Chinese Yuan prepares big slam against the dollar

[Skybird]

In Decembre, China and Japan had agreed a treaty that installed the Yuan as official payment currency of equal status for the mutual trade between both countries. The dollar'S status got under pressure, loosing market shares in Asia.

I now read in German news that negotiations between China, India, Brazil, Russia and South Africa have succeeded and that from end of March on China will offer credits in Chinese currency. At the same time, and since quite some longer time already, China has been busy with silenty shifting its currency reserves in dollars, replacing dollars with other currencies, or making a hay-day from the European misery and using the money of these dollar-reserves in shopping tours amongst European top-companies.

Having the Yuan being established as an equal trade currency beside the dollar and Yen in trading with Japan, and even more important: establishing the Yuan now the the credit currency with the BRISC countries, has strong consequences that are easy to be underestimated, but i fact are not. I read that the bank HSBC calculates that the share of the Yuan in financial transactions on all Asian markets would rocket from currently 13% (in Asia) to over 50% in 2015. Globally, the dollar currently plays a role in around 85% of all fincial transactions. With the Asian market turning from US to Chinese currency, this unavoidably causes a blow, and the psychological signal will also add to the overall effect.

Many people in Brussel and even more in Washington will hope and pray that the treaty will collapse in the very last minute. The only reply possible for both would be to just print more money that is not covered by a similiar grow in real assets and materiual values of Wetsern economies. What that means for Euro and dollar, is clear: massive devaluation, and an increase in debt burdens. It is this devluation of the dollar that has made China starting to react poissibly earlier than planned and getting ready to take over the global role of premier currency from the dollar, and reducing China'S immense rerseves in (increasingly worthless) dollars. The policy of the US has costed them many hundreds of billions in recent years, in other words the US actively destroys Chinese wealth. Washington certainly did not seriously expect that it would go like this endlessly, forever.

I think the dominance of the Yuan as the world's lead currency will have been established much sooner than I and we have expected just some years ago. The Euro crisis and the American debt crisis forces them to push the pedal earlier than they had wanted.

And no, I do not think they will stop the massive regulation of their currency anytime soon. They would be stupid if they did. after all, what America and Europe do, is massive currency regulation at the cost of the others, too. One has set the precedent to which the Chinese now can refer. Maybe not that clever a move by us, then.

[Catfish]

Which of course was the reason for the other wars in the mid-east. The US economy cannot afford to let oil not being sold in Dollar currency.
Only this time, China is not a small fish ..

[Stealhead]

Once it was said that sun never sets on the British Empire less than 100 years later it most certainly does.No one nation is the biggest kid on the street forever.We are currently in a transition point it should be obvious to most people .

[Ducimus]

news link?

edit:
Regardless if China is acting as Skybird says, this commentary comes to mind:
http://globalpublicsquare.blogs.cnn.com/2012/02/05/zakaria-its-a-new-world-mitt/

[Stealhead]

I can certainly agree with Zakaria what we are seeing is other nations rise it does not signal our (the United States) down fall just that the rules are changing.

[the_tyrant]

No matter what Skybird thinks about the euro, I genuinely believe that it is a good concept.

I bounce around the world a lot, and I absolutely HATE currency conversion.

I would certainly love a one world currency

[Ducimus]

I can certainly agree with Zakaria what we are seeing is other nations rise it does not signal our (the United States) down fall just that the rules are changing.


I do like his commentaries, he presents facts and logical thinking. Although in many of his commentaries, i think its obvious he favors Obama and the Democratic party. Im fine with that because he doesn't seem to be above critizing them as well.

Back on topic, here's one he made about China a few days ago. If he's correct, China definatly needs to do something. Which maybe leads into what Skybird was saying?

http://globalpublicsquare.blogs.cnn.com/2012/03/05/zakaria-will-china-hit-a-speed-bump/

[Stealhead]

I noticed the favor for Obama's policies though I'd say that he is no pundit he likes what he likes dislikes what he dislikes not just a blind follower or mouth piece.

[August]

Yet another foreigner prognosticating our imminent doom. My my. 236 years and these negative nancy's ain't been right yet, no doubt to their immense chagrin.

[joegrundman]

Yet another foreigner prognosticating our imminent doom. My my. 236 years and these negative nancy's ain't been right yet, no doubt to their immense chagrin.

fareed zakaria is an american citizen. or did you mean skybird? he's german

[mookiemookie]

Yet another foreigner prognosticating our imminent doom. My my. 236 years and these negative nancy's ain't been right yet, no doubt to their immense chagrin.

Hey now, Skybird's called 7 of out the last 2 recessions correctly. :rotfl2:

[Skybird]

I made no prophecies of doom, I quoted some news, and made some - I think reasonable - conclusions.

The prognosis part for 2015 was done by HSBC, which is the sixth largest enterprise in the world and the biggest bank in Europe. It is a British house. Before you call them Cassandra because oyu do not like their message, you want to make sure you are up to their level of information, August.

The rest on how the game is changing, imo is a pretty obvious writing on the wall.

[August]

I made no prophecies of doom, I quoted some news, and made some - I think reasonable - conclusions.

How many times have you typed the word "tic" when referring to my country and you claim not to make prophecies of doom?

The prognosis part for 2015 was done by HSBC, which is the sixth largest enterprise in the world and the biggest bank in Europe. It is a British house. Before you call them Cassandra because oyu do not like their message, you want to make sure you are up to their level of information, August.

You mean i'm supposed to believe the same people that have gotten Europe into the mess they're in? Oh-kay...

The rest on how the game is changing, imo is a pretty obvious writing on the wall.

Well like I said foreigners have claimed that the writing is on the wall for our imminent collapse ever since Concord Bridge. From my side of the pond their loosing streak is over two centuries old. I don't see why I should believe anything they say.

[Skybird]

How many times have you typed the word "tic" when referring to my country and you claim not to make prophecies of doom?


Dictionary:
"auf Pump leben" - "to live on tick"

I also do not talk of an immediate doom. But a process of fall, a historic decline, with the chance that due to a variety of imaginable reasons this intensifies and indeed result in acute crisis. For example the day when the US would be unable to get any credit anymore anywhere - that would spell distater for your inner politics and economics. It would not be followed by months of delcine, but immediate riots, uprise on the streets, and storming the banks. Simply what we see in Greece, but multiplied.

It makes sense to remiond us tiome and again that our systems run on tick. And that is no good strategy. Not at all. It's a fall into the centre of the spiral, and it cannot result in anything different than disaster.

BTW, one coudl lso argue that your country indeed already shows signs of its fall. Education system is detoriating. Powergrid. Streetgrid. Job infrastructure. Not to mention finances. Debts equalling the yearly fiscal budget. Indeed, you live on tick, its a fact. Most Western nations do. When you spend more than you earn and live by means you cannot afford, you end in debts. It's only natural. And debts and their interests must be serviced.

[CaptainHaplo]

While I laugh at doomsday prophecies from European "talking heads" who have dug their own holes....

The reality is the dollar is going to weaken significantly. Worldwide players do what they do - but the reason for the future weakness of the dollar does not lie with China, or with the Euro, it lays at the feet of the last 11 years of US governance, along with quite a bit of history farther back....

As much as I don't care for him, Bill Clinton did balance the budget for the US. Granted - he was dragged kicking and screaming to it - but he did it. The first Bush didnt, the last Bush didn't (didn't even try!), Obama sure hasn't made any efforts either.

The dollar is weak because the government that controls it has no financial restraint, has a burgeoning and ever growing debt, and has shown no intention during recent history to correct this problem. As long as the politicians (on both sides) talk about "cutting the deficit" in terms of actually cutting the deficits GROWTH, instead of doing something sane like making the government run in "the black" on the balance sheet - the dollar will continue to weaken.

Yes - China does what it can to manipulate the currency to their benefit. Yes, European fiscal insanity has played a role.

But when it comes to the dollar growing ever weaker - actions such as unrestrained spending and quantitative easing (in all its forms - including TARP) have undermined the strength of the dollar. You want to see where the blame lies - look at Washington DC for the last decade+.

That is just the way it is..

[August]

Dictionary:
"auf Pump leben" - "to live on tick"

I know what it means Skybird. FYI I pay my credit cards off every month, i'm 28 years ahead in paying off my 30 year mortgage and the rest of my bills are always paid on time. Tic(k)? You ain't talking about this American.

[Takeda Shingen]

The demise of the dollar began with NAFTA. We are only now seeing the inevitable end result. We can thank Ronnie, George H. W. and Bill for this.

[Skybird]

I know what it means Skybird. FYI I pay my credit cards off every month, i'm 28 years ahead in paying off my 30 year mortgage and the rest of my bills are always paid on time. Tic(k)? You ain't talking about this American.
Mais l'état c'est ne pas tois! ;)

[August]

Mais l'état c'est ne pas tois! ;)

Shoo-be-doo-be-doo-wop, scat-a-tat-tat. :salute:

[JU_88]

The demise of the dollar began with NAFTA. We are only now seeing the inevitable end result. We can thank Ronnie, George H. W. and Bill for this.

I thought it started back with Nixon after he broke the dollar away from the gold standard :yep:

[Skybird]

I thought it started back with Nixon after he broke the dollar away from the gold standard :yep:

So thinks me.