China threatens 'nuclear option' of dollar sales

Just a thought!
In the eve of China blackmail against the Dollar, I see there another new trick from the Elite World Bankers to push the Euro to merge with the Dollar to create a Eurodollar, which would perform as a single currency for both the United States and Europe (after all the 2 biggest by fare consumer are America and Europe), and ultimately for the rest of the world. Then the Elite World Banker will be close to the New World Order .
Is this to fare fetch as a theory?

Kacou

From the perspective of diplomatic signals, Paulson just returned from his fourth trip to Beijing since he assumed control of the Treasury. I think China has attended one economic pow-wow in Washington during the same period. When Muhammad has to continually go to the mountain, I think it says something about a country's leverage.

I've been watching the FOREX since this story hit the wire, and it doesn't appear that currency markets are concerned about the news...but if China continues to jawbone this threat, and congress continues to up the protectionist ante, the markets could begin reacting to the rhetoric alone.

It's been two years since the last round of congressional hearings, threats, and condemnations which resulted in a token two percent revaluation of the Yuan. Obviously it didn't have much of a positive effect for the old USofA. One potential problem for China from a rapid revaluation of their currency (20%-40%), is the potential for sparking runaway inflation. The US on the other hand could expect a sizable reduction in China's purchase of treasuries, which could put upward pressure on interest rates...not something the US economy would welcome right now.

Gone are the honeymoon years of 2002-2004 after China first entered the WTO. It was touted back then, that the new relationship would open the market, and increase US exports to the mainland. This we were told, would support hundreds of thousands new American jobs, and ultimately lead to a reduction in the bilateral trade imbalance (already huge).

Guess it hasn't worked-out that way.

Originally posted by OBE1

Guess it hasn't worked-out that way.

Certainly hasn't. I am not sure what should be done (I am not that well versed in economics to know I have to admit) but something should and needs to be done.

Can anybody enumerate what actions to be taken by ats members like me to get ahead of this looming economic conflict? It does not look promising at all.

Being a family person, I'd like to know what's in store for our children. What are the immediate steps to be done with the following:

1. mortgage
2. 401k
3. credit cards
4. loans
5. investment ideas
6. survival preparedness

Will appreciate greatly for any u2u.

Gosh, Terrapop. I think you are right. It's a sad realization that the end is near for many of us and there is literally no way out. I wonder who decides who lives and who dies.

Originally posted by RetinoidReceptor

Originally posted by Foppezao
Then those countries will have to switch to the euro as well. And so the dollar will fall spirally.

Unfortunately it doesn't work that way.

First off, the Euro is a relatively new currency and cannot just be traded in for the trillions of dollars out there (there is not enough Euros). The sheer demand will spike the Euro's value up to enormous heights while the dollar, yen, middle eastern currencies, and yuan all depress which means Europe will not be able to export ANYTHING. It would be very bad for Europe.

I assure you, Japan, Saudi Arabia, Iran, Nigeria, Europe will not be happy that China has dumped so many dollars and rendered their reserves useless. And they wouldn't be able to get nearly as much Euros for their dollars if the dollar depreciates.

---What do I think? Nothing will happen.

Yes thats true, the higher euro isnt good at all for our export. For my country[typical export/flow] we're happy the consuming is at a good level, the export results suck..But that wont be the problem of the OPEC countries, at a certain point they just want value for their goods..
I also think the advantage of the trade suprlus China has is that they could just as well sell their 60% to the E.U, its more difficult for the US to change from sellers..SO i wonder how exactly are those economies intertwined?, and as siamese as people say..?
As said before the [stock market]media doesnt really speak about this..keep the faith is their motto, untill it really hits hard..
And the problem is, as a government there's little you can do if the currency falls..See what happenend with the European currency crisis of 1992, the British goverment just lost from the currency speculators..And the latter dont give a # if the dollar falls..



[edit on 8-8-2007 by Foppezao]

Marg is as usual right. If China called in its loans.... it might cause both economies to collapse... indeed cause a world wide depression but China would recover; we would not. The economic situition in this country right now is a house of cards about to fall; some here in the US see it but mark my word, more overseas see it more clearly than we do.

Massive debt
a money pit called the Iraq war
the looming social security crisis with the retirement of the baby boomers
a crumbling infrastructure
Ill concieved tax cuts (which according to the GAO is the #1 cause of the deficit even with the war)

To name a few.

With these crisis looming in our future and no leg. plans from either party to deal with them (privatizing Social Security was a scam to funnel more public funds into private hands, not a real plan to deal with it) it is obvious that despite our economic and military power our days as the world's super power are numbered.

The bush administration and its ill concieved wars are its last gasp. We will continue to try and threaten to throw our weight around but as these crisis deepen, our ability to do anything will lessen.

Which in my humble opinion is a blessing for this country, abit a mixed blessing but one none the less.

AND before some damned fool posts claiming that I hate my country and all that tripe; I love my country very much and served her honorably thank you very much... I just don't buy into my country right or wrong jingoism... it is no sin to say we are going in the wrong directions.

[edit on 8-8-2007 by grover]

Excellent discussion of a very real threat.

But we have made our own bed--at least our "leaders" and their handlers have, and we will pay for it.

The push to bring China into the WTO was of course spearheaded by Bush I, as the lynchpin of globalization. The basic premise was, open the China market and you open its huge labor market too, and eventually you will erode and destroy the working class. No more $20.00/hr pay with benefits for autoworkers, etc., corporate America could shed itself of its labor obligations and maximize profit.

Thus the rise of Walmart & co.--with declining earnings, the working class needed someplace to shop that it could afford. In a vicious circle, US workers, who's earnings were eroded by Chinese goods, bought Chinese goods to stay afloat.

Well, that part of the equation has worked like a charm; the idea to go back to 19th C. capitalism is well on its way to fruition. But the sticking point was always the debt China would accumulate, and here the same religiously held ideologies and willful blindness to reality that got us into Iraq came into play, allowing the PTB to hope against all reason that we--a post-industrial, service-based economy--would somehow become balanced trading partners with a huge country just beginning an industrial revolution. Pure madness.

Of course the US Gov't is a consortium of corporate, financial and military interests, and we are just their playthings. These interests don't really care about the national debt, because it has been fobbed off on us, and they have been virtually unshackled from taxation. They are roaming wolves.

China's debt card, though, will not be played, at least not blatantly. They will continue to let us bleed ourselves through accumulating debt. They hold the leverage, and we have given it to them happily. And they are not alone; the world will be happy to let us hemorrhage dollars and power to put us in our place. You are already seeing dollar independence take hold in south america, and in the oil markets. This will widen and accelerate. The only corrective is a strong retraction in the money supply, but that will cause a major depression. So we will blundr along, alienating the world and weakening our economy further, simply because we're so enormous and the world has to trade with us, but they will do so to their advantage.

Quite a mess.

The biggest difference is that China actually produces something while the US does not. They can recover a lot quicker than the US can. The US would default basically overnight, the stock market would lose 50% if not more of his value, houses would be dirt cheap and foreigner would start buying US assets more and more till the value of the dollar would rise again. China will never do it ; just dumping a couple of hundred billion USD would do a lot of damages and the US would do anything in power to convince China to stop selling the USD.

Originally posted by Gools

Originally posted by FredT
...fairly in the open market.

Care to tell the rest of us what that is exactly?

I'll take a stab at it.

A free market is when the government gets out of the way as much as possible and lets the market drive itself. Our government seems to have long ago forgotten this policy.

For one we should stop subsidizing mega-companies like ExxonMobile. I doubt they need special tax breaks to stay in business. Sink or swim people, if your business is good then let the market bear that fact but the tax payer shouldn't be responsible for propping up company XYZ.

On another tip we gotta tear down these competition barriers. Hemp beats cotton hands down on many levels but the Fed doesn't like hemp so we all suffer, the economy suffers. America isn't taking alternative energy seriously, we need to start now. Other countries are putting us to shame in this field, it's embarrassing. American automakers have been getting their asses handed to them because even in a time of war & rising oil prices GM & others were still pumping out gas hogs while Toyota went the fuel efficiency route.

The drug war is a lost cause, we waste billions on it. Decriminalize pot or make it legal. The difference being (a) instead of jail you get a ticket, this increases revenue; (b) regulate it and tax it, this will add billions to the economy. Every person we throw in jail for dope is someone who isn't out there working, isn't out there buying goods and services. The majority of Americans don't seem to have a problem with pot, this is the market of social ideas, follow the market, don't force it to believe what you want.

Rework the college entitlement system. The government is handing people college money simply because they are African American or Asian American - stop. If we're going to give out money it should be based on how well someone did in high school, not the color of their skin. It's ridiculous. When I was 25 and lived far below the poverty line I couldn't get money (I'm white) because my parents made too much money. Never mind the fact that they're divorced. Never mind the fact that I didn't live with them. College money should be handed out equally among all races and based on how did well in school (or some sort of test). This is just like how we support big business, "oh you're company XYZ, well we'll give you money based on that fact alone".

Revamp the public education system. Ours is a joke. The teachers unions run this countries schools, hands down. The schools don't need more money or more computers, they need a better curriculum. Dumb kids make a dumb country. Dumb countries can't compete.

Stop regulating the market to death ! Governments are no good at micro managing economies and that's exactly what the US Gubment has been trying to do for a long time now. We all see how this has been working out. Our market should be the "market of good ideas" not the "market of red tape".

Stop playing favorites. If I gotta hear about one more multi billion dollar Gubment contract I think my head is going to explode. I don't care if the KBR of Toys R Us. America is about competition, survival of the fittest. No bid contracts always end badly with terrible waste and billions of dollars down the tube. If a competitive arena is good enough to decide who builds the shuttle then it should be good enough for just about anything else also.



Loooong story short : The government needs to get out of everyones life. Get out of the markets. Stop playing favorites and let the economy run itself. Stop telling people how to live their lives. Stop propping up systems that don't work. Stop wasting billions on projects that almost every middle class American despises. Stop sending billions of dollars to Israel and the middle east. Stop maintaining military bases around the world.

Stop pretending we are a democracy that uses capitalism when it clearly isn't so.

*edited to correct a little dyslexia

[edit on 8-8-2007 by discomfit]

Does this mean the US will stop threatening others if they are economicaly fudged? after china drops the dollor?
and will they still be sending military aid funds to countries like Israel, Pakistan and so on?

also i read that the middle eastern countries wont be happy
Iran for one is already droping the dollor to euros

and im sure the rest of them will do so soon as the value of the dollor is so unstable.

also to the person who said combine euro and dollor in your Dreams

Originally posted by prsbuff
What are the immediate steps to be done with the following:

1. mortgage
2. 401k
3. credit cards
4. loans
5. investment ideas
6. survival preparedness

1. If you have to have one, it must be a 15-year low fixed rate, and pay it off as fast as possible. If you have an ARM and you don't refinance, you're screwed.

2. Leave it alone unless you need to avoid foreclosure or bankruptcy.

3. Pay them off FAST and close the accounts.

4. See 3, and NEVER use debt AGAIN.

5. Conservative. Stay away from precious metals and the stock market.

6. Guns and ammo.


It has been my position for some time that China is simply part of the equation. China is being used to intentionally collapse the US economy with enough time before the 2008 elections for Americans to get extremely uncomfortable. Socialist Scum Hillary will be most appealing to the millions of homeless and desperate by default. The SPP/NAU will be ready to move forward, thanks to Bush. Any rebellion will be swiftly put down through domestic military police action, again thanks to Bush.

Fortunately, I don't think anybody needs to learn Mandarin. Spanish will be pretty handy though.

There was an interesting article in the New York Times a few weeks back (online version)

this was at the start of the global sell off...

Many noticed Chinese stock markets did not fall during the US sell off. This was compared to the Chinese 9% correction that resulted in the DOW dropping nearly 500 points.

this what the New York Times wrote.

That day may be remembered, not as the start of a worldwide bear market as was feared then, but as an indicator of a new world economic pecking order. Whereas it was long said that the world caught pneumonia when the United States suffered a cold, it is now the Chinese economy that has taken world leadership. So long as it remains strong, many companies will prosper no matter what the prospects for their home markets.

If China was to use the "nuclear option" of the dollar, it might be a wise idea for them. After all, the Communist party want to the cool down the economy. What better way to slow it down?

But, as CNBC put it, China is probably trying to influence the US elections in 2008 and putting some fear into candidates.

China is only doing what America did with the Europeans when it was heading towards superpower status.

Finding a weakness and exploiting. The yanks used colonial liberation to end the Empires.

China is using the US economy.

Originally posted by prsbuff
Can anybody enumerate what actions to be taken by ats members like me to get ahead of this looming economic conflict? It does not look promising at all.

Being a family person, I'd like to know what's in store for our children. What are the immediate steps to be done with the following:

1. mortgage
2. 401k
3. credit cards
4. loans
5. investment ideas
6. survival preparedness

Will appreciate greatly for any u2u.

My list looks like this:

1. Shift all us dollar investment to euro
2. Keep all US loans because they will be worth nothing once # hits the fan.
3. Have an emergancy food supply for at least 30 days
4. Ask your grandpa how he survived 1929.

APC, good pointers, would you mind elaborating why you would NOT suggest investing in precious metals. Long commodity bull markets are expected, and in the past when the major world currency changed it turned out favourable for precious metals.

Gold is also linked to oil price and the inverse of the dollar, which would both signal a strong buy looking at the medium term...

None of this would have happened if we hadn't run such huge budget deficits starting in the early 1980s. We finally got a budget surplus in the late 1990s and then Bush put us back into debt.

We OWE TOO MUCH. Plain and simple. The national debt is almost 9 trillion dollars; almost 4 trillion of that comes from money borrowed from the Social Security trust fund.

It has frustrated me for many years that the vast majority of Americans have no idea how much those tax cuts cost us.

Originally posted by kacou
Just a thought!
In the eve of China blackmail against the Dollar, I see there another new trick from the Elite World Bankers to push the Euro to merge with the Dollar to create a Eurodollar, which would perform as a single currency for both the United States and Europe (after all the 2 biggest by fare consumer are America and Europe), and ultimately for the rest of the world. Then the Elite World Banker will be close to the New World Order .
Is this to fare fetch as a theory?

Kacou

Not so far fetched I think. Only the other week did the English and French branches of the Rothschild banking dynasty get it together again after 190 years of err... not being together. I can see both America and UK joining the Euro as some sort of 'bid to fight terrorism' together.

Originally posted by Dae
I can see both America and UK joining the Euro as some sort of 'bid to fight terrorism' together.

America is not a member of the European Union, so how can it join the Euro or the Eurozone?

Originally posted by prsbuff
Can anybody enumerate what actions to be taken by ats members like me to get ahead of this looming economic conflict? It does not look promising at all.

Being a family person, I'd like to know what's in store for our children. What are the immediate steps to be done with the following:

1. mortgage
2. 401k
3. credit cards
4. loans
5. investment ideas
6. survival preparedness

Will appreciate greatly for any u2u.

Here's the deal. First, the selling off of US debit instruments all at once is self defeating for the Chinese. I've said it once, and I'll say it again. This panic over China's investment is not called for.

If they sell all at once, the value of their investments will decline dramatically. China's capital will decline; they will have less principle to act with; they will have less cash flow from bond interest, and their new investment, when they pick one, will increase in price because of the mass amount of money they are investing in them.

That being said, he's a general guideline for you prsbuff:
1. Mortgage- Only open a mortgage when you know that you can afford it. Avoid scams that will tie your mortgage to a variable rate. I believe the Fed will slowly start to increase rates again, which will cause you to pay more per month. Also avoid interest only loans. The best case is to have a fixed rate.
2. 401k- Invest as much as possible in your retirement accounts. There is no telling how long social security will last. If you're worried about a stock market crash, then there are many ways to protect yourself. First, some providers allow you to invest in nonstandard 401k investments, such as real estate. Or you could invest in foreign markets. Or, worst case, put your money into a federally insured money market, usually insured up to 100k.
3. credit cards - Bad news; they typically have interest rates that are tied to prime. If you have credit card debit, consider card hopping. There are many companies out there that will give you 0% APR for the first year. Transfer your balance there, then when that runs out, find a new card company with the same promotion.
4. loans- Loans are important, and are not bad. Most successful persons, corporations, and governments have bonds issued to increase cash flow. Just remember to get a fixed rate, and handle your cash flow in such a way where you will not default on the loan.
5. investment ideas- See the 401k.
6. survival preparedness- Don't fall for the end of the world threads. People have been saying the same things for thousands of years. Pretty good track record for being wrong.

Originally posted by Nextstep
APC, good pointers, would you mind elaborating why you would NOT suggest investing in precious metals.

Regarding gold, it has a long term return of about 4%. Taking into account an average inflation rate of 4%, your net yield is zero. And in an economic collapse or major catastrophe, gold is useless.

I have not taken an extensive look at things like platinum, but I try to be prepared for worst-case. And in worst-case, a hunk of metal is only worth about as hard as you can throw it.