China to ‘liquidate’ US Treasuries, not dollars

September 20, 2011 by · Leave a Comment
Filed under: Currency News 

We have two choices, we either need to make the hard choices ourselves or they will be made for us, that is for sure.   Do we want to do it on our terms or not?  This article is troubling is that this could signal a significant decrease in debt buying from our largest purchaser of U.S. Treasuries and obvious are largest trade partner unless you count Europe as a whole.

If this actually come to fruition then we will see disorderly auctions for our debt and in that event, the Federal Reserve will be forced to come in as the buyer of last resort to prop up our debt markets.  Personally, I think this would be healthy for the long-term.  We need some sort of wake-up call to let our government know that they can not continue to keep running deficits and we need to bite the bullet and cut entitlement programs and scale back the size of government.   I do not affiliate myself any particular political party, so please don’t read this and try and box me into some group.

What I am speaking about is just basic math.  For every dollar of debt we have to create beyond what we take in as taxes, either goes into some asset class and that raises prices or into inflation once the economy picks up speed.  We need to live within our means and encourage savings and investment on a major scale.  I have been working on a list of items that would greatly help fix America and get us back into a leadership role on the economic scene.   A major portion of this list addresses entitlements, basically it sets cut-off for the younger generation so we can keep our obligations to our citizens who don’t have enough time to create an alternative plan.   Remember, when you try to help everyone, then you help no one because we will be broke trying.

The Telegraph (Ambrose Evans-Pritchard) –  The debt markets have been warned.

A key rate setter-for China’s central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible.

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China trade imbalance blamed for 2.4 million jobs lost

March 23, 2010 by · Leave a Comment
Filed under: Global News 

I have to agree that foreign free trade is in part to blame for this loss of jobs from 2001-2008.  It is not that free trade is bad but we incentivize the movement of jobs off-shore and we let the cheap finished goods back into the country unencumbered.   This is not totally bad, but if we are not providing retraining and more after-highschool training like vocational and college.  If we do not do this to create opportunity, then these under-skilled workers are going to have jobs available to them that will lower their standard of living and create less opportunity for their children.

This is the key point that we as a society do not seem to grasp.  We keep vilifying foreigners like China because its easy and doesn’t place blame on the home front but that is not the real culprit.   These countries are just taking advantage of the system we have opened up to them.  As long as we keep producing less and consuming goods without any thought of the actual cost, this cycle will continue until it gets so unbearable that we revolt.

Reuters – Unfair Chinese trade and currency practices caused the loss of as many as 2.4 million U.S. jobs between 2001 and 2008, according to a study released on Tuesday.

The report by the left-leaning Economic Policy Institute said China’s “currency manipulation” was a major cause of the United States’ trade deficit with China, though it said other Chinese practices contributed to the deficit.

The report comes ahead of an April 15 semi-annual report by the Treasury Department in which it must decide again whether to label China a currency manipulator. U.S. lawmakers in recent weeks have been pressuring the Obama administration to label China as such, something that U.S. President Barack Obama, like his predecessor, George W. Bush, has so far resisted.

Source:  Reuters

China alarmed by U.S. money printing

September 7, 2009 by · Leave a Comment
Filed under: Currency News 

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

July 12, 2009 by · Leave a Comment
Filed under: Videos 

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.


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China positioning its currency for a run at world supremacy by 2020?

April 5, 2009 by · Leave a Comment
Filed under: Currency News 

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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