China drives another nail into the coffin of the $ !

[Mega]

http://online.wsj.com/article/SB1000...036945472.html

They must be laughing their ass off every night, every night they go home to the wife & chat about how they fu8ked the Anglo-saxons AGAIN!

My people think fondly of the Long bow & Spitfire...tools to victory........i wonder if China view Walmart the same way?
Mike

[Mega]

Re: China drives another nail into the coffin of the $ !

Turkey is about to "jump ship"
Major re-a-line-ment of power:-
Turkey-Iran-Russia-China

http://www.telegraph.co.uk/news/worl...ting-Iran.html

[pksubs]

Re: China drives another nail into the coffin of the $ !

Turkey is about to "jump ship"
Major re-a-line-ment of power:-
Turkey-Iran-Russia-China

http://www.telegraph.co.uk/news/worl...ting-Iran.html

How could you miss this ? It's Turkey-RUSSIA-Iran-China aka TRIC !!

[GRG55]

Re: China drives another nail into the coffin of the $ !

http://online.wsj.com/article/SB1000...036945472.html

They must be laughing their ass off every night, every night they go home to the wife & chat about how they fu8ked the Anglo-saxons AGAIN!

My people think fondly of the Long bow & Spitfire...tools to victory........i wonder if China view Walmart the same way?
Mike

Mega...use your head, man.

Last year Chinese exports to the USA and EU combined totalled more than $600 Billion. Trade the other way totalled just over $200 Billion. The Chinese KNOW that not only can they not expand that trade gap, they won't even be able to keep it that large much longer. So if you are the so called "factory to the world", with waaaaaaay too much installed manufacturing capacity - and more being built every day - you're basically scrzwed unless you keep finding new markets in which to dump your crappy output. They are so damn desperate they are going after Greece and now Turkey. "Triple trade with Turkey over the next five years to $50 B"...what a joke. That outta be good for half of one toy factory, with a bit of melamine-laced milk powder thrown in for a bonus.

The knee-jerk anti-USA biased "analysis" that shows up on iTulip is making this place a waste of time for those that are trying to inject some thought into the dialogue.

Connect the dots Mega. If China wants to "drive another nail into the coffin of the $" then why did this show up on the same day as you started this thread? They're buying USTs because they're a one-trick pony economy with time running out...

By IB Times Staff Reporter | October 18, 2010 14:59 GMT
China is lapping up Treasuries again; remains top holder in August

China's holding of U.S. Treasuries rose by $21.7 billion to $868.4 billion in August, the Treasury Department said on Monday, blunting somewhat the argument that China is continuing to sell U.S. government debt as a counter-punch to U.S. pressure on the yuan...

[GRG55]

Re: China drives another nail into the coffin of the $ !

Just a small addition to the above, I read this article in the print addition of the FT early this morning on the plane back from Aussieland to the Persian Gulf:

GE plans return to US-made products

By Jeremy Lemer in New York
Published: October 18 2010 20:27 | Last updated: October 18 2010 20:27

General Electric plans to invest $432m in four US centres that design and make refrigerators by 2014.

The move will add about 500 jobs and reverse a long-term trend of outsourcing its appliance manufacturing to places such as China.

GE argues that a combination of US production quality, the ability to market goods as US-made, and rising transport, currency and labour costs in formerly cheap manufacturing countries have made the moves practicable.

A series of local, state and federal tax breaks have also played a role. For setting up the design and manufacturing centres in the Midwest and South, GE negotiated about $78m in tax breaks.

Over the past year a number of US companies ranging from Caterpillar, the world’s biggest maker of earthmoving equipment, to Wham-O, the maker of the Frisbee and Hula-Hoop, have announced similar plans to expand US production facilities.

GE’s appliance units have now pledged to spend more than $1bn in the US over the next four years, supporting about 1,300 jobs.

“Twenty years ago we were in the process of moving every appliance manufacturing job to China or Mexico,” Jeff Immelt, chief executive, said earlier this year. “[But]...when I open up the safe under my desk I can’t find the pennies that we have saved ... So the next generation of products are going to be made in the US.”...

[GRG55]

Re: China drives another nail into the coffin of the $ !

And just before I get off this soapbox...remember all the fuss about SWFs just before the financial world blew up? Here's something else from this morning's FT print addition that caught my eye. Well waddyaknow, maybe every move the Chinese make isn't so omnipotent after all [btw: C1ue turned out to be correct when [s]he predicted as much about the SWFs at the height of the fear-frenzy about them a few years back].

Investment: Rainy day funds recast

Up until three years ago, they were widely demonised as a possible threat to western security. Then they became saviours of first resort to the world’s ailing banks. Today many of them are chastened but on the mend...

...As ordinary people have watched them losing money in western banks, they have begun to complain angrily – not least in China, where nationalistic feelings can run high – that public money is being squandered on foreign ventures. Many of the governments behind SWFs are authoritarian and undemocratic but they they are not immune from such heat. Following lossmaking investments in US banks, China Investment Corporation (CIC), for example, is rumoured to be under pressure from Beijing to take on more risk to improve short-term performance...

[ThePythonicCow]

Re: China drives another nail into the coffin of the $ !

Mega...use your head, man.

Thanks, Mega, for provoking GR55 into his rant. (Good posts, GRG55.)

I wonder if what we are seeing is best understood as competition between major nations, with arguments to made for or against the US, Russia, China, India, Euro, ... gaining or losing ground, or is it better understood as the elite oligarchy of the world extending their grip, with the inter-national competition being part side show distraction and part jockeying for position.

Rather like when the Mafia crime families extended their grip on organized crime in many US cities (if such they did, I don't really know.) The impact for the rest of us didn't depend particularly on which family bested which family in a given city. Rather the impact on the rest of us depended on the total impact of the several families combined, all with similar modi operandi.

The essential conflict is not Big Corp versus Big Gov, nor this Big Gov versus that Big Gov. The essential conflict is Big Them versus the Rest of Us.

[c1ue]

Re: China drives another nail into the coffin of the $ !

when I open up the safe under my desk I can’t find the pennies that we have saved

I think a slight editorial note is necessary here:

when I open up the safe under my desk [at work] I can’t find the pennies that we have saved

Immelt 2009 total pay:

http://www.reuters.com/article/idUSTRE6243OD20100305

General Electric Co (GE.N) Chairman and Chief Executive Jeffrey Immelt declined a bonus for a second consecutive year, but his total compensation rose slightly from 2008, largely reflecting a change in pension values.

Immelt, in an annual letter to shareholders ahead of the company's April shareholder meeting, described recent times as "The Decade From Hell," and said the company was going to refocus on its core industrial businesses, counting on global growth in infrastructure.
Immelt's 2009 compensation totaled $9.89 million, up from $9.28 million 2008, but below 2007's total of $14.29 million, according to a filing with the U.S. Securities and Exchange Commission.

The compensation includes $4.4 million in a higher pension value, reflecting a change in the discount rate and Immelt's age and service period, GE said in its filing.

Louis Chenevert, CEO of fellow industrial United Technologies Corp (UTX.N), received 2009 compensation valued at $20.5 million, a 13 percent cut from 2008, according to that company's proxy filing with the U.S. Securities and Exchange Commission.

Immelt, the 54-year-old CEO of the U.S. conglomerate, earned a base salary of $3.3 million, which has not changed since April 2005. Immelt asked the board that he not receive a bonus for 2009. In 2007, the last year he received a bonus, it totaled $5.8 million.

"Although the board felt he had performed extremely well in 2009 in a tough environment, they agreed to his request," GE said.

Because of a change in SEC rules, GE valued Immelt's 2008 stock awards at $2.04 million, rather than the $6.86 million it reported a year ago. That difference explains why Immelt's 2008 compensation appears lower than the company reported in February 2009.

'DECADE FROM HELL'

"We suffered one of the worst global economic downturns in history," Immelt wrote in a letter to shareholders that opens by calling this era The Decade From Hell. "The banking system teetered on the abyss.

"The world has been reset. Today's uncertainty feels like the 'new normal.' We will not return to the relative tranquillity of the pre-crisis world. Growth will be harder to come by, trends will be more volatile and constituent voices will be louder. We see this environment as an opportunity to renew GE."

[btw: C1ue turned out to be correct when [s]he predicted as much about the SWFs at the height of the fear-frenzy about them a few years back].

No magic there. Saudi Arabia/Al Waleed led the way by showing that even being an early friend of the banksters is no help with the brown stuff hits the rotary impeller.

Now the SWFs no longer trust the banksters. But will it matter?

[sishya]

Re: China drives another nail into the coffin of the $ !

This is what I posted in "Hudson's Thread". THought this is relevant here.

Interesting article.
Now the Question is which will be be route taken to facilitate international trade.


(1) Countries accrue reserves on the basis of trade volume and take each others reserves : moderate rate of dollar value destruction
(2) Gold returns to play as reserve currency to payout net of (Import- Export) : rapid rate of dollar value destruction
(3) Everyone continue accepting dollar thus paying tribute to Dollar Empire : slow controlled rate of dollar value destruction

May be EJ can forecast the scenario that will unfold.
Looks like China is going to take route (1). Gold bugs want route (2).
Anglo Financial empire wants route (3). My bet is still on (3) to continue.

- If BRIC's want to take route (1) , then BRIC's buying each other's bonds is not Currency war as the Media
is falsely portraying but actually international trade moving away from dollar. This will be potentially
catastrophic for US dollar system + military. This I think is very important for iTulipers to ponder.
If this plays out I think it is high time for US residents to go all-in to Gold. In all the above 3 scenarios,
Gold is coming out on the Top.

- Also if this (1) plays out, US Bonds and Stocks can blowout and fall as Capital will flee US after selling.
Dollar will also fall. This is what I had a hunch that this all playout Jan 2011.


Now I see Indian banks trying to do the same as Turkey.

http://economictimes.indiatimes.com/...ow/6744692.cms

14 Oct, 2010, 06.20AM IST, Sugata Ghosh,ET Bureau

Rupee-yuan trade platform sans dollar-peg sought


MUMBAI: Far from the currency row that has rattled global financial markets, a few local banks have sounded out the regulator on the possibility of a new currency arrangement between India and its largest trading partner, China.

They are suggesting a simpler and less expensive mechanism that would bypass the dollar and allow trade payments in local currencies.

Since the Indian rupee and Chinese yuan are largely non-convertible currencies, export and import transactions between the two countries have dollar pegs. The rupees that an Indian buyer pays his bank for Chinese import, are converted into dollars which in turn is converted into yuan with the help of other banks for paying the Chinese seller.

It’s a transaction that can take two to three days due to differences in time zones, and involves certain operational costs that could be pruned if payments can be directly settled in yuan and rupees.

Bankers think that the spiralling trade volumes between the two countries could serve as the bedrock for a gradual development of a rupee-yuan market, where banks would give regular spot and forward quotes on the exchange rate, just as they do for rupee-dollar currency trades. However, it would call for the Reserve Bank of India and the People’s Bank of China (PBOC), the Chinese monetary authority, to agree on a mechanism that could have market as well as diplomatic implications.

“A direct yuan-rupee trade would cut transaction time, in fact the transactions could become real time. Also, the transaction cost would be lower,” said Aditya Puri, managing director and CEO of HDFC Bank, which is one of the domestic institutions that mooted the idea.

He said that the HDFC Bank team which recently visited China felt that Chinese authorities may be open to the suggestion. A bilateral trade using local currencies would require Indian banks opening yuan nostro accounts, which can be used for yuan trades, in Hong Kong or the mainland. This would need regulatory approvals from both countries. The Reserve Bank of India spokesperson did not comment on the subject.

Bankers think the proposal could benefit the India-China trade. “It’s one of the most important trade corridors. Any means to facilitate that from a trade or a trade finance perspective would help parties, particularly if it takes off the risk from them and shorten the settlement cycle,” said Hemant Mishr, managing director and head of global markets for South Asia at Standard Chartered .

Interestingly, in an effort to internationalise the currency, China has permitted limited trading of yuan in the Hong Kong offshore market for trade and certain capital account transactions.

Also, in recent times it has entered into special currency arrangements with various countries. Last year China struck a ‘currency swap’ agreement with Brazil that allows payment for imports from China in yuan and imports from Brazil in the lira. It has also signed pacts with Malaysia, Argentina, South Korea, Belarus and Singapore .

Across markets the deals were interpreted as China’s efforts to internationalise the yuan and slowly pave the way to help yuan eventually replace dollar as the world’s reserve currency.

I think it is high time we iTulipers thought through these implications. If BRIC can trade themselves without settling in dollar, I think we will have hyperinflation because of the huge Treasury market. Smart minds here need to look into this FAST - maybe it is my paranoid side of my brain is getting the upper hand now.

[Southernguy]

Re: China drives another nail into the coffin of the $ !

Argentina and Brazil are trading in local currencies also.
Then, if the trend consolidates, how is the US going to react?
US has been having a free ride with the dollar for about 60 years now. That has permited it΄s war and profligate spending with no consequences.
Military options are, I think out or the question.
Rising interest rates so as to strengthen the dollar would make US debt unpayable.
Intersting question to think about.
Then, if a basket of currencies sustitute dollar as reserves, what is the point of people holding gold?
Just accumulate in yuans, reals, liras, etc, a basket of same.
Gold pays no interest and I don΄t think shall become a means of circulation of merchandise.
Of course, all this has nothing to do with today΄s gold falling. I΄m thinking in two-five years time frame.
Big companies moving manufacture to the US maybe also been thinking about this. If dollar continue to devalue, people in the US have a lower standard of living, debts liquate,
it΄s time to produce in the US.
After all it΄s a big country with plenty natural resources, educated workforce, infrastructure etc.
Anyway, all this seem to look as a several years slow pace of production everywhere, with commodities markets softening.

[Starving Steve]

Re: China drives another nail into the coffin of the $ !

Argentina and Brazil are trading in local currencies also.
Then, if the trend consolidates, how is the US going to react?
US has been having a free ride with the dollar for about 60 years now. That has permited it΄s war and profligate spending with no consequences.
Military options are, I think out or the question.
Rising interest rates so as to strengthen the dollar would make US debt unpayable.
Intersting question to think about.
Then, if a basket of currencies sustitute dollar as reserves, what is the point of people holding gold?
Just accumulate in yuans, reals, liras, etc, a basket of same.
Gold pays no interest and I don΄t think shall become a means of circulation of merchandise.
Of course, all this has nothing to do with today΄s gold falling. I΄m thinking in two-five years time frame.
Big companies moving manufacture to the US maybe also been thinking about this. If dollar continue to devalue, people in the US have a lower standard of living, debts liquate,
it΄s time to produce in the US.
After all it΄s a big country with plenty natural resources, educated workforce, infrastructure etc.
Anyway, all this seem to look as a several years slow pace of production everywhere, with commodities markets softening.

Latin America and the USSR, also Israel tried this approach. It works at first, and then people begin to lose confidence in their currency. They stop working. Then import prices go up. Then domestic producers raise prices too. Then the inflation spiral begins. Then interest rates go up, but they lag the rate of inflation. Then the fun really begins. Then the people (Starving Steve and other morons like me) ask for a wage increase to keep pace with inflation. Then the fun really begins....

The central bankers try "dirty-floats" which means that central bankers rig the currency market, just a little bit. They call it "tinkering" in common English. The tinkering begins with establishing "an upper-bound" and a "lower-bound" to the "acceptable trading-range" for each currency against the other. Then more tinkering; more "bail-out nation"; more TBTF; more corruption; more spending; more stimulus; more asset-bubbles; and then come the currency controls.

This process is slow at first because people are slow-learners, just like I am a slow-learner. Then come the shortages of food or this or that commodity. Then the de-valuations or the de-monetizations begin. Then inflation accelerates in all countries, especially as confidence is lost by everyone. Then come the new currencies, and the stories from the central bankers that they have learned their hard lessons.

If my memory serves me correctly, Peru destroyed four currencies. Argentina destroyed five. Israel destroyed one, at least. Bolivia destroyed five currencies. Brazil destroyed five. Mexico destroyed one currency, and so did the U.S.S.R.

People become coin-collectors. They love gold coins, especially. People also become interested in homes, land, condos, anything to collect............. Need I say more?

What is interesting to me this time around is that students are so quiet on the college campuses, especially at Berkeley. Why would Berkeley be so tame? Even now, shirts, ties, and suits worn by everyone at UC Berkeley. Why? No-one is asking questions and challenging the curriculum in economics?

I have to take my medication......

[medved]

Re: China drives another nail into the coffin of the $ !

The knee-jerk anti-USA biased "analysis" that shows up on iTulip is making this place a waste of time for those that are trying to inject some thought into the dialogue.

+1

[bill]

Re: China drives another nail into the coffin of the $ !

And just before I get off this soapbox...remember all the fuss about SWFs just before the financial world blew up? Here's something else from this morning's FT print addition that caught my eye. Well waddyaknow, maybe every move the Chinese make isn't so omnipotent after all [btw: C1ue turned out to be correct when [s]he predicted as much about the SWFs at the height of the fear-frenzy about them a few years back].

Investment: Rainy day funds recast

Up until three years ago, they were widely demonised as a possible threat to western security. Then they became saviours of first resort to the world’s ailing banks. Today many of them are chastened but on the mend...

...As ordinary people have watched them losing money in western banks, they have begun to complain angrily – not least in China, where nationalistic feelings can run high – that public money is being squandered on foreign ventures. Many of the governments behind SWFs are authoritarian and undemocratic but they they are not immune from such heat. Following lossmaking investments in US banks, China Investment Corporation (CIC), for example, is rumoured to be under pressure from Beijing to take on more risk to improve short-term performance...

SWF are doing deals just not directly. SWF are using PE and Hedge Funds.
Now who said that 3 years ago?
http://www.itulip.com/forums/showthr...10161#poststop

Matt Taibbi said it , 3yrs late.

http://www.rollingstone.com/politics...RS_show_page=0

By Matt Taibbi
Oct 18, 2010 1:30 PM EDT

He goes on: "So if a sovereign wealth fund has an investment in a hedge fund — which they have a bunch — and that hedge fund was then invested in commodities, I expect that a bank would report that as a hedge fund to the CFTC and not a sovereign wealth fund. And their argument would be, 'How can we know who the hedge fund's investors are?' — even if they know darn well.


But more to the point, the origin of these SWFs is not even relevant, necessarily. What is relevant is that these funds are foreign and that thanks to a remarkable series of events in the middle part of the last decade, they rapidly became owners of big chunks of American infrastructure. This is a process of a country systematically divesting itself of bits and pieces of its own sovereignty, and it's taking place without really anyone noticing it happening — often not even the people asked to vote formally on the issue.

There are now highways, airports, parking garages, toll roads — almost everything you can think of that isn't nailed down and some things that are — for sale, to bidders unknown, around the world.
When I told Pennsylvania state representative Joseph Markosek that someone had been pitching the Pennsylvania Turnpike to Middle Eastern investors, he laughed.
"No kidding," he said. "That's interesting."

[coolhand]

Re: China drives another nail into the coffin of the $ !

lotsa different implicit references to peak cheap oil in here, & impacts of global oil production flat for the last 5 yrs of the decade, which was unprecedented in a time when oil prices were rising: "Too expensive to ship GE products b/c of high oil prices. Immelt called this the "Decade from Hell" - maybe b/c avg oil prices were 2-3x the avg oil prices of the last 40 yrs? How is that going to get any better?"

US having to print money & debase the currency b/c can't drive real production growth w/such high baseline oil prices...which is helping drive the currency issues.

As far as why not a basket of currencies instead of gold? The only currency that can absorb the tidal wave of $-value that resides in foreign $ reserves right now w/out blowing foreign trade to bits is gold. Becoming the foreign reserve currency, or becoming part of the basket means you have to start consuming & running big deficits as your currency becomes rich compared to other currencies NOT in the reserve basket. NOBODY WANTS THAT - THAT'S WHY WE HAVE CURRENCY WARS TODAY - THEY ARE ALL TRYING TO GET THEIR CURRENCIES CHEAPER TO DRIVE EXPORTS & THEREFORE JOBS SO THE POLITICIANS DON'T GET THROWN OUT OF OFFICE & SO THE PEOPLE DON'T STARVE. PUTTING YOUR CURRENCY IN A RESERVE BASKET WOULD BE 180-DEGREES IN THE WRONG DIRECTION TO WHAT EVERYONE IN THE WORLD IS TRYING TO ACCOMPLISH.

In contrast, what happens if gold becomes a big part of a global reserve & is revalued over time to $20,000/oz? Nothing (well, a few bullion banks probably go tits up, but they're already tits up, they just haven't admitted it yet.) But this just means IMO that gold can't go to $20,000 or $30,000 or $50,000 overnite - it has to be managed higher in a very orderly fashion...JUST LIKE THE GOLD BULL MARKET HAS BEEN FOR THE LAST 10 YRS. WHAT OTHER 10-YR OLD BULL MARKETS WERE SO ORDERLY 10 YRS IN? HOUSING - NO!!! INTERNET? NO!!!

IMO, the engines of the US economic jetliner that was carrying the world went out at 30,000 ft in 2007-08...& they're not coming back on. Now the game is try to glide the plane down with the minimal amount of damage, instead of the alternative, which is a nosedive from 30,000 ft in which everyone on board dies, proverbially speaking

[Starving Steve]

Re: China drives another nail into the coffin of the $ !

lotsa different implicit references to peak cheap oil in here, & impacts of global oil production flat for the last 5 yrs of the decade, which was unprecedented in a time when oil prices were rising: "Too expensive to ship GE products b/c of high oil prices. Immelt called this the "Decade from Hell" - maybe b/c avg oil prices were 2-3x the avg oil prices of the last 40 yrs? How is that going to get any better?"

US having to print money & debase the currency b/c can't drive real production growth w/such high baseline oil prices...which is helping drive the currency issues.

As far as why not a basket of currencies instead of gold? The only currency that can absorb the tidal wave of $-value that resides in foreign $ reserves right now w/out blowing foreign trade to bits is gold. Becoming the foreign reserve currency, or becoming part of the basket means you have to start consuming & running big deficits as your currency becomes rich compared to other currencies NOT in the reserve basket. NOBODY WANTS THAT - THAT'S WHY WE HAVE CURRENCY WARS TODAY - THEY ARE ALL TRYING TO GET THEIR CURRENCIES CHEAPER TO DRIVE EXPORTS & THEREFORE JOBS SO THE POLITICIANS DON'T GET THROWN OUT OF OFFICE & SO THE PEOPLE DON'T STARVE. PUTTING YOUR CURRENCY IN A RESERVE BASKET WOULD BE 180-DEGREES IN THE WRONG DIRECTION TO WHAT EVERYONE IN THE WORLD IS TRYING TO ACCOMPLISH.

In contrast, what happens if gold becomes a big part of a global reserve & is revalued over time to $20,000/oz? Nothing (well, a few bullion banks probably go tits up, but they're already tits up, they just haven't admitted it yet.) But this just means IMO that gold can't go to $20,000 or $30,000 or $50,000 overnite - it has to be managed higher in a very orderly fashion...JUST LIKE THE GOLD BULL MARKET HAS BEEN FOR THE LAST 10 YRS. WHAT OTHER 10-YR OLD BULL MARKETS WERE SO ORDERLY 10 YRS IN? HOUSING - NO!!! INTERNET? NO!!!

IMO, the engines of the US economic jetliner that was carrying the world went out at 30,000 ft in 2007-08...& they're not coming back on. Now the game is try to glide the plane down with the minimal amount of damage, instead of the alternative, which is a nosedive from 30,000 ft in which everyone on board dies, proverbially speaking

Thank you, Coolhand, for an excellent post. I agree with it, but then I am a gold-bug.

Slooooooooowly let gold rise, and tie all world currencies to gold. Then, let the currencies float relative to each other. This sounds like the old Bretton-Woods Agreement to me, but I am no economist.

Everything being relative in the Universe, the U.S. with its 8,000 metric tonnes of gold in Ft. Knox would do fine. This would be a de-valuation of the dollar with respect to gold, but we already have that now. Just make the de-valuation official, and tie the world's currencies to an anchor in gold. And then the world gains by economic stability. The trust in currencies becomes REAL.

This sounds quite a bit like the problem with house-titles in America: "Show me the clear-title blessed or imprinted by the jurisdiction or the Queen, and then let me take the imprinted-document ( the clear land-title ) home to put onto my wall."

Someday, maybe even marriage-contracts might be anchored to gold.