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China escaping the US dollar? - 4/12/2011 2:04:01 PM

Fellow

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There are some news that suggest China trying quietly to convert their owned US dollar into real assets..
For example: "Did China’s surprise trade deficit trigger a market downturn?". [ http://in.ibtimes.com/articles/133488/20110413/china-trade-deficit-commodities-inflation.htm ]
China reported a surprise trade deficit for first quarter 2011 on Saturday. While exports climbed 26.5 percent from last year, imports surged 32.6 percent. .... China tapped into its vast savings and stepped up consumption. It’s quite another when the deficit was driven by rising commodities prices.

And this: http://www.youtube.com/watch?v=GmAgdx6_GHg&feature=player_embedded ]
*Breaking* Chinese Dumping US Dollars for Scrap Gold Port of Long Beach
The last "China harvesting America" could be just a small private operation. Nevertheless, it falls into the same category.

I am interested in the question: how much effect large players trying to leave the sinking ship could have? Do they think they can play the process and not cause the it going out of control?

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RE: China escaping the US dollar? - 4/12/2011 2:17:21 PM

mnottertail

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Two competing forces. We owe them alot of money, and if they devalue it, it hurts them, on the other hand, they need to get more exports or cheapen theirs to balance in their favor, and they got lots of folks to feed...there is a proverb in the Tao Te Ching that says that full bellies don't make war.

The same issue of inflation, deflation, stagnation, if all the people we owe money to start shucking and jiving to their benefit (and why shouldn't they) at the macro governmental level, we could be further fucked.

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RE: China escaping the US dollar? - 4/12/2011 3:27:21 PM

Aneirin

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One thing I do understand about those that seek money above everything else, they value money and profit more than anything else and that includes nationality. See economic migrants, not just those that cross our borders seeking to make a better life for themselves, for they are small fry, but the big players, the corporations that move into countries because what they are being offered is better than what they had before, the only reason to move, money and the prospect of it. In the UK our wonderful government threatens to make it more difficult for the banks and other financial institutions that nearly brought our economy down, what do the banks and so reply to that, they say they will take their business elsewhere, so the government backs down and the dangerous continue to act dangerously because they know full well they fuck up tax payers money will bail them out as it has before and they can keep their financial rewards into the bargain.

Wheres theres money nationality fades into insignificance, it means nothing, those thatseek money care nothing for those they take the money from as at the end of the day, it is just business and business is the most profitable where there is money to be had.

China if it is trying to escape the dollar, may it be they know something that other's don't and they are trying to minimise any damage to themselves by getting rid of what might come to be worth less.

Perhaps reality has caught up with the western world, the good times are gone, a thing of the past.

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RE: China escaping the US dollar? - 4/12/2011 5:15:09 PM

Edwynn

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The first quarter trade deficit is only a mild surprise, not a shock.

Their first quarter always has the lowest output every year, and the trade balance is always narrowest accordingly. This year it just happened to bump into the negative.

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RE: China escaping the US dollar? - 4/12/2011 5:26:50 PM

Real0ne

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quote:

There are some news that suggest China trying quietly to convert their owned US dollar into real assets..

they have been doing it for several years.

if its news those who its news too have been sleeping at the stick!

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RE: China escaping the US dollar? - 4/12/2011 5:29:01 PM

Real0ne

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quote:

ORIGINAL: mnottertail

Two competing forces. We owe them alot of money, and if they devalue it, it hurts them, on the other hand, they need to get more exports or cheapen theirs to balance in their favor, and they got lots of folks to feed...there is a proverb in the Tao Te Ching that says that full bellies don't make war.

The same issue of inflation, deflation, stagnation, if all the people we owe money to start shucking and jiving to their benefit (and why shouldn't they) at the macro governmental level, we could be further fucked.

NOT to worry!

someone will start a war just for them!

They have done it every other time why switch horses now.

_____________________________

"We the Borg" of the us imperialists....resistance is futile

Democracy; The 'People' voted on 'which' amendment?

Yesterdays tinfoil is today's reality!

"No man's life, liberty, or property is safe while the legislature is in session

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RE: China escaping the US dollar? - 4/12/2011 5:42:47 PM

Fellow

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quote:

Two competing forces. We owe them a lot of money, and if they devalue it, it hurts them, on the other hand, they need to get more exports or cheapen theirs to balance in their favor

China exports are increasing in good pace. The problem I see is the possibility of other players (esp. Japan) joining China and trying to move out of dollar denominated assets. Allegedly, the Federal Reserve currently buys 70% of US government bonds thus effectively monetizing the debt. It clearly signals very high US dollar inflation around the corner. There is no obvious escape route.

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RE: China escaping the US dollar? - 4/12/2011 7:00:21 PM

SilverMark

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With the Yuan being pegged to the dollar and the Chinese New Year falling in February a small trade deficit in the first quarter is barely a blip on the Chinese radar.

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RE: China escaping the US dollar? - 4/12/2011 7:00:32 PM

MrRodgers

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quote:

ORIGINAL: Fellow

quote:

Two competing forces. We owe them a lot of money, and if they devalue it, it hurts them, on the other hand, they need to get more exports or cheapen theirs to balance in their favor

China exports are increasing in good pace. The problem I see is the possibility of other players (esp. Japan) joining China and trying to move out of dollar denominated assets. Allegedly, the Federal Reserve currently buys 70% of US government bonds thus effectively monetizing the debt. It clearly signals very high US dollar inflation around the corner. There is no obvious escape route.

All countries that are able to earn foreign currencies are under pressure to maintain substantial foreign currency reserves. What is happening is that many countries are now forming investment firms or 'sovereign wealth funds' to invest in mostly govt. debt and commodities.

Once substantial reserves are accumulated, it becomes a serious interest in maintaining its value. Thus the Chinese are so married to the dollar, a divorce would be very messy...costly. After Brenton Wood...the die was cast. Only private gold sales for currency and free floating exchange rates with the dollar as reserve currency.

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RE: China escaping the US dollar? - 4/12/2011 7:49:51 PM

pahunkboy

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I thought the dollar was as good as gold?

I hoard silver.... bad me.. BAD I SAY! ;-) I be a terrorist by this act!!!!! Yeah yeah yeah.

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RE: China escaping the US dollar? - 4/12/2011 9:37:41 PM

Real0ne

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quote:

ORIGINAL: MrRodgers

quote:

ORIGINAL: Fellow

quote:

Two competing forces. We owe them a lot of money, and if they devalue it, it hurts them, on the other hand, they need to get more exports or cheapen theirs to balance in their favor

China exports are increasing in good pace. The problem I see is the possibility of other players (esp. Japan) joining China and trying to move out of dollar denominated assets. Allegedly, the Federal Reserve currently buys 70% of US government bonds thus effectively monetizing the debt. It clearly signals very high US dollar inflation around the corner. There is no obvious escape route.

All countries that are able to earn foreign currencies are under pressure to maintain substantial foreign currency reserves. What is happening is that many countries are now forming investment firms or 'sovereign wealth funds' to invest in mostly govt. debt and commodities.

Once substantial reserves are accumulated, it becomes a serious interest in maintaining its value. Thus the Chinese are so married to the dollar, a divorce would be very messy...costly. After Brenton Wood...the die was cast. Only private gold sales for currency and free floating exchange rates with the dollar as reserve currency.

so who will wind up owning all of china now?

_____________________________

"We the Borg" of the us imperialists....resistance is futile

Democracy; The 'People' voted on 'which' amendment?

Yesterdays tinfoil is today's reality!

"No man's life, liberty, or property is safe while the legislature is in session

(in reply to MrRodgers)

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RE: China escaping the US dollar? - 4/13/2011 5:12:59 AM

Termyn8or

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FR

If I were in charge of a foreign country the last thing I would want is a large investment in the USDs. Moving to divest of USDs is what got Saddam all fucked up. While his motives may have been malevolent, justified or not, we can't do the same thing with China.

What I say has not changed. The shit is going to hit the fan, and as friendly as China may be, she does have to look out for her own best interests and if I was the leader, I would not the the goofball US drag my country down with it. This is an objective view that many US citizens may not like, but we have to realize there are other kids on the block.

This is not the only divestiture(sp) of the USD in the world, nor will it be the last. The problem here is the magnitude of the debt. One day "they" will say "if we knew then what we know now.....". Maybe "we" wouldn't have spent opur stupid ass out of existence, and people, it's done.

When you got a couple of little countries that decide they no longer like the USD, it affects our value negatively. We can live with that. But when we're talking about China, their influence will be a bit harder to swallow. Hopefully they will divest slowly, and if everyone gets a brain and returns commerce to reality, there may be hope. But maybe not.

Just how much US debt does China hold ? Quite a bit. Now what happens of they want rid of it all at once ? We are that vulnerable - to a foreign power that doesn't even pretend to be altruistic. They will look out for number one. They bought that debt for two reasons. First was the minimal amount of interest they could collect, and the other was to support their ever so important trade. Yes they care about what matters as we apparently do not. But they got themelves into a trick bag doing it and now they have to figure out what to do next.

Now their government could well be as nasty as our's and they only care for themselves and their buddies, but I think even if it is a secondary cause they will look out for their people, not our's. What would you do ?

Someone said full bellies do not start wars. I have to modify that. Full bellies do not start revolutions (usually). It's also been said that many are a couple of meals away from revolting. In the old days you could start a war and take the resources of another country. But now with the greed at the very top of the food chain, we the People do not see the fruits of war. Only our "leaders".

Speaking of food, what was a major impetus in the most recent revolution(s) ? And what happens when you are making $7 an hour and a loaf of bread is fifty bucks ?

Wait and see. I don't have much to offer in the way of alternatives. I have already outlined our best course of action as I see it. Break the money power by knowing what gives it it's value. We can destroy it's value, but that would require solidarity and we can't seem to agree on much anymore. That will change as those bellies empty out and don't get refilled.

It's possible that the world will help us out, but it would be foolish to count on it.

T^T

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RE: China escaping the US dollar? - 4/13/2011 4:32:18 PM

Politesub53

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Good post Termy. China is embracing capitalism and the west are reaping the rewards, for better and now for worse. The west started to invest in China first as an outlet for sales, and then as a means of cheaper production. Slowly but surely the Chinese are turning it around to work in thier own favour.

I am in favour of Capitalism in many ways, but there is a finite market that at present is being fed by a larger manufacturing sector. It`s the downside of the NWO and globalised markets.

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