China alarmed by U.S. money printing
Interesting news piece from the Telegraph. The most interesting part was when Cheng Siwei was quoted with this little tidbit, “Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets.“ He was speaking to an alternative to the U.S. dollar. China is very aware of the fact that any major public gold bullion purchases would “stimulate” the markets, I read this as drive the price to the moon and some. I will close with this little interesting fact that gold as consolidated at $930.00/oz. during the traditionally lower demand part of the year. Unless we see a major correction tomorrow morning in the New York Spot market, I predict we will finally see gold bust through $1,000.00 per ounce. Does the smart money know something the average joe doesn’t? Likely in my opinion.
Telegraph, London - Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”. “We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.
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Video: Rep. Mark Kirk says China may be purchasing $80 billion in gold bullion to increase reserves
Editor’s Note: Admittedly, Fox News is not my favorite news organization. This video of an interview on Fox is pretty good and Republican Representative Mark Kirk from Illinois gives a pretty solid perspective of some of the debate that are happening in Washington and globally about the U.S. dollar and China as our largest creditor. The omission that China is going to buy $80 billion in gold bullion says a lot about their inflation expectations in itself. To put that into perspective, if you purchased that amount a current price ($920.00/oz.), that would equal 2,717 tonnes of gold bullion. According to the World Gold Council, that would outstrip an entire years mining production for the entire globe. If that is not some indication about our current situation and what is expected for inflation, than what else do we need? Enjoy the video.
Video:
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China positioning its currency for a run at world supremacy by 2020?
In my opinion I do not see the dollar as the “only” dominant currency by 2020 either, with China, India and Brazil working hard to provide employment and raise the standards of their people, to accomplish this, they will need to provide stability and that will make those countries more attractive to invest in and that is the biggest reason people invest in the dollar. If we were more responsible with how we handled our currency, we would not hear these calls as loud as we do in these current times. It will be interesting to see how this plays out.
News (LA Times):
Reporting from Shanghai — Could the world’s currency of choice have the face of Mao Tse-tung on it, not George Washington? Quixotic or not, the Chinese are preparing for that day.
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China calls for new global currency to replace dollar
The calls for a replacement to the dollar is getting more pronounced everyday. China has really pushed for the IMF to use SDRs (Special Drawings Rights) as the super-sovereign currency used between governements. I am not in favor of giving any international agency this type of power. When you concentrate power, it makes it much easier to abuse.
I understand why the call for these changes are coming, being that we are the de facto reserve currency, our domestic monetary polices are devaluing the dollar. We should not look to bailout and look more to preserve our currency on the world market and let the market take care of the mal-investment.
News (AP):
China is calling for a new global currency controlled by the International Monetary Fund, stepping up pressure ahead of a London summit of global leaders for changes to a financial system dominated by the U.S. dollar and Western governments.
The comments, in an essay by the Chinese central bank governor released late Monday, reflect Beijing’s growing assertiveness in economic affairs. China is expected to press for developing countries to have a bigger say in finance when leaders of the Group of 20 major economies meet April 2 in London to discuss the global crisis.
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Chinese cautious on Treasury Notes
I wonder why, maybe because we are going to issue between 2-3 trillion dollars worth this year and we are still not sure if that is even going to solve the current credit & confidence problem?
News (Reuters):
China’s willingness to continue buying United States Treasury securities in large numbers will depend on its need to protect the value of its foreign investments, the Chinese premier, Wen Jiabao, said Saturday. He also said that a stable yuan is in everyone’s interests.
“Whether we will buy more U.S. Treasury bonds, and if so by how much — we should take that decision in accordance with China’s own need and also our aim to keep the security of our foreign reserves and the value of them,” Mr. Wen said.
His enigmatic remarks, made near the end of a visit to Europe, could raise new concerns about China’s commitment to continue purchasing United States government debt.
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China losing taste for debt from U.S.
It is not just China that is losing their appetite for U.S. sovereign debt, its basically the whole world that is fed up. The world is not going to sit back with all its problems and fund us to be the consumers of the world. That is not the path to global prosperity.
You don’t have an island with a bunch of people with limited resources and then assign one guys jobs as the person who eats. It makes no sense and it won’t stand my spotlight or public opinion over time and that is what counts.
News:
China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.
The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time.
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China to allow Yuan to be used to settle trades normally denominated in dollars
This is bearish news for the U.S. dollar for sure. With China ability to produce goods on a major scale so they will always have something to trade, it looks like the Yuan might become a reserve currency. It should be no surprise that with our reckless bailouts on companies that should of failed that is leading to a devalued dollar is not sitting well with countries that hold much of our sovereign debt.
News:
The pilot scheme was announced in a package of measures designed to help exporters hit by the global downturn. It means if the two parties to a trade have yuan available, they need not enter world exchange markets to pay.
Most of China’s foreign trade is settled in US dollars or the euro, leaving exporters vulnerable to exchange rate fluctuations. The yuan is not yet a freely convertible currency. Officials did not say when the trial scheme would start.
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