Wednesday, June 17, 2009
Evidence mounts for US dollar and bond madness
The richest Countries now are China,Russia,India and Brazil. America is half way a third world country. California, is so broke they can't even pay attention and The LA Lakers have to pay for their own parade, because the state is so broke, but yet the mainstream media keep lying to masses about how the economy is going to get better. Face it it's time for America to fall like other Countries and Empires did in history. You can't stay on top forever. Rome, even the great Egypt/kemet has fallen. Power/energy is induced and who controls the power/resources controls the game. Don't hate the player hate the game.
There was an excellent interview by Max Keiser with Rick Ackerman, stock market forecaster and economic expert, with relation to many of the factors around the economy and the manipulations that are on-going. You really should listen to it, as they also first go over the mysterious $134 billion in seized bonds and who may be behinds that scandal.
However the part I want to highlight has to do with China and what are they going to do with their US assets like dollars and bonds Perhaps better said, what they have clearly already started. Here is a partial transcript from the podcast and video:
"All the talk about China abandoning the dollar...
There are six people seated at the table and one with a huge, huge pile of chips, that is China. Now people can say, 'China is in trouble' and they have a trillion dollars worth of dollars ... and they can't afford to bolt from the dollar because it is going to send all of their USD holdings down in value.
My feeling is, China with that big pile of chips has already written off it's loses and it is going to take the trillion hit and it can kinda do a little bit... China does not care what happens to the dollar, it has basically written it off. [They are using their hard USD's to buy hard assets like copper and gold...]
Is China going to continue to buy gold bullion, what do you think Rick?
China has been doing it so well, that is not driven the price of gold above $1,000, like you might expect. The Chinese are very patient, they are very wise, and eh, they are buying huge stocks of metals right now at depressed prices, that's one of the factors that has driven the Baltic exchange (Baltic Dry Index) higher."
Note on BDI or Baltic Dry Index in this report (with chart):
Careful! Shipping Rates Show Signs Of Speculative Excess
In other words, fits in perfectly with what Max and Rick were discussing above! It is experiencing this bounce, based on heavy buying by China to get out of their USD's and into something stable, like metals and raw resources...
SO, interesting, the Baltic Dry Index crash (in prices) has been stopped and even seen a small rally here, based off of China's divesting from the USD (In summary). That is something. Thus, this is not a recovery we are seeing, but a cover-up of China making the biggest switch in history, out of the USD and related assets.
We see China, via past reports, up to a lot of activity around distancing itself from the USD as a reserve currency and likely Treasury Bonds as well. Here is a small archive to review from the last weeks of what China (And Russia and other important countries) are up to:
* Brazil and China work together to replace dollar
* The Fed hires lobbyist whom specializes in... collapses?
* Malaysia, China mull ending dollar trade: report
* Russia may swap US Treasuries for IMF debt
* New Currency Cooperation (China and Asia)
* China talks up currency diversity
* Breaking- New World Reserve Currency out of G20!
* Russia, China- Gold Standard return...
* China shoots over the bow- warning to Obama on economy
* Non-USD investments - a time to act (China and GCC start new currencies
In closing, Rick sees a rally in gold up to 1,066, not quite time for the big move up with this metal, in his view...
Postscript: Everyone is discussing the G8 and what will come out of it. For me it is this E4 (The Emerging Four, as I call it.) and their big meeting on Tuesday, as we read:
"BRIC is an acronym for the developing nations of Brazil, Russia, India and China. These nations will meet on June 16th and the reserve status of the USD is expected to be a key topic of discussion. Chinese and Russian officials have expressed concern about the USD reserve status and their holdings of US assets. Recent speculation that the US AAA debt rating could be lowered heightens concern about the potential risks of holding U.S.treasuries. Earlier this week, the Russian president said that the BRIC may discuss his proposal to create a new world currency. Russia has reduced its USD reserves from 45% to 41.5% and increased its euro reserves to 44% from 47.5%. Russia's central bank says that it will reduce holdings of US treasuries. Russia may sell some of its USD reserves and move them to IMF bonds. The Russian president says that China supports the idea of the need for a global reserve currency to replace the dollar."
Source: < ahref=http://www.fxstreet.com/fundamental/economic-indicators/event-risk-bric-meeting-on-june-16th/2009-06-12.html>http://www.fxstreet.com/fundamental/economic-indicators/event-risk-...
As they mention some of the risks, if the BRIC countries decide, to speed up their dumping of USD holdings are:
"What are some of the possible risks if the BRIC countries decide to speed up diversification out of US holdings and broaden discussions about the need for a global reserve currency at next week's BRIC meeting in Russia? The biggest risk could be that the dollar may fall sharply in value as investors dump US treasuries. A sharp decline in the value of the dollar could make it more difficult for the US to fund its budget deficit. Interest rates may continue to rise, the Fed’s balance sheet will expand and inflation could surge. These factors would present a major threat to the US recovery and the global economy. Fed Chairman Bernanke said he is confident that the USD will remain the main reserve currency for many years to come. The BRIC countries may have a big say in whether Bernanke is right. The BRIC must be careful not to trigger a dollar crisis as a freefall in the USD would hurt the value of their already large holdings of US treasuries."