese it was the *British* who invaded Tibet and machine gunned down Tibetan troops, who defended themselves with prayer flags and flintlocks. Brits weren't as determined as the Chinese though.

Sun, 07/15/2012 - 22:06 | 2619089 Overfed
Overfed's picture

Just like that, and maybe even just a bit more ruthless. The Chinese need liebensraum and resources.

Mon, 07/16/2012 - 00:44 | 2619393 prole
prole's picture

Wait I am so confused- Are we talking about China or Eretz Israel?

Sun, 07/15/2012 - 14:17 | 2617850 saturn
saturn's picture

Yes, the world needs to cease powermongering. This problem has been with humans since they became apes. Maybe a bit earlier even? Can we change our genes by the strength of will? So far it seems completely impossible. Majority of people still long to be part of the food chain, not to stand over it. They may thing they are over it, but they are blind to the fact they created their own version of food chain within their society. All because they want to gain power over each other and wish to be worshipped. Quite a pathetic achievment after several thousands years of attempts to build a (scratch) sustainable (/scratch) (underline) highly polarized (/underline) societal model.

Mon, 07/16/2012 - 00:48 | 2619395 prole
prole's picture

"WE Need" "humans apes" "Can't we change our genes and become meek little sheeplets all of us"

Thinking like that is what has led Western Civilization to its own suicide, and the reason why our daughters will be married by the dozens to whichever sheik or Rabbi gains the ultimate ownership of us.

Dear Lord: We did you place me by birth among such cowards?

Sun, 07/15/2012 - 17:46 | 2618479 falak pema
falak pema's picture

so its the colonial hat on the white man's dikk that gives it a magical touch of uber -alles?

How the sheeple love to be raped; as long as its in white man's satin sheets!

Ave Caesar, morituri te salutant! 

Sun, 07/15/2012 - 13:44 | 2617738 MillionDollarBoner_
MillionDollarBoner_'s picture

"And when the fiat dies in America and the troops are all called home there will be another colonization of..."


Easier to reach, speak the same language (ignoring Quebec) and chock full of goodies !;o)

Sun, 07/15/2012 - 14:04 | 2617812 economics9698
economics9698's picture

Dude that is so southpark.

Sun, 07/15/2012 - 14:13 | 2617848 MillionDollarBoner_
MillionDollarBoner_'s picture

Suck my balls ;o)

Oh yeah, and soooo true too!

Sun, 07/15/2012 - 22:23 | 2619130 dogbreath
dogbreath's picture

that will be interesting lots of divided loyalties up here.  If say Al Gore is president the west coast will surrender because he'll shut down the oil sands.  The west coast will insist on the military not destroying the cannabis fields like in afaganistan.   Quebec has probably already had negotiations to become the 52nd state, and the only thing you'll like about them is their women.  A month after the deal you'll be regretting it.  whine whine whine.   the east coast will add 5 milion food stamp recipients.   

Sun, 07/15/2012 - 13:46 | 2617749 timbo_em
timbo_em's picture

"China is not into political correctness."

What country is into political correctness? It's all about promoting one's very own interests. At least that's what I observe.

Sun, 07/15/2012 - 13:56 | 2617786 LULZBank
LULZBank's picture

Dont worry about him, he must be US Citizen. They have a long way to go, to get some common sense.

Sun, 07/15/2012 - 14:02 | 2617809 economics9698
economics9698's picture

America has the Yid police watching our every politically incorrect comment.  

Sun, 07/15/2012 - 14:07 | 2617826 LULZBank
LULZBank's picture

True, they have been crying murder over what the Americans have been doing in the Middle East.

Mon, 07/16/2012 - 00:50 | 2619401 prole
prole's picture

They are serving you master. Are you displeased with their performance?

If you feel they need some motivation you can always run a USS Liberty redux drill on them, that should light a fire of initiative under their feet.

Sun, 07/15/2012 - 13:24 | 2617678 tmosley
tmosley's picture

Help me out here.  Do these agreements mean that the dollar is not used in trade between the agreeing nations, or does it mean that there is an OPTION not to use the dollar in trade between the agreeing nations?  If it is the latter, is there a way to determine to what extent currencies other than the dollar are being used?

Sun, 07/15/2012 - 13:46 | 2617746 MillionDollarBoner_
MillionDollarBoner_'s picture

Oh, the USD is still being used.

"I lipe my arse on American Dorrer...HaHaHA!"

Sun, 07/15/2012 - 13:46 | 2617748 sosoome
sosoome's picture

There's probably an inverse relationship to drone attacks in there somewhere, but I'm not a mathematician.

Sun, 07/15/2012 - 15:17 | 2618060 CrazyCooter
CrazyCooter's picture

My understanding (and correct me if I am wrong) is that this is shaping up as a competing reserve currency. Essentially trade is clearing between the two partners in Yuan via these agreements. This implies accumulating Yuan reserves to facilitate said trade. In some cases there has been a gold/oil/etc barter type arrangement, but the real thing to watch is the Yuan trade.

What gets tricky here, as I understand it, is that a lot of "plumbing" is required to do bills of credit, settle accounts, insure shipments, wire funds, etc to sell/buy in Yuan. This takes time and effort to set up and get going, thus the gradual nature. It also requires trust and critical mass (i.e. a network of one node isn't valuable, but as the network gets bigger its value grows rapidly).

This also implies Yuan debt markets, so those who acquire surplus have something to do with it. So, again, these Yuan debt markets need to be up and running, clearning, etc.

As the Yuan reserve currency status grows (the measure of its role as a reserve currency is a function of the number of trade partners participating - this is not linear but similar to the comp sci subject of the value of networks as a function of the number of participants/nodes), it will put pressure on the dollar. Nations will being to have choices in Yuan trade or Dollar trade. THIS is where things will get interesting.

Again, just my partially (and unprofessional) opinion.



Sun, 07/15/2012 - 23:30 | 2619289 americhinaman
americhinaman's picture

just means it's an option.  it means the govt will provide lines of financing in CNY to banks in africa, who can then provide cny financing to companies who want to do business with china.  for example, if you want to buy some chinese goods to sell in africa, but you don't have CNY to deliver to the chinese company, now there will be a way for you to borrow them via your african bank (who then accesses the CNY swap).  later, when you sell the goods you will have some african currency to pay back to the bank that loaned you CNY to begin with.  they will be able to do their offsetting hedges b/c there are now CNY lines into their country to do so.  works similarly if you're selling rocks and oil from africa into china, just in reverse. 

it also doesn't mean there is no fx risk for doing business, it just opens a credit line that's all.

there are already USD credit lines everywhere, and USD trade will be an option as long as that is so... which will be a long time.

Sun, 07/15/2012 - 13:27 | 2617684 vainamoinen
vainamoinen's picture

not to worry - Larry Summers has got the "work around" - - -

Sun, 07/15/2012 - 16:57 | 2618350 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

more like the reach around

Sun, 07/15/2012 - 13:40 | 2617702 TruthInSunshine
TruthInSunshine's picture

There are rumors of a gold-painted round, only known as the Krugmanite, circulating in the developing world, including African nations. It's composed of 10% tin and 90% nano-coated bullshit particles, and it bares the slogans "In Diocletian We Trust" and "It's Got Electrolytes!" on one side, which is engraved with the likeness of The Bernank, and "What, Me Worry?" alongside the € symbol and the image of a breed standard Weimaraner on the other side.

Locals in villages where these are appearing claim they've seen Antonov An-225 Mriya Cargo Planes, emblazoned with both the great Seal of the New York Branch of the Federal Reserve Bank and the European Union Flag, flying over their skies, and dumping pallets of these coins.

It is speculated by some that this is either a joint American/EU operation to confuse locals, or a Chinese operation to further a mistrust of the currency of the U.S. and EU.

In other news, Chinese state companies are aggressively buying all the tungsten they can find on African markets.

Sun, 07/15/2012 - 14:05 | 2617816 bankruptcylawyer
bankruptcylawyer's picture

Its got electrolytes, classic. you made my day tissy. 



Sun, 07/15/2012 - 13:34 | 2617704 zero19451945
zero19451945's picture

China has a thriving and growing economy and is far more capitalist than the US.

Where do you think capital is going to go?

Sun, 07/15/2012 - 13:47 | 2617759 cossack55
cossack55's picture

Where it always goes. Crony capitalists.

Sun, 07/15/2012 - 13:35 | 2617709 onebir
onebir's picture

I think it's pretty difficult to do anything with RMB outside China. Up until 2010 foreign residents in China couldn't send RMB out of the country (though this seemed to be changing). & even in HK you can't get an RMB account without a residents card. Last time I was there you couldn't withdraw cash from HK branches of mainland banks over the counter. Fortunately ATM withdrawals were allowed.

Unless things have changed, I thnk significant loosening up on RMB convertibility would be necessary for it to become a reserve currency. If ZH's recent reports on hot money flows are anything to go by, that would lead to significant outflows, which would make it considerably less attractive (at least for a while).

Sun, 07/15/2012 - 13:39 | 2617721 moskov
moskov's picture

China will only open the capitals accounts with revealing the gold reserve for the first time when Euro completely diminished and dollar near lifeline support.

Sun, 07/15/2012 - 13:50 | 2617762 MillionDollarBoner_
MillionDollarBoner_'s picture

Dooood! U can get a RMB account in New York!

Where do you live? Do you get out much?

Sun, 07/15/2012 - 13:57 | 2617791 onebir
onebir's picture

Dood! Do U reed links b4 u post vem?

3. May I open an RMB account with you or convert currency between RMB and USD? 

No. We do not provide RMB accounts or currency exchange service between RMB and USD. 

Sun, 07/15/2012 - 14:24 | 2617865 MillionDollarBoner_
MillionDollarBoner_'s picture

"No. We do not provide RMB accounts or currency exchange service between RMB and USD."

But we do accept currencies which are not being Ctrl+P to death...

Sun, 07/15/2012 - 15:51 | 2618160's picture



Unless things have changed, I thnk significant loosening up on RMB convertibility would be necessary for it to become a reserve currency.


It would seem that the nations with which China is trading can start using RMB to trade with each other. Wouldn't that be part of the larger plan?

Sun, 07/15/2012 - 13:36 | 2617711 moskov
moskov's picture

Don't worry! Americans will buy more made in china olympic uniforms to burn.

USSR did the same thing in 30 years ago?so does USSA today

Sun, 07/15/2012 - 13:39 | 2617722 speconomist
speconomist's picture

Which ones are those fancy three-letter economic theories?

Asking from total ignorance.

Sun, 07/15/2012 - 13:52 | 2617769 ebworthen
ebworthen's picture

PPP - Print, Print, Print

CEA - Confiscate Everyone's Assets

BCB - Bailout Central Banks

ERC - Elect Random Crony

ENE - Earnings Not Employment

DDM - Debts Don't Matter

RAT - Raise All Taxes

DIP - Deflate, Inflate, Print

OPD - Offshore, Propagandize, Delude

PRP - Promise, Remove Punchbowl

BCL - Bread, Circuses, Lie



Sun, 07/15/2012 - 15:53 | 2618163's picture

YIY -- Yours isn't yours.

Sun, 07/15/2012 - 13:40 | 2617723 world_debt_slave
world_debt_slave's picture

It's on like....

Sun, 07/15/2012 - 14:18 | 2617870 MillionDollarBoner_
MillionDollarBoner_'s picture

Yeah, it is soooo on...

Sun, 07/15/2012 - 13:51 | 2617729 MillionDollarBoner_
MillionDollarBoner_'s picture

I wonder what they are buying from South Africa with their RenMinBi?


Gold and diamonds spring to mind...or maybe its iGadgets or summat fungible like that?

Sun, 07/15/2012 - 13:44 | 2617739 ebworthen
ebworthen's picture

All pension plans, IRA's, 401K's forced to buy only short term treasuries.

There, problem fixed (as far as Wall Street and Washington are concerned).

Sun, 07/15/2012 - 13:52 | 2617773 MillionDollarBoner_
MillionDollarBoner_'s picture

Not "short term treasuries" - "solidarity bonds"!

Get with the (Groupthink) program, dude...


Sun, 07/15/2012 - 13:45 | 2617745 b_thunder
b_thunder's picture

There's literally nothing that corrupt African leaders wouldn't do when bribed by equally corrupt Chinese businessmen/trade reps.

Accept CNY?  No problem!  Just pay 5% "tax" to the Head of Central Bank

And it's going to be totally different story when Colonization 2.0 starts happening - i.e. the Chinese will attempt to buy real assets in masse for the mass produced trinkets they're selling to Africa now.  And when Africans say "Suck my 9" d*ck, you stupid Chink", then they'll learn that what they count on as a "reserve currency" may overnight be devalued by 50%, or even completely repudiated.


Sun, 07/15/2012 - 13:51 | 2617770 cossack55
cossack55's picture

Thats why you always follow the three tried-and-true steps of westerning:

1) enslave local population

2) liberate local population

3) rape local population for decades


Sun, 07/15/2012 - 14:48 | 2617916 akak
akak's picture

Kind of sounds like the history of the Han Chinese in Tibet to me.

Mon, 07/16/2012 - 08:21 | 2619669 giovanni_f
giovanni_f's picture

Germany (before Adolf Hitler), North Korea (before Kim Il-sung), Iran (before Chomeini) , Venezuela (before Chavez), Cuba (before Castro), Argentina (before Kirchner).

I am being imprecise with this series (but that's ok when dealing with a fundamentalist moron). Chavez and Kirchner have been regularly elected unlike monkey-face GWB ("called condi from the limo") for his first term. How anyone from a nation that has produced creatures from hell such as Cheney, Clinton, Bush, still dares to judge other nations is beyond any decent persons comprehension.

Sun, 07/15/2012 - 13:56 | 2617785 MillionDollarBoner_
MillionDollarBoner_'s picture

Make that "Suck my 7.9" d*ck"

Honestly, DYOR! 

Sun, 07/15/2012 - 13:46 | 2617747 DavidC
DavidC's picture

Well, as the Fed has been the buyer of a higher and higher percentage of Treasuries, all it has to do is increase a little bit more so it's buying the whole lot...


Sun, 07/15/2012 - 13:52 | 2617752 spooz
spooz's picture

Right.  And China is going to use all those resources and capacity to sell their junk to who? Where is this thriving middle class that will take the place of the US consumers?

Sun, 07/15/2012 - 13:52 | 2617772 cossack55
cossack55's picture

Iceland and Finland

Sun, 07/15/2012 - 14:07 | 2617824 spooz
spooz's picture

sorry if I missed the sarcasm, but I don't think two countries who together have about 1% of our population will do the trick.

Sun, 07/15/2012 - 14:21 | 2617882 MillionDollarBoner_
MillionDollarBoner_'s picture


Did I just see "thriving middle class" and "US consumers" in the same sentence?

Is that allowed? Moderator!?!

Sun, 07/15/2012 - 14:29 | 2617910 spooz
spooz's picture

The lack of a thriving middle class is why china has excess capacity problems which will hurt growth.  The US middle class is on life support.  who will take its place for China?

Sun, 07/15/2012 - 17:39 | 2618461 Esculent 69
Esculent 69's picture

“The way to crush the bourgeoisie (middle class) is to grind them between the millstones of taxation and inflation.” Vladimir Lenin

Any of this sound familiar hmmmmmmm?

Sun, 07/15/2012 - 13:48 | 2617754 JR
JR's picture

When you can create money out of nothing you can create crime, you can create destruction.

Fed policy says the economy doesn’t need savings; it can avoid financial doom with a policy of spending and credit, with money created out of nothing. Yet countries that have low savings have low investment, low wages and low profits.

The Fed Piper knows you can’t create spending power out of nothing ,that you can't manufacture debt for unproductive purposes like JPM speculation and consumer spending, using a controlled media as ratcatcher.  The Fed knows it is building a debt load that cannot be repaid, building a debt trap. Why?

This nation, said the late Dr. Kurt Richebacher, is encouraging a savings crisis, promoting “economic backwardness, social decay and its own financial doom.”


Is America to succumb to the Fed/IMF siren song that destroyed Argentina and many other countries and is destroying the EU while its financial hit men confiscate their properties for pennies on the dollar, while at the same time the Fed/IMF is creating U.S. vulnerability by hollowing out her economy via hollowing out her manufacturing base?

George Becker, a president emeritus of the United Steel-workers of America, said in 2003 that as a result of this creeping fiancial tyranny, “China is a clear and direct threat to our interests. They violate our intellectual property, they traffic in goods made by prison labor, they have demanded that we transfer our technology to them, they have proliferated weapons of mass destruction, and the list goes on and on. Are they a threat to our interests? You bet they are!”

Said Becker, “As the world globalizes, we have been helping to create a competitor who will absorb more and more of our jobs, more and more of our wealth, and more and more of our productive capacity. That is a real threat to America’s future.”

Why is this so?  Is America next for national destruction as outlined by ex-IMF John Perkins aka Economic Hitman in the Banksters’ Handbook “Model for Colonizing Nations”?

None dare call it accidental!

Sun, 07/15/2012 - 14:22 | 2617885 Zwelgje
Zwelgje's picture


 'Capital must protect itself in every possible way, both by combination and legislation. Debts must be collected, mortgages foreclosed as rapidly as possible. When, through process of law, the common people lose their homes, they will become more docile and more easily governed through the strong arm of the government applied by a central power of wealth under leading financiers.

These truths are well known among our principal men, who are now engaged in forming an imperialism to govern the world. By dividing the voter through the political party system, we can get them to expend their energies in fighting for questions of no importance. It is thus, by discrete action, we can secure for ourselves that which has been so well planned and so successfully accomplished.'

- Montagu Norman, Governor of The Bank Of England, addressing the United States Bankers' Association, New York, 1924.


Sun, 07/15/2012 - 14:58 | 2617981 JR
JR's picture

Ironic, isn’t it, when it takes the deaths of multiple millions of fellow citizens, rather than the obviousness of deductive reasoning and historical evidence, for the meaning of those words to sink into the collective intellect?  Fortunately, the Chinese have not yet forgotten; unfortunately, if the financial conspirators have their way there soon will be no exits that lead to financial freedom.

NPR’s Frank Langford this morning talked of a survey that shows 60 percent of China’s wealthiest (including bankers) are either planning or thinking of excuses, like a better education for their children, to get out of China.

Why the elite exodus from China? It is generally known that all that money they made could be gone in a minute if they get on the wrong side of the Communist government.

The WSJ in February said applications by Chinese for EB5 investment immigration visas had increased 1000% from 2007 to 2011.  The visas “require an investment of $1 million into an American company (Source: Department of Homeland Security)”.

CNN’s Beijing office reported last November that nearly half of Chinese millionaires were “thinking about leaving the country, while 14% have or are in the process of applying for emigration, according to a Hurun Research Institute and the Bank of China report.

“Their joint ‘Private Banking White Paper 2011’ talked to individuals with assets of more than 10 million yuan (US$1.57 million) in18 cities to find out how China’s super rich manage their wealth. The average asset holdings of the 980 surveyed are 60 million yuan (US$9.44 million), with the average age of 42.”

Sun, 07/15/2012 - 15:17 | 2618056 Zwelgje
Zwelgje's picture

"Why the elite exodus from China?"


My guess is that they're not part of China's inner circle elite. Maybe they made their money via enterprise based on slave labour and that is getting increasingly difficult in the People's Republic.


Even the proles there are not accepting it anymore.


From 2007 till 2011 I worked in the fashion industry. Our Chinese contacts told us in 2010 they had to increase wages by 20% in order to get enough able workers to get the job done.


The Chinese leaving want to enjoy their cash before the crash.

Sun, 07/15/2012 - 16:13 | 2618215 MillionDollarBoner_
MillionDollarBoner_'s picture

Update: I still work in the fashion industry and wages are currently increasing in GuanDong at about the same rate - 20% per annum. Also power, materials, tooling costs are increasing at a similar rate. Automation is the big thing I.e. labour is pricing itself out of the market.

Consider then that the "market" is us. So what's actually happening is that Chinese labour is becoming too expensive for us to buy.

Kinda puts a different slant on things, doesn't it?

Sun, 07/15/2012 - 14:28 | 2617906 MillionDollarBoner_
MillionDollarBoner_'s picture

"they traffic in goods made by prison labor"

Gotta love that! Soooo ironic! Or were you being sarcastic?

Sun, 07/15/2012 - 15:15 | 2618049 JR
JR's picture

The point is, we’re not there yet. We’re talking about a nation, China, that is the example of what tyranny does.

Sun, 07/15/2012 - 13:54 | 2617776 q99x2
q99x2's picture

Reserve currency status is a trick played on sheeple.

Sun, 07/15/2012 - 13:59 | 2617797 spinone
spinone's picture

As long as OPEC only takes dollars for oil, no worries.

Sun, 07/15/2012 - 14:16 | 2617858 jimmyjames
jimmyjames's picture

OPEC doesn't only take dollars-

Are you saying the EUR has to be exchanged for USD before Germany or France can purchase ME oil?


There is such a thing as currency exchanges-in all countries--if-there was such a rule (there isn't) what would stop any OPEC country from immediately-within a nano second of the trade-exchanging those supposed risky USD only trades back into any world currency of their choosing?

Sun, 07/15/2012 - 14:32 | 2617909 spinone
spinone's picture

Yes, OPEC does only take dollars.  That's exactly what I'm saying.

Sun, 07/15/2012 - 15:06 | 2618008 jimmyjames
jimmyjames's picture

Yes, OPEC does only take dollars.  That's exactly what I'm saying


Not true--OPEC oil is only "priced in USD-

All currencies are fungible-your USD only falls apart because of that fact-

Key word below.. "increasing" as in adding to the "foreign reserves"

Some OPEC members have said they will consider increasing transactions in euros. The dollar has fallen almost 15 percent against the euro in the past 12 months.

Sun, 07/15/2012 - 22:17 | 2619115 tmosley
tmosley's picture

Just because it is fungible doesn't mean it is accepted in trade.  If you doubt this, go try to use your perfectly fungible gold to buy something at the store.

Mon, 07/16/2012 - 11:56 | 2620414 Goner
Goner's picture

While this is technically possible in Utah its not really likley. But I do find some of the moves being made in Utah interesting in a first baby step sort of way.

Excluding the huge NAS spy center

Sun, 07/15/2012 - 22:53 | 2619209 spinone
spinone's picture

No, dollars are the settlement currency for oil with OPEC since 1975

Sun, 07/15/2012 - 14:00 | 2617801 bankruptcylawyer
bankruptcylawyer's picture

has everyone here gone half retarded. have you forgotten the last 30 years of military intervention in the middle east?

when america goes broke, we will simply TAKE the oil that our war machine requires in order to perpetuate the next big 'reset' war. 

the reason the british economy and military machine tanked, is because other nations' militaries superceded their own. 


If i were russia , I would get Iran not to nuke Israel, but to Nuke the Saudi Arabian/Emirati major oil fields. This would result in a counter strike on persian fields, and in one fell swoop , Russia will have set the winning terms for the next world war, without money to buy oil from 'free' countries, and without Saudi cooperation, the united states will have a shit of a time moving its navy and air force around.



Sun, 07/15/2012 - 17:34 | 2618445 Esculent 69
Esculent 69's picture

Can you say Oh Canada? If you think the Canadians are going to let Russia or China protect them then that is aboot the funniest thing i heard since Obama said the private sector is doing fine. Canadians might be peaceful Socialist fools, but they are not full retard Commie bastardos.

Sun, 07/15/2012 - 14:10 | 2617836 jimmyjames
jimmyjames's picture

We have looked at the currency rate risk management of the reserve portfolio. I think the yuan has performed very well, supported by the huge international reserves of China.


Maybe because at this point in time-the so called Yaun performance is because it is locked to the $-

Break the lock first and let's see if it's weaker or stronger-

Sun, 07/15/2012 - 14:14 | 2617840 Gromit
Gromit's picture

Isn't this all a little silly?

1)  The Chinese don't buy US securities because they want them but instead to manipulate the value of the Yuan 

2) The Yuan is not a convertible currency.

3) Not really a problem becasue it's tied to the dollar which is convertible -  so

3)  What's the big deal?

Sun, 07/15/2012 - 15:21 | 2618071 Bobportlandor
Bobportlandor's picture

That ties to my question. Wouldn't China have to decouple  to avoid the suction down?

Sun, 07/15/2012 - 14:54 | 2617875 akak
akak's picture


China is slowly taking over the world's real assets.

Can you say "blobbing-up", boys and girls?

I knew you could.


Li Dongrong, assistant governor of the People's Bank of China

Made me laugh!

I always suspected that most central banksters are wrong dongs.

(But this one being a Chinaman, certainly not a long dong.)

Sun, 07/15/2012 - 14:20 | 2617879 deez nutz
deez nutz's picture

can my credit cards be denominated in yaun? issued by China?

this scares me if I am unable to excerise my gddam american right to make debt!! fck this make war with china!! 

Sun, 07/15/2012 - 14:35 | 2617923 goforgin
goforgin's picture

Excellent idea. Dollar to the moon!

Sun, 07/15/2012 - 14:41 | 2617936 kito
kito's picture

Buy happy. get your renminbi denominated bank account open before world wide capital controls kick in.....

Sun, 07/15/2012 - 15:08 | 2618019 New American Re...
New American Revolution's picture

Unilateral trade agreements are always the prelude to war.

Sun, 07/15/2012 - 15:10 | 2618028 blunderdog
blunderdog's picture

Well, for sure we need some kind of competition if we're ever going to blow up our current debt system.  If it has to be the RMB we need to dash the dollar against, so be it.  Everyone was probably hoping for something with a bit less schadenfreude.  If only they'd bring back the Deutschmark.

Sun, 07/15/2012 - 15:35 | 2618115 WallowaMountainMan
WallowaMountainMan's picture

its all the same money pit no matter how u slice the tomato we call the planet.

tie my money to a communist politburro decision making manipulating machine that must eventually fight its people to the death over 'freedom'?

or a failed zone of disparate governments? 

or to one private bank with unlimited printing capabilities?

hey, 6 a one, half of the odder. or is that evenner?



o/t the euro fix: break up, keep the euro circulated, pegged, no new ones control p'd, and let all countries print and sell to their own stuff to their hearts delight. euros deposited, euros replaced by that country's paper.

just a theory. :)


Sun, 07/15/2012 - 15:51 | 2618158 JamesBond
JamesBond's picture

anyone with their eyes open for the past twenty years knew china was playing for contorl of africa.

this is no surprise 



Mon, 07/16/2012 - 03:02 | 2619477 slackrabbit
slackrabbit's picture

Having worked in Africa I can say that  our use of their countries as cold war points hasn't left the West with many fans, but their are still plenty of mines fields and the local population blind, deaf, limbless or dead. 

Its not so much as CHina controls Africa but more like we are deeply unpopular.....then there's also that whole slavery issue....

Sun, 07/15/2012 - 20:24 | 2618873 Money_for_Nothing
Money_for_Nothing's picture

China is about to take the fall.

Obama will suddenly find a reason to nationalize all the US treasuries that China owns. That will give him enough money to buy the election without having to get Congress to raise the debt limit. That will be the final coup de grace to trade with China. With all the fracking natural gas he will fart in the face of the other world leaders.

Sun, 07/15/2012 - 21:35 | 2619024 silverdragon
silverdragon's picture

As China makes most things and all that trade will be in Renminbi or the buyers currency which has to be better than a dollar, the dollars future is bleak.

The Chinese must have about 30-40 currency swap agreements so far. Another 150-160 to go.

Then the Chinese will inform the world of how much Gold they actually have. This will be the nail in the coffin of the dollar.

The dollar will devalue against everything.

The good news for America is that everything they make will be dirt cheap Harleys and Mustangs for peanuts. Military kit on the cheap for govts, then US manufacturing will claw its way back.

Americans that don't have Gold and Silver will be f*cked as everything will be devalued massively.

A decade of economic ugliness and then the light at the end of the tunnel. The hard bit will be dealing with what France and UK had to, which is getting used to being a power that is just one of many powers.


Sun, 07/15/2012 - 22:08 | 2619096 antisatan
antisatan's picture

on the subject of China, there is one paper I strongly feel all should read, and keep in mind as they move forward...

Do NOT follow this link or you will be banned from the site!