World's Second And Third Largest Economies To Bypass Dollar, Engage In Direct Currency Trade

Tyler Durden's picture

To all who still think that in the war of attrition between the USD and the EUR (because contrary to what some have "discovered" only recently, currency wars have been going on for a long, long time and will continue to do so, before morphing into trade and real wars), in which both currencies are doomed, and where the winner takes it all, if only for a few minutes, we bring to your attention the following most recent update out of the Pacific Rim (where incidentally the Shanghai Composite has resumed its relentless track lower with the obvious intention of closing 2011 at its 52 week low) in which we find i) that the dollar's hegemonic control over the world is ending, and ii) that the mercantilist relationship so long sustained between China and the US, may be shifting and reversing, and in its next metamorphosis will see Japan buying the bonds of... China (although probably not for long - see next post). As Bloomberg reports, "Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for the exchange, to cut costs for companies, the Japanese government said. Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday." And before someone blows it off as merely more foreign relations posturing, "“Given the huge size of the trade volume between the Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd." As for China's reverse mercantilist move, one which will stun anyone who believes that Yuan is still undervalued, "Finance Minister Jun Azumi said Dec. 20 buying of Chinese bonds would be beneficial for Japan because it would help reveal more information about financial markets in China, the world’s largest holder of foreign currency reserves." Speaking of, has Albert Edwards gloated yet that given enough time, he always ends up being proven right, in this case about the CNY's upcoming devaluation?

Some more on the direct FX bypass, something which should piss of USD traders quite a bit, from Bloomberg:

Encouraging direct yen-yuan trades will aim to reduce currency risks and trading costs, Japan’s government said. Currently, about 60 percent of trade transactions between the two nations are settled in dollars, according to Japan’s Finance Ministry. China is Japan’s biggest trading partner.


Then-finance minister Noda said in September 2010 that Japan should be able to invest in China’s market given that China buys Japanese debt. Japan holds $1.3 trillion of foreign- currency reserves, the world’s second largest.


Austria has already been granted the eligibility to buy Chinese bonds, according to the Japanese government official. Central banks from Thailand to Nigeria plan to start buying yuan assets as slowing global growth has capped interest rates in the U.S. and Europe.


Investing in Chinese debt has become easier for central banks as issuance of yuan-denominated bonds in Hong Kong more than tripled to 112 billion yuan ($18 billion) this year and institutions were granted quotas to invest onshore.

So while the US and Europe bicker over just who it is that will first end up bailing out one then the other, those who are supposedly doing the bailing, have decided to gradually move away from the interminable financial sink hole that is the developed world. All that needs to happen next is for Russia and India to join this compact, and Jim O'Neill will be proven 'right', although with a 100% inverse outcome to the one desired by the Goldmanite, as globalization proceeds merrily on its way... just without the US and Europe.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
King_of_simpletons's picture

Once the decoupling happens DOW 36000 is on the way. Enjoy the holodeck recreation of a perfect never ending bubble.

wanklord's picture

Blame the Baby-Boomers for all the ongoing disgraces of this country, that's why they are considered America's failed generation. These good-for-nothing invested their deprived intellect in experimenting with all types of drugs and having very promiscuous (and many times deviant/unnatural) sexual lives.

In fact, the following video taken at Woodstock in 1969 clearly depicts what Baby-Boomers were all about:

Consequently, their offspring are the best evidence that defect genes have been transmitted from one generation to the next; worst of all, the chances that their descendants' DNA carrying a more complex sequence of these defective genes are 100% guarantee -these new generation of Americans can fairly be described as subhumans.

DaveyJones's picture

I hear Adam and Eve were boomers. your defective genes are showing

economics1996's picture

Santana was great!  As for the blame, think of it this way, the baby boomers paid for the silent generation’s retirement and medical bills, and will get nothing in return.  Any boomer after 1950 is toast.

If you want to blame a generation blame the silent generation, they are the gimme generation who never saw a government program that they could resist.  They were the ones who foisted the generational theft upon us.

Bananamerican's picture

Dude, don't attempt to pee on Boomers saying, "the following video taken at Woodstock in 1969 clearly depicts what Baby-Boomers were all about", then, link to

Stuck on Zero's picture

I saw a bumper sticker the other day:


George Bush's Legacy:  No Child Left a Dime



DosZap's picture

Stuck on Zero

I saw one for Obammy, that said: ALL Children left to live off YOUR dime.

Non Passaran's picture

Ah, I see, very scientific! And on the topic, too.

Ima anal sphincter's picture

Didn't we see the EXACT same post two days ago? The blame is on ALL Americans for allowing the banksters and their minions to absolutely destroy this country.

Have you EVER shopped for cheap Chinese crap at Walmart? Have you resisted paying taxes? Have you EVER written your representatives (although I use that term lightly)? Have you ever spoke the truth about 911 to friends and family?

Just what have YOU done? All I see is a repeated post by a young UNEXPERIENCED kid who has NO clue about the big picture.

Get off your ass and DO something if you want things to change.

Bob's picture

He's posted that same dumbass comment verbatim at least 4 times that I have seen. 

Apparently such inspired genius is best honored by cut and paste trolling. 

Oh regional Indian's picture

Bob, though if you look beyond the broad brush and his purposefully denigrating tone, what he is saying is somethign that needs paying attention to.

Probably not too many ZHers fall under the ambit of what he is saying but boy, a lot of Americans do.

It's two things really or three.

1) With leadership comes responsibility. Amercia has shown none and neither have the boomers.

2) Boomers got assimilated. Totally. I lived in Marin county, north of the bridge in NorCal. I saw it, everywhere. Stinking rich, sold out boomers in their fancy cars and their tie-dye and multi-million dollar homes.

3) Woodstock was a CIA op. Specifically a drug op. It was a horror story through and through, in-spite of the glanourization. Wavy Gravy was a CIA payroll drug dealer. A motorcycle gang was in charge of security!!!!

So, blame and finger-pointing aside, people in the US seem guilty by sins of omission or commission. True to a greater or lesser degree worldwide, but then again not too many countries have fought or instigated so many wars, dropped nuclear bombs, poisoned their own population AND dumbed them down...

while the people did nothing. See how OWS is gone?



chubbar's picture

If you are going to assign responsibility to someone then they must also have had the authority to have made a change. Individually, other than POSSIBLY an elected official, that is not the case.  Our system of gov't gives the illusion that we all have a "vote" in who represents us but they fail to mention the representatives are purchased and vote completely against the best interests of the voters who put them there. Doesn't take much observation to see this is the case. So, I completely disagree with your assessment that "baby boomers" were anything other than snookered into believing they were being fairly represented. I might also go for the idea they believe there is a free lunch, but they were firmly led down that road as well starting in 1913.

Ranger4564's picture

I can't disagree with you more.  The reason the entire world is in the toilet and being flushed, is because of the excuses, lack of initiative or responsibility, and the projection of responsibility onto someone else.  When the going's good though, everyone and their mother want the positive credit.  But when things are deteriorating, it's always someone else's resonsibility.  You're ignoring a major point, everyone has justified self-seeking in the biggest con of them all, self-reliance, so none of the elected representatives are concerned for other's welfare, most by intention, some by simple mindedness.

My recommendation, do not rely on someone else to fix something for you.  In this world of greed and self, no one gives a crap about you or anyone other than the self.  Fix it yourself or watch as things get much worse. 

chubbar's picture

Well, you seem to know about the problems of our country but I notice they are not fixed. Since you claim that each individual is responsible for the state of the world, nation or city, why is it that you have been unable to fix what you see is wrong within any of these systems? I say it is because you don't have the power/authority to do so. You may be able to control some things within your immediate sphere of influence but you have not fixed what we are talking about here. I can only implore my representatives to do the right thing, I can't make them do so. I take my own initiative to protect my family as best I can given the laws I'm forced to follow or the limits of my income, time, energy. Other than that, I'm not sure I follow what I am able to do that I'm not doing? I don't see much being fixed regardless of my desire to see them fixed and my pleading with my representatives to do so? Please advise how I should be going about fixing the world?

Ranger4564's picture

I have been doing my part all of my life.  The problem is, the vast majority have not been, and in most cases, working against my progress.  I did not say an individual can overcome the majority, I said we all need to be concerned citizens.  By the way, the US is not the only country with problems by any means, the whole world is buried in cultures that are the root of the problems.  I think the whole world needs a do-over.  And the only place to look is in the mirror.  Start doing something and hope others catch on.

chubbar's picture

Well, I can agree with everything you say. I've been doing the same. But when someone accuses me, as a member of a demographic group, of ignoring/encouraging the excesses and problems of the world, and I know I've been fairly proactive in trying to stop the activity he is accusing me of encouraging, I get defensive and call bullshit. Lumping everyone of a certain age range and making generalized statements is idiotic and I refuse to let someone get away with that nonsense. I agree with your comments, excluding the language which implied that you agree with the idea that all baby boomers somehow "let or encouraged" the leadership of this nation do any fucking thing. These asshats have been on autopilot for decades and pretty much do what they want regardless of what you and I ask them to do or who we vote for. I'm hoping Ron Paul can at least get some Executive Orders repealed and be around long enough to give decent, informed input when this current monetary system comes crashing down. Other than that, we are off the cliff and busy enjoying the view.

DosZap's picture


I have been doing my part all of my life

Sorry bro, thats not good enough, 50% of this site blames you NO Matter what you have or haven't done,simply because of your age grouping.

You are the cause of ALL our problems, and everyone that was born doing those years.

They want us dead,and they do not want to contribute a cent (like we have all our lives to help our elders),we are the reason they are/will be  failures.

Save your breath....................they have already made up their minds.

Smiddywesson's picture

What he is saying is that hundreds of millions of innocent people deserve what is happening to them because they can't or won't understand a conspiracy that is designed to go undetected.  I'm sorry, I can't go along with that.

I'm no more greedy for buying an SUV than my parents were for buying that loaded station wagon.

The same goes for a larger house when my parents owned a beach house.  How many people do you know who one one of those bad boys today?

I'm no more greedy than my parents for taking a vacation like them.

Hello, I'm Joe Six pack.  I work longer hours, commute further, limited myself to two kids, and my wife works too.

Anyone who says the average guy, who really has all the votes, is in anyway morally responsible for the most powerful and unseen conspiracy in the history of the world has to reconsider how he views reality.  The central banking conspiracy works like the roots of a tree slowly cracking a sidewalk.  A normal person can't see it and doesn't have the time or the werewithal to learn the truth. 

nmewn's picture

Smiddy hits it out of the stadium again...right through some idiots windshield in the parking lot, who's inside watching the game bitchin about his seats and the price of popcorn.

StychoKiller's picture

Just about EVERY post from the Wanklord is the same!

Hugh G Rection's picture


Although your avatar makes me throw up in my mouth, I agree with your comment.

I have been ostracized from the supposed aristocracy of my community for being too vocal about 9/11, the banking cartel, and the imminent doom of the great unwind.

For every one person that I reach, it is worth 30 people giggling about what a tinfoil "twoofer" I am.  At this point I enjoy being mocked for fighting for the truth.  I feel much more fulfilled than when my life was consumed with possessions and meaningless materialistic bullshit.

Transformer's picture

Are you guys kidding?  That stuff from Wanklord is funny shit.  I just copied it and sent it to some of my friends who don't read ZH.  And the link to Santana at WS is a very cool one.  LMAO

Ima anal sphincter's picture

Big D...   It doesn't matter what people think any more. Scream it out. I did it to the most senior man at my facility last week. It started with a news clip about a soldier coming home to his two year old daughter. Touching..... yes, but it's the same ol-thing. "BE A SOLDIER - BE A HERO". should be "BE A SOLDIER - BE A PAWN, MURDERER, COUNTRY DESTROYER, AGENT FOR THE BANKERS......"

This gentleman's father was career military and he didn't take my statement lightly. (I was stupid enough to serve also, so my statements had some backing.) I let loose about 911 and how anyone who still believes the "official" story is a brainwashed sheeple dumb-ass. (He, like most folks believe what comes out of that damn boob tube). The barrage continued..... if you know the truth about 911, then you understand that EVERYTHING after that is a LIE. Iraq, Afghanistan, Pakistan, Syria....and ALL the rest of the counties we've fucked up.  THE MILLIONS OF PEOPLE WE'VE MURDERED.

Homeland Security, Patriot Act, this last piece of crap NDAA....are ALL acts to TAKE YOUR FREEDOMS AWAY.

I explained to him the facts on Iran, a country who has not attacked anyone in over 200 years. I told this gentleman that we WILL do it. We will murder millions more. We will destroy another country.We will start WWIII to cover the bankers asses.

I THEN explained what has to be done to "right this ship". That there is no other options. (I can't say it here on ZH, but many are understanding the need). At that point....he left.

To the people who DO understand. Speak the truth to family and friends, co-workers, people on the street.... This nightmare must end. The power is with the people, USE IT.

Ima anal sphincter's picture

My statements towards military members was too harsh. Nobody joins the military with the intentions of doing what I mentioned above. You join with the thought of serving your country and being the "good guy", but once you sign on that dotted line and lift your right're THEIRS. You no longer have any control over you own life and you will be USED at the whim of tyrants.

How many military members are "protecting" the USA? How many are overseas "fighting terrorism'? Just what IS fighting terrorism? Is an insurgent an enemy? Maybe an insurgent is a citizen of a country who is fighting off an invader. So's who's the invader in all these cases?

As my good buddy Henry (Zionist piece of shit) Kissinger said...Military men are dumb, stupid animals to be used as pawns for foreign policy.

Please understand I mean NO disrespect to any military member, just understand what you're being USED for.

SilverRhino's picture

Nobody joins the military with the intentions of doing what I mentioned above. You join with the thought of serving your country and being the "good guy"

Crudely put, but true.  "War is a Racket" - Smedley Butler ... it is required reading for any of my children before joining the military.  

Semper Fi (USMC 89-95 here)

AnAnonymous's picture

Didn't we see the EXACT same post two days ago?


Factual statements do not require to be rephrased ever and ever again.

Bob's picture

Maybe not, but even you give it the effort of trying, AA. 

We expect more from "the US citizen," though. 

Real Estate Geek's picture

Seems like WL is a bot.  I say that because his posts tend to be at the very top of threads, indicating a high rate of page refreshing, and those posts are seldom relevant to the topic at hand.  What's a shame is that we respond, allowing "him" to sidetrack the discussion.

Ranger4564's picture

Exactly what I've been trying to communicate.

RockyRacoon's picture

Thanks for that link!  I was almost tempted to give you a greenie -- but I didn't.  Great stuff.

DaveyJones's picture

it is a great solo. funny, now it's our leaders who are tripping

RafterManFMJ's picture



Don't blame me, I voted for Kodos

maxcody's picture

Look further than the Democrate, pro- union tax and spend politics times since FDR.

Then the two Bushe turned liberal and the last one dumb plis Obomanomics toput

the icing on the table.

Pondmaster's picture

Lord of the Phallus-


What drivel - now to find a fish to warp with printed version of your whining tirade - nuff said . WAH WAH WAH - Ah forget it , I don't want to spoil a good fish .

DosZap's picture


You simply are missing most of your marbles.(Wanking off will do that ya know).

To Throw ALL BOOMER'S into the Woodstock Festival mindset, and say that all are the same , like we were all there is asinine, as you are an ignorant bigoted Assa-Whole.

I am from that Gen, know likely a couple of thousand folks, and not ONE attended this sixties flower child dopefest.

It in no way, defines several Generations of Boomer's,your just a hate filled,spiteful DICK.

Ahmeexnal's picture


This practice will be adopted by ALL nations.

No longer shall a "reserve currency" be used. It will be direct trading between currency pairs.

The world knows that "reserve currency" means "parasitic currency".



macholatte's picture

Let's say you're another country and you bought into the whole globalism thing and you were doing pretty good making stuff and selling it all over the world. Then the cover came off and the box opened and voila... you saw your so called trading partners coming unglued because your business model really did work, you put them out of business and you would be going down with them very soon. Holy shit! Those aren't trading partners, they're anchors around your neck. So you look around for someone, anyone to work with to help you bail yourself out.

It's all natural ebb and flow. Every man for himself. While the American tax payer gets it shoved up his collective ass the sheeple continue to graze. Oblivious to the wolves coming up the hill.


We have the wolf by the ears, and we can neither hold him, nor safely let him go. Justice is in one scale, and self-preservation in the other.”

-- Thomas Jefferson


“We all know, from what we experience with and within ourselves, that our conscious acts spring from our desires and our fears. Intuition tells us that that is true also of our fellows and of the higher animals. We all try to escape pain and death, while we seek what is pleasant. We are all ruled in what we do by impulses; and these impulses are so organised that our actions in general serve for our self preservation and that of the race. Hunger, love, pain, fear are some of those inner forces which rule the individual's instinct for self preservation. At the same time, as social beings, we are moved in the relations with our fellow beings by such feelings as sympathy, pride, hate, need for power, pity, and so on. All these primary impulses, not easi ly described in words, are the springs of man's actions. All such action would cease if those powerful elemental forces were to cease stirring within us. Though our conduct seems so very different from that of the higher animals, the primary instincts are much aloke in them and in us. The most evident difference springs from the important part which is played in man by a relatively strong power of imagination and by the capacity to think, aided as it is by language and other symbolical devices. Thought is the organising factor in man, intersected between the causal primary instincts and the resulting actions. In that way imagination and intelligence enter into our existence in the part of servants of the primary instincts. But their intervention makes our acts to serve ever less merely the immediate claims of our instincts.”

-- Albert Einstein



AnAnonymous's picture

Let's say you're another country and you bought into the whole globalism thing and you were doing pretty good making stuff and selling it all over the world. Then the cover came off and the box opened and voila... you saw your so called trading partners coming unglued because your business model really did work, you put them out of business and you would be going down with them very soon.


If it was that simple, US citizens would have done it already.

midtowng's picture

I'm curious how a nation with 220% debt/GDP is supposed to bail out China, which happens to be the nation that is supposed to bail out the entire world?

How exactly is that supposed to work?

tenaciousj's picture

Step 1: Press Print

Step 2: Press Buy Bonds

economics1996's picture

$4.6 trillion just waiting to be dumped on the open market.

High Plains Drifter's picture

japanese buying chinese bonds?  tell me its not so?  

Schmuck Raker's picture

It is so so. Also so, China buying Japanese bonds.

[tie 2 rocks together...]

Backspin's picture

163 word opening sentence.  Not bad.  Not a record, but not bad!

VisualCSharp's picture

The tendency of Zero Hedge's numerous writers to digress multiple times in story summaries is simply mind-boggling.

francoismathieu's picture

Good for my mountain of Yuan.

High Plains Drifter's picture

the nips are cosying up with the chinese because they may have to rent mongolia for a few hundred years pretty soon.....