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08/08/2007 04:55 AM ID: 64079 Permalink   

China Threatens USD

 

Two officials from China have announced that China may use its $1.33 trillion in USD holdings, foreign reserves, against the US should they [Washington] institute trade sactions against China in an attempt to revalue China's yuan.

This option, referred to as China's "nuclear option," could trigger a collapse of the dollar, in a time where it is already weakened. There is also worry that this will cause a peak in US bond yields, potentially throwing the US into recession.

China, which is estimated at holding around $900 billion in various US bonds, is potentially looking at using their economic throw as a bargaining chip against the US to protect its economic interests, the revaluation of the yuan.

 
  Source: www.telegraph.co.uk  
    WebReporter: havoc666 Show Calling Card      
  Recommendation:  
ASSESS this news: BLOCK this news. Reason:
   
  44 Comments
  
  funny...  
 
i remember being in a debate about exactly this less than a week ago on here, namely with gogevandire... i wonder if chinese officials are taking there cues from us...lol


@goge, if you read this article, i would like to hear your take on this esspecially.
 
  by: havoc666     08/08/2007 04:58 AM     
  a worldwide recession  
 
will hurt the rich countries the most.

The chinese people won't care much, they are still dirt poor in comparison.
 
  by: jendres     08/08/2007 05:05 AM     
  Can we get Bush/Cheney to GTFO?  
 
If it's not one war, it's another.
The speculation alone's not gonna help trading this week.

*sigh*, back to watching Bloomberg like a hawk.
 
  by: redstain   08/08/2007 05:23 AM     
  ;p...  
 
With how much the world has been pulling away from the USA I doubt a recession here would effect them as much as we would like to think.
 
  by: splicer   08/08/2007 05:30 AM     
  at this point  
 
at this point i think the US is more dependant on the rest of the world then the rest of the world is on the US, maybe once upon a time this wasn't true... but it certianly seems to be the case now.
 
  by: havoc666     08/08/2007 05:36 AM     
  @redstain  
 
this isn't a bush/cheney thing, its all the US politicians thing.
 
  by: jendres     08/08/2007 05:40 AM     
  i could explain...  
 
but I've been brought to my knees with the last two comments.

someone?
 
  by: redstain   08/08/2007 05:43 AM     
  On the other hand...  
 
Poison grain, lead paint on toys, etc. The U.S. should pull out all business from China anyway.
 
  by: Nooze Worthy     08/08/2007 05:49 AM     
  @noozeworthy: [mexican gambit]  
 
Never going to happen.

We feed ourselves McDonalds, do we really care if goods are poorer if it will cost you half the price, and increase the profits of local retailer by 40%?

Watching people stand for 9 days without sleep, food just to win a pickup is a nice barometer of where our allegiance lies. Humiliating.
 
  by: redstain   08/08/2007 06:10 AM     
  Glad  
 
I don't have any investments :D
 
  by: hl2k   08/08/2007 06:20 AM     
  Gimme a few days  
 
I'm too busy at work right now and have just sold off all my investments a few weeks back so havent really been following

That was to Havoc
 
  by: GogeVandire   08/08/2007 07:45 AM     
  @hl2k : do you have a pension?  
 
Investments are also barometers.

You can connect Investments stocks to the economy, which then connect to inflation, taxes, jobs, unemployment levels, debt and mortgages, house prices.

It sounds like a tenuous link, but in fact the economy is almost an organism which can be affected by external actions in obscure but profound ways.
 
  by: redstain   08/08/2007 07:51 AM     
  Nothing much to it  
 
China's pretty much said its keeping the yuan low compared to the dollar if it has to crash the $ to do it.

Its bluster, chinas going to entirely devalue the yuan through inflation if it doesnt do something soon.

**Note, no mention of the US invading Iran, just congress starting a trade war with China.**
 
  by: Gogevandire   08/08/2007 09:12 AM     
  Shooting themselves in the foot.  
 
"Its bluster, chinas going to entirely devalue the yuan through inflation if it doesnt do something soon."

But if you're so sure China's economy is going to commit suicide, why are you proposing a trade war and risking retaliation?

Personally, I'd prefer if the economy didn't drop to a level somewhere between Argentina and Zimbabwe.
 
  by: redstain   08/08/2007 09:18 AM     
  IMO the morons in Congress  
 
are throwing fits over China's surplus for 3 reasons:

(1) to find a scapegoat for all the economic ills started by his highass GW Bush - his free trade and globalization.

(2) to gain a political edge with voters in the next election

(3) they are ignorant and stupid enough to believe that a significant appreciation of the Yuan will solve the problems.

 
  by: landers     08/08/2007 10:28 AM     
  @Red  
 
"But if you're so sure China's economy is going to commit suicide, why are you proposing a trade war and risking retaliation?"

I'm not advisiong either, but if the Dems win, expect them, however, just an aside, China's currently fighting one anyway, its financial sector is all bottled up against outside trade, at the very least it would narrow the imbalance considerably if that were opened up.

"Personally, I'd prefer if the economy didn't drop to a level somewhere between Argentina and Zimbabwe."

Moneys irrelvent to the economy.

Zimbabwe is in dire straights because it destroyed its farming industry when it evicted all the white farm owners, who proceeded to burn their crops, the currency manipulation is a symptom of the failing economy, not a cause.
Although printing money can be a cause, its not in this case.

As I said, its mostly bluster in any case, China cant keep going, I know western bankers are noting real inflation is high, but even official inflation in china is high, real inflation is sky rocketing, the low yuan is the main cause, inflation killed nationalist china, it'll kill the PRC just as well.
 
  by: Gogevandire   08/08/2007 10:38 AM     
  too early to worry about a trade war  
 
US multinational corporations have got a powerful lobby. A major trade war bill will have to fight through lobbyists sponsored by corporate giants like Intel, Microsoft, Motorola, Dell, HP, IBM, GM, ... (too long to list).

failing that, the initial tidal wave of foreclosures and hyper-inflation from a trade war with China will send enough congressional nuts home for a quick reversal of policies.
 
  by: landers     08/08/2007 10:49 AM     
  @Gogevandire  
 
quote <<Moneys irrelvent to the economy....but even official inflation in china is high, real inflation is sky rocketing, the low yuan is the main cause, inflation killed nationalist china, it'll kill the PRC just as well.>>

how did you manage to accumulate so much false information?

oh wait, you made everything up, didn't ya?
 
  by: landers     08/08/2007 10:55 AM     
  @Landers  
 
Yes landers, you know all and are always right.
 
  by: Gogevandire   08/08/2007 11:05 AM     
  For the benefit of others  
 
http://business.timesonline.co.uk/...

First paragraph more or less explains it, first three seal the deal.

http://business.timesonline.co.uk/...

Detail less, but proves the point.
 
  by: Gogevandire   08/08/2007 11:27 AM     
  LOLOLOL @Gogevandire  
 
quote <<http://business.timesonline.co.uk/...
First paragraph more or less explains it, first three seal the deal.

http://business.timesonline.co.uk/...
Detail less, but proves the point.>>

(1) you are so dumb that you are posting links to sabotage your own case, without knowing it.

(2) you don't understand the linked stories, let alone reading them with a critical mind.

(3) reporters for timesonline.co.uk can be wrong about the stuff they cover. in their defense, even "professionals" at economists.com have been seriously mistaken about China's economy.

as a homework for ya: stop posting nonsense for a while and read all the articles about China's economy published on timesonline.co.uk and economist.com over the past 10 years.

see how frequently they got it right (it's MUCH easier this way, trust me).
 
  by: landers     08/08/2007 11:57 AM     
  @redstain  
 
Damn good point.
 
  by: Nooze Worthy     08/08/2007 12:19 PM     
  @Landers  
 
"(1) you are so dumb that you are posting links to sabotage your own case, without knowing it."

Explain why those articles sabotage my assertion that china is having troubles with inflation.

"(2) you don't understand the linked stories, let alone reading them with a critical mind."

I've written articles that have been published in financial journals, I think I can understand the times.

"(3) reporters for timesonline.co.uk can be wrong about the stuff they cover. in their defense, even "professionals" at economists.com have been seriously mistaken about China's economy."

Absolutly, economics is the most complex system in the world, it makes the grand unified theory of the universe look simple, entirely irrelevent though.

China has a problem with inflation, either it raises interests rate to control it, raising the value of its currency, or it doesnt, and hyper inflation hits and the yuan collapses.

"as a homework for ya: stop posting nonsense for a while and read all the articles about China's economy published on timesonline.co.uk and economist.com over the past 10 years."

I've read the economist for about 5 years when I saw a great advert for it, I also get a fincial times in my inbox daily at work.

Answer my points, and I'll continue the discussion, dont, and I wont.
 
  by: Gogevandire   08/08/2007 12:34 PM     
  @Gogevandire  
 
what part of my previous post do you not understand?
 
  by: landers     08/08/2007 12:47 PM     
  @Landers  
 
I'm not sure if this is what you mean, but are you basing your opinion the idea that china will let its currency run riot and use the $ for imports it needs?

Its definatly a possibility, however it wont be devalueing the $ when it does so.

Just a thought
 
  by: Gogevandire   08/08/2007 12:48 PM     
  Checkmate China  
 
I'm damn glad I grow my own food.
 
  by: valkyrie123     08/08/2007 12:48 PM     
  @Valk  
 
Get my keys friday, vegetable garden goes in saturday.
 
  by: Gogevandire   08/08/2007 01:02 PM     
  On the $ collapse  
 
http://blogs.telegraph.co.uk/...

Same author

"Disregard all hysteria. The ailing Greenback will not collapse this year, not in ten years, not in twenty years, not in half a century. There is no credible currency against which it can collapse. (Unless you count gold). None of the world's rival power blocs have the economic and demographic depth to challenge American dominance."
 
  by: Gogevandire   08/08/2007 01:45 PM     
  Dear China,  
 
May I have 1 billion dollars?
 
  by: Svengali   08/08/2007 02:39 PM     
  @Goge  
 
Congratulations Goge on owning a piece of the rock. Good luck in your new home.

If you can find them plant non-hybrid seeds in your garden. You can harvest the seeds from these plants and they will grow true to seed. Try these guys, they are the best.

http://www.seedsavers.org/...

I hope everything goes well with the move. Get some rest, you earned it...and you need it. Hang in there.
 
  by: Valkyrie123     08/08/2007 07:51 PM     
  P.S @China  
 
Can you send a little of our work back to UK please.

They have more power than some give them credit for!
 
  by: captainJane     08/08/2007 08:16 PM     
  Investing back into industrial infrastructure  
 
The only way of gaining back an edge is investing money back into the country. Not ploughing it into foreign projects. And here's the trick, commissioning an all-powerful, totally transparatent - to the public - oversight body to monitor the budget and investments.

We can make sure the federal funds get spent in a way the contracts who win the bids don't bloat their prices - a common practice which has plagued all funding. We can also watch executives of the funds don't squirrel away funds into private funds or more likely deals with backhanders.

We can overhaul education, research, agriculture, public infrastructure .. and I know you'll hate me for saying this .. ALTERNATIVE ENERGY.

Becoming more self-sufficient - which is as much a cultural change as material change - can turn the fortunes of the nation and it's people around.
 
  by: redstain   08/08/2007 10:58 PM     
  @Valkyrie123  
 
"If you can find them..they are the best."

Are we talking Cannabis here?

 
  by: Fonzo   08/08/2007 11:10 PM     
  LOL @Gogevandire  
 
quote (telegraph blogger) <<Disregard all hysteria. The ailing Greenback will not collapse this year, not in ten years, not in twenty years, not in half a century...>>

darn, is this pompous, moronic blogger on telegraph.com trying to contradict the Bible? the Prophecies? there will be no WWIII? no end of the world? he sounds like he can guarantee the future for up to 50 years.

and YOU Goge, what else do you like to do besides regurgitating the BS of moronic bloggers on Telegraph.com?
 
  by: landers     08/08/2007 11:41 PM     
  @Red  
 
Yes. Alternative energy is the key.

Policing the world to ensure our supply of energy from foreign sources has dramatically increased costs on multiple fronts: money, time, and human life.

Nearly half a trillion dollars, $200 mill a day, have been poured into Iraq since 2003.
(source: http://www.msnbc.msn.com/...

Lobbyists, such as haliburton - dick cheney's company, pushing for Iraq oil fields to being opened up for their oil services has far too much pull with our politicians.

The "no bid" contracts they've been handed by bush & co. is proof of that.
(source: http://www.cbsnews.com/...

U.S. casualties fighting terrorism abroad: 3,600+.
(source: http://icasualties.org/... )

The kicker is republican's take on terrorism. 3,000 people died on 9/11 due to terrorism, fighting it abroad was suppose to save more American lives. But the war has taken more lives then the lives lost on 9/11. That point is republican fallacy.

Are Iraqis better off now? Only if a death toll post Saddam is a good thing. The Death toll of Iraqis post saddam: 500,000+. That's another republican bs point.
(source: http://www.washingtonpost.com/...

Energy is the largest industry in the world, with much of the worlds energy dependent on oil. The largest reserves found in the middle east as their single biggest export.

If the republican's have waved the flag of terrorism and planted it deep in the sands of the middle east. You should ask yourself how the middle east funds it's terrorism.

How? Is it surprising to know it's oil.

Who is the biggest consumer of oil? If you said the U.S. - you are correct.

You want to stop terrorism absolutely, you cut the funding to it. That means energy independence, in turn alternative energy is the key to fighting terrorism.

Not policing the rest of world with the biggest stick and trying to secure other sovereign nations resources for yourself.

The world is too big, politicians to corrupt, and industries too self serving.
 
  by: ukcn001XYZ   08/08/2007 11:58 PM     
  ?  
 
And how, pray tell, could this be a surprise to anyone? We have been shipping our national wealth overseas [in the form of trade deficits] to places like Germany, Japan, China, and any country which could be a proven source of cheap (Slave?) labor since before I was born. Maybe the chickens are coming home to roost. We have no one to blame but ourselves.
 
  by: LeePIII   08/09/2007 12:03 AM     
  @redstain  
 
good. but where is the money for such investments?

the war in Iraq has already drained hundreds of billions and there is no end in sight.

A social security crisis will begin to surface soon.

The industrial base has already been greatly eroded. More high-paying technical/managerial jobs are being outsourced overseas.

America isn't graduating enough local engineers and scientists to compete with other major economies.

...

...

the screw-ups of GW Bush, his reckless administration and the incompetent Congress are too many and too huge to be reversed anytime soon. for now, the screw-ups will continue.
 
  by: landers     08/09/2007 12:09 AM     
  @Landers  
 
Industry; building things we need is the key.

Stop building tanks; more agriculture, irrigation, better exhaust filters for factories and cars. Improve tech on lighting, airconditioning, energy efficient monitors, eco-switches.

The eco-industry is nascent, carve a niche or become an world leader. When the industry thrives, so does research. And you research, you have the financial incentive to train more scientists.

What about the SocialSecurity/Trade deficit? The problem will not go away if we begin a road to recovery. And it sure as heck won't go away if we just continue our Road to Heck; pedal to the metal.

We screwed ourselves so far, nothing we do will allow us to walk away unscathed. But we can't let neo-Republicans to use this imagery and say: "woooo, if we do it your way, taxpayers will suffer". Time to do things right for once and brace for impact.

It's a fairytale world I know. But I'd like to step out of the nightmare we're currently in.
 
  by: redstain   08/09/2007 12:30 AM     
  *strokes ego*  
 
There's a reason I've been saying for 2 years here to buy precious metals, gold and silver. But make sure to keep them in a foreign bank!
 
  by: QuestioningAnswers   08/09/2007 12:55 AM     
  @QuestioningAnswers  
 
and don't forget to short the greenback liberally on a major uptick.

the FED has stopped publishing the M3. you know what they are up to.
 
  by: landers     08/09/2007 01:25 AM     
  @redstain  
 
the problem is this:

GW Bush and his cohorts have steered the Titanic into an iceberg in broad daylight. But instead of mending the gashes, these morons are denying / debating that the gashes are real. In the meantime, they are steering the ship into other icebergs, again in broad daylight.
 
  by: landers     08/09/2007 01:46 AM     
  @landers; old news  
 
Continuing with the imagery, when we take control back in '08, the newly ousted Cheney and crew will be standing there trying to blame us for everything 6 months after just inheriting the problems.

We know the score, didn't claim it was going to be easy. ..else it would have been done already.
 
  by: redstain   08/09/2007 07:23 AM     
  Just a small comment.  
 
China is so economically dependent upon the U.S. and the western world trade that it is hand tied. There would be a total revolution in China if it lost world trade even as little as 5% because of a sell off of $. They would never risk it, they would never risk this in a communist regime. It is very difficult to manage a two billion population. Just think about it. Would you go through with a sell off of USA dollars risking the back lash of 2 billion expectant population who you have promised of better life and economical progessions.
The communist regime of China is just bearly holding on. Any deviation from the party line is dealt with severe actions and that is the only way they are able to hold on to such a mass of population. They may blow a lot of smoke outside of the country in the propaganda but there is no fire. The leaders know not to tip the boat while floating in calm waters.
 
  by: Rosko Sinep     08/09/2007 11:29 PM     
  @Rosko Sinep  
 
you posted the exact some comment in both threads... no i have to direct you to get the info:

http://www.shortnews.com/...

long story short thats not exactly how it is the US can sell it to their people all they want but the facts remain.
 
  by: havoc666     08/09/2007 11:44 PM     
 
 
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