Tue 2010-08-24 20:09 EDT

EconomicPolicyJournal.com: Is China Executing a Cunning Sun Tzu Strategy to Destroy the Dollar and Cause an Upward Price Explosion in Gold?

Elizabeth Brinsden

Could China be coveting the role of the next economic superpower, thereby supplanting the USA? If so, is China planning to do this by design or is it simply awaiting this result by default as a result of the total collapse of the American economic system?...At a superficial level, it may appear to the onlooker that China has been sucked into a giant malinvestment by purchasing these bonds, but a closer look at Master Sun's stratagems may reveal a well conceived and even cunning plan...China may well be heading in the direction of pegging its currency in some form to something else and that that something else, is very likely to be gold. Then China could offload its US bonds by sale , once again raising the price of gold dramatically which in turn would compensate for the dollar losses...Not only would this give China the only trustworthy currency in the world, but it would simultaneously and conveniently constitute the knock-out blow to the USA as the economic superpower...

caused; China executive; com; Cunning Sun Tzu Strategy; destroyed; Dollar; EconomicPolicyJournal; gold; Upward Price Explosion.

Culture of Life News Thu 2010-05-20 16:57 EDT

Imbalances In World Trade Cause Tectonic Shifts In Power

Elaine Supkis

...Very, very soon, China will be the world's #1 oil buyer and shortly after this, the yuan will suddenly displace the dollar as the currency which determines the value of oil deals. Then, the yuan/dollar peg will vanish. And we better prepare for this day: it is INEVITABLE. We will suddenly find out where all those many trillions of US dollars are hidden in various foreign FOREX accounts and then hyperinflation will rage...for the US dollar, not the Chinese yuan...

Culture; imbalances; Life News; Power; World Trade Cause Tectonic Shifts.

naked capitalism Fri 2010-03-19 16:02 EDT

Calibrating differences between China and Japan's bubble blow-off top

Edward Harrison

...Is China experiencing a massive bubble or not? If so, will the bubble's inevitable pop spill over into the real economy in a nasty way as it has done in the U.S. and elsewhere?...My own point of reference has been the 1920s and the 1930s more than the 1980s and 1990s. In the 1920s, Great Britain played the role now played by the United States: military power, declining economic power, anchor global currency, and largest debtor nation. The United States played the role now played by China: rising economic and military power and `alpha creditor,' a phrase our Yves Smith coined. (The key difference is that the U.S. was more advanced relative to Great Britain than China relative to the U.S.)...China is effectively doing what France did by accumulating reserves despite fears of currency depreciation. I think this reserve policy is significant because this is what is behind all of the talk of protectionism and currency pegging. The Chinese are afraid that the U.S. are actively looking to devalue the currency while the U.S. are fed up with the peg and the resultant imbalances...

Calibrating differences; China; Japan's bubble blow; naked capitalism; Top.

New Deal 2.0 Tue 2009-11-03 20:07 EST

Roosevelt Institute Director and Senior Fellow Rob Johnson will lead Soros' $50 Million Effort

Rob Johnson, Director of the Economic Policy Initiative of the Roosevelt Institute, has been pegged to lead financier George Soros' $50 million effort to create an ``Institute for New Economic Thinking'', which will fund research, convene symposiums, and establish a journal -- all in the name of promoting free market skeptics and creating a new economic paradigm. To this end Soros is gathering market-skeptics this week, including Roosevelt Institute Braintruster and Nobel Prize-winner Joseph Stiglitz, George Akerlof, Michael Spence, and Sir James Mirrlees to start the conversation. ``Economics has failed not only to predict and explain what happened but has also failed to protect society,'' said Johnson in an article in Newsweek. ``That's what the crisis revealed. The paradigm has failed. There is no guidance.''

0; 50; effort; lead Soros; new dealing 2; Roosevelt Institute Director; Senior Fellow Rob Johnson.

Credit Writedowns Fri 2009-10-23 08:57 EDT

US angling to get Chinese to revalue renminbi

In what looks to be a central line of attack in the quest to re-balance the global economy, the Treasury Department has ratcheted up the rhetoric against China's currency peg. The Treasury's semiannual report to Congress slammed the Chinese for their lack of exchange rate `flexibility,' but stopped well short of accusing the Chinese of currency 'manipulation' as Tim Geithner had claimed...[dollar losing reserve currency status]

angle; Chinese; credit writedowns; revalue renminbi.

Jesse's Café Américain Thu 2009-10-15 16:38 EDT

Sumitomo Forecasts Dollar to 50 Yen, End of Dollar as Reserve Currency

Jesse

"We can no longer stop the big wave of dollar weakness," said Daisuke Uno at Sumitomo. ...The market is taking the dollar where it should be, where it needs to go. If only countries with obvious pegs and ongoing manipulation to support export mercantilism were also to allow their currencies to float more freely. It is going to kill off global trade. It is the great failure of the WTO and US trade policy to have allowed pegs and overt currency manipulation policies which are de facto tariffs and subsidies on trade.

50 yen; Dollar; ending; Jesse's Café Américain; reserve currency; Sumitomo Forecasts Dollar.

Credit Writedowns Wed 2009-10-14 12:12 EDT

Currencies pegged to the dollar under pressure to drop peg

...as the dollar continues to weaken, those countries with pegs will be under pressure to drop their peg or to revalue their pegs higher. The Bloomberg video linked below explains. The dichotomy whereby the adjustment process is done only through free-floating currencies is inherently unstable -- and invites a nationalistic response. A busted peg in any major U.S. trading partner's currency is likely to have a very negative psychological impact on currency markets and severe knock-on effects... [dollar losing reserve status]

credit writedowns; currency pegs; Dollar; drop peg; pressures.

The Big Picture Wed 2009-10-14 11:36 EDT

Andy Xie: Here We Go Again

Former Morgan Stanley Analyst Andy Xie explains why China is a potential bubble: [Consider] the US Savings and Loans crisis of the late 1980s and early 1990s. The US Federal Reserve kept monetary policy loose to help the banking system. The dollar went into a prolonged bear market. During the descent, Asian economies that pegged their currencies to the dollar could increase money supply and lending without worrying about devaluation, but the money couldn't leave home due to the dollar's poor outlook, so it went into asset markets. When the dollar began to rebound in 1996, Asian economies came under tightening pressure that burst their asset bubbles. The collapsing asset prices triggered capital outflows that reinforced asset deflation. Asset deflation destroyed their banking systems. In short, the US banking crisis created the environment for a credit boom in Asia. When US banks recovered, Asian banks collapsed. Is China heading down the same path? There are many anecdotes to support the comparison. Property prices in Southeast Asia became higher than those in the US, but ``experts'' and government officials had stories to explain it, even though their per capita income was one-tenth that of the US. Their banks also commanded huge market capitalizations, as financial markets extended their growth ad infinitum. The same thing is happening in China today. When something seems too good to be true, it is. World trade -- the engine of global growth -- has collapsed. Employment is still contracting throughout the world. There are no realistic scenarios for the global economy to regain high and sustainable growth. China is an export-driven economy. Bank lending can support the economy for a short time, however, stocks are as expensive as during the heydays of the last bubble. Like all previous bubbles, this one, too, will burst.

Andy Xie; Big Picture; Go.

Minyanville Sun 2009-08-30 15:08 EDT

How China Will Handle the Yuan

Ryan Krueger, Lance Lewis: Something is up with China and the yuan...What if it were close to revaluing against the dollar? We know it's fed up with funding US debt, but it can't stop funding it as long as it continues to peg to the dollar and is forced to buy dollars every day in order to hold down the yuan. The US isn't even its largest export market anymore. The EU is. The US consumer is broke. Why does China need to keep exporting cheap goods to the US if the US consumer can't buy them anyway?

China; handles; Minyanville; Yuan.

Tue 2009-04-21 00:00 EDT

Jesse's Café Américain: Overseas Private Investors Sell US Financial Assets

Jesse's Café Américain: Overseas Private Investors Sell US Financial Assets; Foreign central banks continued to purchase Treasuries while shedding agency debt. This is largely in support of currency pegs for industrial policy and homage from client states like Saudi Arabia.

financial assets; Jesse's Café Américain; Overseas Private Investors Sell.

Wed 2008-07-09 00:00 EDT

Econbrowser: UAE & Other Gulf Countries Urged to Switch Currency Peg from the Dollar to a Basket That Includes Oil

Econbrowser: UAE & Other Gulf Countries Urged to Switch Currency Peg from the Dollar to a Basket That Includes Oil, by Jeffrey Frankel; dollar losing reserve status

basket; Dollar; Econbrowser; Gulf Countries Urged; include oil; Switch Currency Peg; UAE.

Tue 2008-07-08 00:00 EDT

Jesse's Café Américain: Internal Report Urges Gulf States to Rethink Their Dollar Pegs

Jesse's Café Américain: Internal Report Urges Gulf States to Rethink Their Dollar Pegs; dollar losing reserve status

dollars pegged; Internal Report Urges Gulf States; Jesse's Café Américain; rethink.