America to devalue by 50% @ G20?

[mooncliff]

Re: America to devalue by 50% @ G20?

Fascinating, nearly unbelievable, story about how inflation was stopped in Brazil.

http://www.npr.org/blogs/money/2010/...y-saved-brazil

[bill]

Re: America to devalue by 50% @ G20?

What type of IMF deal did Timmy present to China?
http://www.marketwatch.com/story/us-...k=MW_news_stmp

Oct. 9, 2010, 10:31 a.m. EDT
U.S. ties China currency move to IMF power deal

By Greg Robb
WASHINGTON (MarketWatch) -- The United States has linked a faster rise in China's currency to a deal that would give the Asian country more sway at the International Monetary Fund. In a speech to the IMF's governing council on Saturday, Treasury Secretary Timothy Geithner said any agreement to give emerging market economies more voting power at the IMF "needs to be accompanied with more progress by countries, particularly the surplus countries, towards more market-oriented exchange rate policies and policies that will reduce reliance on exports and strengthen domestic demand." The top Chinese representative at the IMF talks, Zhou Xiaochuan, the head of China's central bank, has already rejected any link between the two issues. The U.S. has been seeking new levers to force China to let its currency rise.

[GRG55]

Re: America to devalue by 50% @ G20?

What type of IMF deal did Timmy present to China?
http://www.marketwatch.com/story/us-...k=MW_news_stmp

This is useless for the USA, and everyone else concerned about the yuan exchange rate against their own currency.

The first rule of negotiating is never trade a certainty for an uncertainty. If they cut such a deal, China gets the certainty of an increased role in the IMF [once given how do they ever take it away?], and everyone else gets the uncertainty of whether China will really do anything material about the yuan exchange rate.

[bill]

Re: America to devalue by 50% @ G20?

This is useless for the USA, and everyone else concerned about the yuan exchange rate against their own currency.

The first rule of negotiating is never trade a certainty for an uncertainty. If they cut such a deal, China gets the certainty of an increased role in the IMF [once given how do they ever take it away?], and everyone else gets the uncertainty of whether China will really do anything material about the yuan exchange rate.

I don’t know what type of deal was proposed.
Negotiations have been going on for some time.
We had a discussion regarding the same back in jan,08.
http://www.itulip.com/forums/showthr...25689#poststop

That said I don’t see any satisfactory agreement produced from G-20 meeting. Pressures will continue to build and only when an crisis exists will there be change.
Any way here’s some more IMF news.
http://www.nasdaq.com/aspx/stock-mar...-in-washington

LIVE: News And Notes From IMF, World Bank Annual Meetings In Washington




The International Monetary Fund and World Bank are holding annual meetings in Washington where world financial leaders are grappling with how to fuel a more balanced global economic recovery and avoid a possible global currencies war. The meetings, a stepping stone toward a major gathering of Group of 20 political leaders in Seoul in mid-November, are expected to offer glimpses on how a number of global economic issues might be addressed or not addressed by world leaders.

(15:25 EDT) The dollar's status as the world reserve currency makes it very difficult to reach currency agreements that resolve the disputes dominating this week's IMF and World Bank, says an executive from one of the world's biggest emerging market investment firms. Instead, global economic imbalances require the creation of a new international monetary system that "reduces the importance of key currencies" (i.e. the dollar) and "integrates emerging market currencies" (i.e. the yuan), says Ousmene Mandeng, who heads the public sector advisory service at Ashmore Investment Management, which invests most of its $35 billion in assets under management in emerging markets. Given that the yuan is not fully convertible, Mandeng is trying to sell central banks on the solution of a common fund into which they would agree to divert their reserve holdings over time. And who would manage the fund? "Ashmore," Mandeng replied, only half joking. ( Michael Casey)

(13:20 EDT) In addition to being vocal on the yuan at the IMF and World Bank meetings, Chinese officials maneuvered on the currency issue by announcing with Turkish officials that China and Turkey would start engaging in trade using their own currencies, effectively excluding the U.S. dollar. The two leaders also pledged to triple trade between China and Turkey to $50 billion within five years, and to $100 billion by 2020, speaking at a joint press conference in Ankara. "We are forming an economic strategic partnership...In all of our relations, we have agreed to use the lira and yuan," Turkey's Prime Minister Recep Tayyip Erdogan said at an appearance with China Premier Wen Jiabao. (Joe Parkinson)

(12:17 EDT) If not now, when? Multiple world finance leaders--including from the U.S., France, IMF and the World Bank--are calling for greater IMF involvement in resolving escalating global currency tensions that many say are threatening to undermine the economic recovery. But that hasn't phased some officials. "This is not the place to talk about that sort of issue," said Rintaro Tamaki, vice finance minister for international affairs, when asked about the dollar's fall below the psychologically important Y82 mark earlier in the day. Asked about the yuan, Russian Finance Minister Alexei Kudrin declined to comment, saying "the issue is too sensitive for markets." (Takashi Nakamichi, Ian Talley and Michael Casey)

(12:14 EDT) Currency samba? Brazilian Central Bank Gov. Henrique Meirelles avoided using language that the country's finance minister, Guido Mantega, used- -calling on a global "currency war"--saying that officials are not targeting any specific exchange rate but only looking to protect themselves from the " excessive liquidity in dollars as a result of the American policies." Meirelles added, "Our aim is at avoiding the building up of imbalances in the Brazilian economy." Brazil is still in the process of implementing regulation to contain gains in the currency but it's still too early to gauge the effect of this week's increase in a tax on foreign investors, Meirelles told reporters in Washington. (Kejal Vyas)

(9:52 EDT) U.S. Treasury Secretary Timothy Geithner has lined up a barrage of bilateral meetings Friday in what's likely to be a campaign to drum up backing for greater international pressure on China to quicken the pace of its yuan appreciation. The secretary said earlier this week it was counter-productive for other nations getting hit by China's undervalued currency for the U.S. to shoulder the burden of taking Beijing to task. Geithner plans to meet with senior finance officials from France, the U.K., Russia, the E.U., Mexico, Australia, Israel and the U.A.E., and with central bank governors later Friday evening. Geithner's also likely to press some of those countries that have fiscal room to spare to delay budget-tightening planned to start next year to allow the nascent recovery a little more air to breath. (Ian Talley)
(9:14 EDT) Chinese leaders, including People's Bank of China Gov. Zhou Xiaochuan, arrived for the IMF plenary session Friday looking confident and relaxed despite being under pressure from the U.S. and Europe to have a more flexible currency exchange rate policy. China, usually low key at international finance summits, also is on a publicity blitz at the gatherings in Washington. Zhou has at least four public speaking engagements during the meetings, including a major keynote speech before the Institute of International Finance on Sunday. PBOC Deputy Gov. Yi Gang, speaking Thursday, has already said China won't allow a more pronounced appreciation of the yuan. (Joy C. Shaw and Mark H. Anderson)

[shunter]

Re: America to devalue by 50% @ G20?

Bed Bugs, Gold Bugs, Monopoly Money, and Faith

By H S

Money is an object (usually paper) that a group of people have agreed to share/trade with each other in order to engage in commerce. Implicit in this agreement is an act of faith – a trust and belief that this piece of paper has some sort of intrinsic value. I like to think of money’s intrinsic value as ‘sweat equity’. Sweat equity implies work or effort; money should therefore represent something not easily obtainable. If a blade of grass represented, say 1US$, then I would be a millionaire many times over after mowing my lawn for a summer or two. Clearly, cutting one blade of grass has very little sweat equity. Equivalently, when a government prints money at will to meet its fiscal obligations or to help its citizens with personal debt or financial problems, this newly printed money lacks any ‘sweat equity’. And if a government does this too often its fiat currency becomes no more valuable than Monopoly Money. What has caused this depreciation in its value? A lack of faith and trust in the money representing something of intrinsic value since it is now produced at a whim.
Bed bugs are nasty irritating little creatures. Governments with loose monetary policies, i.e. those that practice quantative easing on a massive scale, use the derogatory term ‘Gold Bugs’ in reference to a small group of people who insist on using a
hard currency. That is, a form of money backed by precious metals such as gold and silver. Why would a group of people (this is mandated in the US Constitution) want their money backed by gold and silver? Because any form of currency backed by precious metals will always maintain its ‘sweat equity’. The sweat equity is implicit in the gold since it takes energy and effort to mine the gold and because gold is of limited supply. Why should one care about maintaining sweat equity in ones currency? Because this forces one’s government to be honest in the promises it makes to its citizens (think underfunded Social Security obligations) and would smooth out the more dramatic ups and downs of the business cycles. Now if you were a politician (a group of people known for failing to keep their promises) would you rather have a paper backed currency or a hard currency?
Here is what's happening. Countries around the world are devaluing their currencies in order to promote exports. US dollars are flooding into emerging markets and this is causing inflation in these countries.
It is only a matter of time before these excess US dollars turn around and start to cause inflation here at home.

[touchring]

Re: America to devalue by 50% @ G20?

This is useless for the USA, and everyone else concerned about the yuan exchange rate against their own currency.

The first rule of negotiating is never trade a certainty for an uncertainty. If they cut such a deal, China gets the certainty of an increased role in the IMF [once given how do they ever take it away?], and everyone else gets the uncertainty of whether China will really do anything material about the yuan exchange rate.

There's a Chinese saying that literally translates into One hand holding onto the cash, and the other hand holding onto the goods.

This is how deals are done in China, you don't let go of the cash until the goods are in your hands. But even this method fails, lest you get fake goods.

[karim0028]

Re: America to devalue by 50% @ G20?

Sentiment against the US Dollar seems pretty overdone, and the Dollar feels oversold [and commodities overbought]. Markets rarely accomodate us the way we would like, or do what they "should" do...and the one thing nobody seems prepared for is a rise in the Dollar.

If the economy continues to slow it would seem to me that accelerated de-leveraging increases the chances of a rising Dollar...which would of course give Ben & Co. the cover they need for QE2.

What's not to like about that, eh...

Agreed! although, looking at a bigger pic of the dollar chart, its going into a big wedge, lets see which way it breaks.

[shiny!]

Re: America to devalue by 50% @ G20?

Sorcha Faal does not emphasis legit. Her (his) specialty is hoaxes, scary pseudo news and doomer theories, like "The Onion", only with a more doomer twist than a humor twist, along with a more elaborate connection to possibly legitimate sounding conspiracy theories.

Thank you, Mr. Cow. I seem to recall now another rumor from the same person, saying that the Russian Minister of Science had given Putin a report about the imminent explosion and collapse of the Gulf of Mexico during the BP event. In future, I'll file the name Sorcha Faal under Fiction.

[ThePythonicCow]

Re: America to devalue by 50% @ G20?

Bed Bugs, Gold Bugs, Monopoly Money, and Faith

By H S

Who is "H.S." ?

[tsetsefly]

Re: America to devalue by 50% @ G20?

Fascinating, nearly unbelievable, story about how inflation was stopped in Brazil.

http://www.npr.org/blogs/money/2010/...y-saved-brazil

best quote of that story:

The only reason they enter the picture now — or ever — is because in 1992, there happened to be a new finance minister who knew nothing about economics. So the minister called Edmar Bacha, the economist who is the hero of our story. "He said, 'Well, I've just been named the finance minister. You know I don’t know economics, so please come to meet me in Brasilia tomorrow,' " Bacha recalls. "I was terrified."

At least he was honest...

As crazy as the plan was it makes. People's loss of confidence in the currency always helps inflation get out of had. So restoring that confidence is part of the solution. For year though, Brazil had interest rates around 13% if not higher. I still think they might be around that range.

[bill]

Re: America to devalue by 50% @ G20?

That said I don’t see any satisfactory agreement produced from G-20 meeting. Pressures will continue to build and only when an crisis exists will there be change.

http://online.wsj.com/article/SB1000...865057796.html

OCTOBER 10, 2010, 10:40 A.M. ET
IMF Meeting Fails to Resolve Conflict Over Currencies

WASHINGTON— The International Monetary Fund's annual meeting this weekend failed to ease currency battles roiling markets, pushing the dispute off to a summit next month of leaders of Group of 20 countries, with no clear resolution in sight.
The meeting Saturday might have been more significant for possible solutions ruled out. Chinese central bank officials rejected calls for an international or regional currency accord, and the World Trade Organization's chief said his institution didn't want to get involved in exchange-rate fights.........

IMF Managing Director Dominique Strauss-Kahn and the chair of the group’s financial committee spoke at a wrap-up news conference on Saturday.
http://www.c-span.org/Watch/Media/20...urrencies.aspx

[medved]

Re: America to devalue by 50% @ G20?

Sentiment against the US Dollar seems pretty overdone, and the Dollar feels oversold [and commodities overbought]. Markets rarely accomodate us the way we would like, or do what they "should" do...and the one thing nobody seems prepared for is a rise in the Dollar.

If the economy continues to slow it would seem to me that accelerated de-leveraging increases the chances of a rising Dollar...which would of course give Ben & Co. the cover they need for QE2.

What's not to like about that, eh...

Gold is about 7% to 10% above its long-time exponential trend. It did not spend a lot of time above this level over the last 10 years. It is very likely to drop some 10-15% as oversold dollar recovers. All IMHO, but MHO is enough for me to keep selling my gold-mining (and iron-mining) stocks.