[perplexd]

a devaluation of U.S. currency will solve our problems with consumer and federal debt.

Of course, buying energy from other countries with worthless green paper will be a huge problem that will quickly replace all the "solved problem" with even more debt. But hey, that's long term, so why worry, right?

every respected economist out there; will tell you that in any stock, commodity, option, bond, or anything else that's traded broadly, it doesn't matter how the stuff gets traded; it matters what currency winds up in the oil exporting nations hands at the end of the day.

it doesn't matter how the stuff gets traded; it matters what currency winds up in the oil exporting nations hands at the end of the day.

Your analysis ignores half the equation. Yes, it is nice for us if the Saudis hold dollars from all their sales. However, if Pakistan starts paying in euros instead of dollars, then guess what they keep in their bank account? What would happen to the dollar if every american switched to euros in their bank account? Sure, the corporations we buy from would convert back to dollars, but our savings would all be in euros...

Ok, that's a bad example because U.S. consumers HAVE NO SAVINGS. But guess what? Oil buying countries do. So, what happens if 100 or so countries convert all their reserves to Euros? Yeah, it would suck. Don't kid yourself -- it will make you look like a "respected economist".

I had to go ahead and point that out because seeing a person with egg on their face can be fun, but when the person was just being a completely arrogant asshole, then it is even more fun.

[alokin]

in "der Spiegel" they write about the declining dollar (in German)

lspiegel

[americandream]

in "der Spiegel" they write about the declining dollar (in German)

lspiegel

Can anyone translate the gist of it, I don't speak German and I'm sure a good many in here don't as well.

[Lighthouse]

in "der Spiegel" they write about the declining dollar (in German)

lspiegel

Can anyone translate the gist of it, I don't speak German and I'm sure a good many in here don't as well.

try babelfish. sounds abit funny but you get the picture:


Spiegel article in english

[Bas]

here's another one from Spiegel international (In english)

For the United States, a Chinese decision to abandon the dollar would be tantamount to Pearl Harbor without the war. It would represent a challenge to the world's biggest economy by the world's fastest growing economy.

Funny, considering that only a couple of years ago there was considerable pressure from Washington on Beijing to let the Yuan appreciate, which amounts to just that: selling dollars.

[Concerned]

here's another one from Spiegel international (In english)

For the United States, a Chinese decision to abandon the dollar would be tantamount to Pearl Harbor without the war. It would represent a challenge to the world's biggest economy by the world's fastest growing economy.

Funny, considering that only a couple of years ago there was considerable pressure from Washington on Beijing to let the Yuan appreciate, which amounts to just that: selling dollars.

Isn't the Yuan pegged to the dollar? So USD going down maintains the same advantage to Chinese exporters.

[MrBill]

Concerned you are correct. As I wrote yesterday in Trader's Corner where I compared oil prices in US dollars versus basket of other currencies. Although there has been 'gradual' appreciation of the yuan against the US dollar the yuan is actually weaker against the euro.

That is why Chinese exports to the EU are higher than exports to the USA and growing. It also conveniently provides the Chinese with an alternative to the US dollar as a store of wealth, so that they do not have to repatriate those export receipts into domestic capital markets and risk an appreciation in the yuan that might make their exports less competitive.

However, it shifts the burden of global imbalances away from the USA and onto the EU where manufacturers are facing stiff competition from not only Chinese imports, but from US exports as well.

Airbus said yesterday that the weak US dollar is a matter of survival for the European airplane manufacturer and plans to cut another 10.000 jobs which might be directly or indirectly a result of a strong euro that makes them less competitive. Then again it may have something to do with the A380's lack of success as well.

Never the less European politicians are baying at the ECB to lower interest rates and help weaken the euro. That would be inflationary, of course, but they feel the EU alone cannot right global imbalances on their own. I knew this day would come. The cries will only get louder when the EUR/USD hits first $1.5000 and then $1.6000. The pressure on the ECB to cut can only increase.

The English Version of Spiegel Online

[Bas]

However, it shifts the burden of global imbalances away from the USA and onto the EU where manufacturers are facing stiff competition from not only Chinese imports, but from US exports as well.


Never the less European politicians are baying at the ECB to lower interest rates and help weaken the euro. That would be inflationary, of course, but they feel the EU alone cannot right global imbalances on their own. I knew this day would come. The cries will only get louder when the EUR/USD hits first $1.5000 and then $1.6000. The pressure on the ECB to cut can only increase.

The English Version of Spiegel Online

Right on. The Euro has become worth 50% more against the dollar since it's introduction, and that's just unsustainable. For most of this year, and also I think last year, I have heard newsreports about Dutch export industries complaining about the high Euro, and I imagine that some of them are in the red ink now or will be soon if they haven't hedged their currency risks.

edited by MrBill

-25% since its introduction at 1.1900 in January, 1999, and about -45% since the lows in 2000 when the Fed ironically had to intervene to buy euros and sell dollars! ; - )

[MrBill]

Sarkozy takes Hu to task over weak yuan....

Hu listened impassively as Sarkozy, fresh from overseeing the signing of business deals worth nearly $30 billion, praised China but said it had to shoulder growing responsibilities on issues such as the environment and exchange rates.

"We need to arrive at currency rates that are harmonious and fair," Sarkozy said with the frankness that has become the hallmark of his young presidency.

"This means that, for its own sake as well, China needs to accelerate the appreciation of the yuan against the euro," he said at a joint media appearance with Hu in the Great Hall of the People off Tiananmen Square.

The European Union, which has overtaken the United States this year as China's largest trading partner, has been ratcheting up pressure on Beijing to correct what it sees as the yuan's unfair undervaluation.

It has also fallen in line with Washington by taking a harder line on trade issues such as intellectual piracy and barriers to Chinese markets.

Source: Sarkozy tackles Hu on yuan and human rights


..... and why betting on the yen may not work out as some plan.

Ashley Davies, a currency strategist in Singapore at UBS AG, the world's second-largest foreign- exchange, comments on the dollar against the yen.

``We would caution investors not to get too bullish on the yen as we do not believe that there is much further downside in the pair barring some calamity in global markets that causes funding currencies to surge.

``Firstly, current levels of dollar-yen are more consistent with an era when investors were actually betting on a strong asset reflation-driven recovery.

``Secondly, high oil prices at $98 a barrel undermine the equilibrium value of the yen.

``Finally, there is no relationship between the Chinese yuan and the Japanese yen, and hence any Chinese yuan revaluation hopes should not translate to sustained gains in the yen.''

Source:
Nov. 26 (Bloomberg)

[eXpat]

China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

All those who were hoping global stock markets would surge tomorrow based on a ridiculous rumor that China would revalue the CNY by 10% will have to wait. Instead, China has decided to serve the world another surprise. Following last week's announcement by PBoC Governor Zhou (Where's Waldo) Xiaochuan that the country's excessive stockpile of USD reserves has to be urgently diversified, today we get a sense of just how big the upcoming Chinese defection from the "buy US debt" Nash equilibrium will be. Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so. And to think that this comes just as news that the Japanese pension fund will soon be dumping who knows what. So, once again, how about that "end of QE" again?

From Xinhua:

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

And as if the public sector making it all too clear what is about to happen was not enough, here is the private one as well:

China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.

The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Tang also said that China should further diversify its foreign exchange holdings. He suggested five channels for using the reserves, including replenishing state-owned capital in key sectors and enterprises, purchasing strategic resources, expanding overseas investment, issuing foreign bonds and improving national welfare in areas like education and health.

However, these strategies can only treat the symptoms but not the root cause, he said, noting that the key is to reform the mechanism of how the reserves are generated and managed.

The last sentence says it all. While China is certainly tired of recycling US Dollars, it still has no viable alternative, especially as long as its own currency is relegated to the C-grade of not even SDR-backing currencies. But that will all change very soon. Once the push for broad Chinese currency acceptance is in play, the CNY and the USD will be unpegged, promptly followed by China dumping the bulk of its USD exposure, and also sending the world a message that US debt is no longer a viable investment opportunity.

http://www.zerohedge.com/article/china-proposes-cut-two-thirds-its-3-trillion-usd-holdings

[eXpat]

GLOBAL MARKETS-US dollar slips, stocks rebound on Fed statement

* US dollar slides to 3-year low after Fed statement

* Wall St higher after statement, press conference awaited

* U.S. bond prices add to losses after FOMC statement

* Fed signals no rush to scale back US economic support
(Adds fresh prices)

By Al Yoon and Herbert Lash

NEW YORK, April 27 (Reuters) - The U.S. dollar slid to a
three-year low against major currencies and world equity
markets edged higher on Wednesday after the Federal Reserve
signaled it would retain extensive support for the U.S.
economy.

Wall Street rebounded slightly and oil prices nudged up
after the Fed said in a statement that it believed the economic
recovery was proceeding at a moderate pace, with little risk an
inflationary psychology would take hold. For details see:
[ID:nN26291565]

The policy-setting Federal Open Market Committee said as
expected after a two-day meeting that it intends to complete
its $600 billion bond-buying program in June as scheduled.

"We did not expect any material surprises in the FOMC
statement and there was none. It remains quite dovish," said
Bret Barker, a portfolio manager at TCW in Los Angeles.

"It could be argued they slightly downgraded growth and
maintained the view that inflation is 'transitory.' It was very
boilerplate," Barker said.

Following the FOMC statement investors awaited remarks by
Fed Chairman Ben Bernanke who will speak starting at 2:15 p.m.
(1815 GMT) at his first-ever news conference on monetary
policy.

http://af.reuters.com/article/metalsNews/idAFN2716242620110427

[mattduke]

"people who are threatening not to pass the debt ceiling are our version of Al-Qaeda terrorists. Really.

Paul O'Neill
http://www.zerohedge.com/article/paul-o ... terrorists

[Blacksmith]

For the last three years, I have been investing with one overriding precept, i.e. that the US dollar will fail. It is a sad state of affairs that such a hard working innovative people are ruled by such a group of incompetent politicians. However, there is an old saying that people get what they deserve.

[eXpat]

Dollar falls, touching lowest since mid-2008

NEW YORK (MarketWatch) — The U.S. dollar fell for a sixth day on Thursday, as stocks inched up and gave currency traders more reason to shift out of perceived safe-havens and into riskier assets.

The greenback fell to a 21-month low before weak U.S. data on weekly jobless claims and first-quarter growth, which reinforced sentiments from Federal Reserve Chairman Ben Bernanke on Wednesday. Investors came away believing there’s no reason to think U.S. interest rates are headed higher anytime soon.
The dollar index /quotes/comstock/11j!i:dxy0 DXY -0.39% , which measures the U.S. unit against a basket of six major currencies, slipped to 73.173, down from 73.284 late Wednesday. Earlier Thursday, the gauge fell to 72.871, its lowest level since July 2008.

The euro /quotes/comstock/21o!x:seurusd EURUSD -0.0068% traded as high as $1.4881, according to FactSet Research, a level that marked the highest versus the dollar since December 2009.

http://www.marketwatch.com/story/dollar-drops-in-asia-after-bernankes-remarks-2011-04-28

[eXpat]

"The Dollar Plummets" May 2nd Edition

After some patriotic sentiment modestly pushed the dollar to just above humiliation levels, the DXY is right back to lowest level since July 2008. We still have about 150 pips to go until the all time low of 71.3521 from April 22, 2008 is taken out. After that, the CNY better be ready to take over as reserve currency cause it will get ugly.

http://www.zerohedge.com/article/dollar-plummets-may-2nd-edition

[AgentR11]

re China.

For renminbi to become viable internationally. It must float. Let me know when they start suggesting that.

OTOH, they'd be idiots to try to hold on to US dollars, but they are going to take a hosing trying to convert all those dollars into real assets.

[radon]

"The Dollar Plummets" May 2nd Edition

...
After that, the CNY better be ready to take over as reserve currency cause it will get ugly.
...

http://www.zerohedge.com/article/dollar-plummets-may-2nd-edition

Why would, say, Russia accept CNY as a reserve currency?
In the absence of the established reserve currency (USD), it is much better to settle international trade in roubles or in the counterparty's currency.
Why finance China with your international trade?

[Clouseau2]

China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings

Not surprisingly, China appears to be getting ready to cut its USD reserves by roughly the amount of dollars that was recently printed by the Fed, or $2 trilion or so.

http://www.zerohedge.com/article/china-proposes-cut-two-thirds-its-3-trillion-usd-holdings

Does that basically mean it's time to go on a $2 trillion dollar spending spree for world assets?

[mattduke]

Imported food up 20% from a year ago.

http://www.bloomberg.com/news/2011-05-1 ... mated.html

[lowem]

USDX doing quite a bit of a rebound straight from oversold to nearly overbought territory. Dead cat bounce perhaps?