China moving away from the dollar

Skybird · 03-24-09, 05:52 AM

Repeatedly I said that if China ever decides to exchange it's dollar reserves (and insane ammounts of American bonds which kept the US economy running) for another currency, then this would cause major damage to the US financial economy. They even have started a silent, slow moving policy to replace their dollars some time ago, like several arabian states also started to do. These actions so far were almost unnoticed, and not causing serious consequences so far. But this time eventually it could become something more real.

And I must say that if I try to see things from their perspective, they even have valid, reasonable points in their concerns.

http://online.wsj.com/article/SB123780272456212885.html

This better gets understood as a yelling wakeup call now.

Quote:

Chinese officials are frustrated at their financial dependence on the U.S., with Premier Wen Jiabao this month publicly expressing "worries" over China's significant holdings of U.S. government bonds. The size of those holdings means the value of the national rainy-day fund is mainly driven by factors China has little control over, such as fluctuations in the value of the dollar and changes in U.S. economic policies. While Chinese banks have weathered the global downturn and continue to lend, the collapse in demand for the nation's exports has shuttered factories and left millions jobless.
(...)
"The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," Mr. Zhou said. The increasing number and intensity of financial crises suggests "the costs of such a system to the world may have exceeded its benefits."
(...)
Holding more international reserves in SDRs would increase the role and powers of the IMF. That indicates China and other developing nations aren't hostile to international financial institutions -- they just want to have more say in running them. China has resisted the U.S. push to make an immediate loan to the IMF because that wouldn't give China a bigger vote.

Gleithner meanwhile indicated they will need even more money for their toxic paper rescue with tax money. Which will increase state debts and budget deficit too, no matter how they are doing. I can't even speculate about the ammount of inflation we will have to battle with after the current crisis is over. To abuse a headline from the WP: there is little use in fighting a fire that way that afterwards the world is devastated in a flooding. That china and other emerging economies, but also Europeans, are loosing smypathy for an economic model doing so, and by it'S ways has caused the desaster, is fully understandable.

I think the chinese are right. and they are realistic, expressing they are fully aware that implementing a new international reserve currency not depending on a single national economy would take much time.

But if we do not get started, how much time will have passed once we have reached the day when such an implementation would have been finsihed - if only it would have been started back then?

SteamWake · 03-24-09, 08:57 AM

http://www.foxnews.com/politics/firs...obal-currency/

Rockstar · 03-24-09, 09:04 AM

I think the dollar is being driven down intentionally to cause fear. Now we hear subtle calls for getting rid of the dollar. To establish a global currency when things are going well cannot be done. But if things are miserable, people are afraid and scratching for food then introducing a new currency should be easy as people will see it as a relief rather an infringement on the their liberties and national pride.

On the other hand I know too the U.S. has a military no other army in the world can match or defeat. But there is a way to bring this country and Europe to it's knees and thats by hitting the economy. Just like they tried in 9/11.

Just my 0.2 cents worth of conspiracy theories

Skybird · 03-24-09, 09:54 AM

Fact is that china directly finances the excesses of the US in spending (and military adventures), and they have all reason to be worried now that for the billions and billions in bailouts their own economy will need to pay for. Why should they want to continue with that? And why should europe do want to continue with that, too? Just 2-3 months ago the US has agreed to implement better transparency and minimum rules of supervision over financial markets - and at the present the Us already has started to rudder back from that and trying to argue that one should not do that and that all the former negotiations should not be taken so serious. America is unable since long to pay for it'S finacial excesses and it'S unsolid economc course by it'S own productivity anymore, it is hanging on all the globe'S finacial drip. But it demands to be seen as the leading economist in the world. That is absurd. If anything, it is the leadsing consumer and waster.

And this has to end. We do not wish to pay for that anymore.

All the West has lived beyond it'S means, also europe, but nowhere it has been that excessive and so much on tick as in the United States.

The cold war has seen it's own kind of stability, becasue two powers exisxted, not just one. with the fall of one of them, things became unstable and more insecure. I think in comparable ways a forming of another fincial hostspot in the world rivalling US claims and forcing the US to implement more serious and better qualified economic proceedings only can be good for all. The past 15 years have shown that the show left to one actor alone only leads to things detoriating. Monopolism never is good - except for the monopolist.

SUBMAN1 · 03-24-09, 08:00 PM

China is a bit scared of the US since if the US ever needed to repay its loans to China, they would just print a bunch of money - as the Fed recently shown us this week no less. So this leaves China in a bit of a precarious situation now doesn't it?

But this is more Skybird fear mongering. Does it ruin your day Skybird when you can't find a negative article about the US of A?

-S

GoldenRivet · 03-24-09, 09:54 PM

fair enough

perhaps the dollar should move away from china

Sea Demon · 03-24-09, 10:32 PM

This is a non issue. And most of the G20 has discounted it. If China and the Russians think that they can just create a "currency" from nothing that can sustain and grow economies, they're going to find out it's not very easy. Dollars may be devalued these days, but the American consumer market tied with all the innovation, new technologies created here, demand for those technologies abroad, and strong entrepreneurship are where the true value of a nation's long term wealth lies. If China stops buying US debt, they will lose our markets and a whole lot of major bilateral deals. If they attempt to crash the dollar, they're going to lose their shirts and much more.

03-24-09, 08:57 AM	#2
SteamWake Rear Admiral Join Date: Mar 2005 Posts: 13,224 Downloads: 5 Uploads: 0	http://www.foxnews.com/politics/firs...obal-currency/ __________________ Follow the progress of Mr. Mulligan : http://www.subsim.com/radioroom/showthread.php?t=147648

03-24-09, 09:54 AM	#4
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,614 Downloads: 10 Uploads: 0	Fact is that china directly finances the excesses of the US in spending (and military adventures), and they have all reason to be worried now that for the billions and billions in bailouts their own economy will need to pay for. Why should they want to continue with that? And why should europe do want to continue with that, too? Just 2-3 months ago the US has agreed to implement better transparency and minimum rules of supervision over financial markets - and at the present the Us already has started to rudder back from that and trying to argue that one should not do that and that all the former negotiations should not be taken so serious. America is unable since long to pay for it'S finacial excesses and it'S unsolid economc course by it'S own productivity anymore, it is hanging on all the globe'S finacial drip. But it demands to be seen as the leading economist in the world. That is absurd. If anything, it is the leadsing consumer and waster. And this has to end. We do not wish to pay for that anymore. All the West has lived beyond it'S means, also europe, but nowhere it has been that excessive and so much on tick as in the United States. The cold war has seen it's own kind of stability, becasue two powers exisxted, not just one. with the fall of one of them, things became unstable and more insecure. I think in comparable ways a forming of another fincial hostspot in the world rivalling US claims and forcing the US to implement more serious and better qualified economic proceedings only can be good for all. The past 15 years have shown that the show left to one actor alone only leads to things detoriating. Monopolism never is good - except for the monopolist. __________________ If you feel nuts, consult an expert.

03-24-09, 08:00 PM	#5
SUBMAN1 Rear Admiral Join Date: Apr 2005 Posts: 11,866 Downloads: 0 Uploads: 0	China is a bit scared of the US since if the US ever needed to repay its loans to China, they would just print a bunch of money - as the Fed recently shown us this week no less. So this leaves China in a bit of a precarious situation now doesn't it? But this is more Skybird fear mongering. Does it ruin your day Skybird when you can't find a negative article about the US of A? -S __________________

03-24-09, 09:54 PM	#6
GoldenRivet Subsim Aviator Join Date: Mar 2007 Location: Texas Posts: 8,726 Downloads: 146 Uploads: 0	fair enough perhaps the dollar should move away from china __________________

03-24-09, 09:04 AM	#3
Rockstar In the Brig Join Date: Nov 2002 Location: Zendia Bar & Grill Posts: 12,614 Downloads: 10 Uploads: 0	I think the dollar is being driven down intentionally to cause fear. Now we hear subtle calls for getting rid of the dollar. To establish a global currency when things are going well cannot be done. But if things are miserable, people are afraid and scratching for food then introducing a new currency should be easy as people will see it as a relief rather an infringement on the their liberties and national pride. On the other hand I know too the U.S. has a military no other army in the world can match or defeat. But there is a way to bring this country and Europe to it's knees and thats by hitting the economy. Just like they tried in 9/11. Just my 0.2 cents worth of conspiracy theories

03-24-09, 10:32 PM	#7
Sea Demon Ocean Warrior Join Date: Mar 2004 Location: USA Posts: 2,552 Downloads: 33 Uploads: 0	This is a non issue. And most of the G20 has discounted it. If China and the Russians think that they can just create a "currency" from nothing that can sustain and grow economies, they're going to find out it's not very easy. Dollars may be devalued these days, but the American consumer market tied with all the innovation, new technologies created here, demand for those technologies abroad, and strong entrepreneurship are where the true value of a nation's long term wealth lies. If China stops buying US debt, they will lose our markets and a whole lot of major bilateral deals. If they attempt to crash the dollar, they're going to lose their shirts and much more.