Japan and China lead flight from the dollar

Japan and China lead flight from the dollar

www.telegraph.co.uk

Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.

(visit the link for the full news article)


Related News Links:
www.bloomberg.com

Related AboveTopSecret.com Discussion Threads:
China threatens 'nuclear option' of dollar sales

Another month or two of negative TIC reports will have a dramatic effect on interest rates (higher), the Dollar (lower), and overall economic activity (slower). Also, we just experienced our first decline in corporate tax revenues since 2003. A reflection of lower profits and a slowing economy. In the face of declining Federal Tax revenues and the outflow of foreign capital...we have no choice but to turn within to cover the shortfall in the Current Account Deficit. Interest rates will rise to attract bond purchases, and higher interest rates will further dampen business activity, and put additional pressure on the Dollar.

Wish I had better news, but there is every indication that this trend will continue in Asia. When the stock market quaked in August, foreign money ran for the border...rather than to the traditional safety of US bonds.

Unprecedented, in-your-face government intervention isn't gonna mend this problem, or fix the derivatives issue either...maybe hide them for awhile longer...postpone them. Personally I'm preparing for a bit of a lifestyle adjustment...while I continue to hope for the best.



www.telegraph.co.uk
(visit the link for the full news article)


[edit on 17-10-2007 by OBE1]

I wanted to follow-up with this link to the Bloomberg piece on declining Corporate Tax revenues. First decline since 2003...largest decline since 2001.

Hey OBE1, I don't understand this part of the article, can you explain it to me in simple terms?



How does that work in correcting the deficit? Economics isn't exactly my strong point.

I understand the flight. Just bought a whack of Sennheiser dumping some US financials. I really don't like the situation and hesitate to tie up funds long term in much USD stuff anymore. I'll keep my Hawg stock forever though or at least some.

It also bugs me that the Canadian dollar is so sensitive and tied to the 800lb Gorilla or I'd buy more Canadian even looking as good as it does. Nothing seems undervalued anymore so it's more and more difficult to chose a direction to invest - so many don't. Which may lead to a buyers market... after a suitable period of downdward re-adjustment and barring "an unexpected international event."

One can't deny the fundamental shift in global USD transaction preferences.

Cheers,

Vic

[edit on 17-10-2007 by V Kaminski]

reply to post by Beachcoma

Hi Beachcoma. A lower Dollar makes our exports more attractive. It also makes imports more expensive. So the theory says that our exports will increase, and our imports will decrease...thereby improving the imbalance...or narrowing the deficit. Americans will buy more domestically produced goods...spur the domestic economy, yada-yada. A couple of problems with this theory today...our manufacturing base has been largely outsourced, and many of our exports rely on imported raw materials & manufactured parts etc.

Anyway, the plan is to accomplish Dollar devaluation in an 'orderly' fashion...gradually, in order to avoid rapid inflation & flight of foreign capitol. Judging by the latest TIC report...it's not working-out too well. To be honest, it's a real house of cards, and the US powers that be have just about played their last hand imo. There are several serious issues converging just below the surface, and it looks like the squeeze may be on.

Hey, here's a riddle for you:

Ford has spent the last thirty years moving all its factories out of the US, claiming they can't make money paying American wages. Toyota has spent the last thirty years building more than a dozen plants inside the US.

Last quarter Toyota made 4 billion in profits...while Ford racked up 9 billion in losses

Peace

Thanks for the clarification
It sounds solid, in theory.

Originally posted by OBE1
Last quarter Toyota made 4 billion in profits...while Ford racked up 9 billion in losses

Seems like a bad case of mismanagement, in my opinion. But without investigating further, it's only a guess.

I believe Toyota hires non union labor and isn't saddled with the huge retirement and health benefits packages that Ford and GM are committed to through union contracts.

V Kaminski, I'm feelin' ya. Canadian...maybe the last relatively honest currency. Canadian Treasuries. Currency ETF's are getting a-lot of chatter too...Yen

Note, also posted:
www.abovetopsecret.com...
www.abovetopsecret.com...
.

reply to post by OBE1


I agree is nothing but a dream within a dream that things will balance out, but like you say we are not longer the wealthy producing nation that the rest of the world used to depend on.

We are nothing than spenders and consumers, people will fall more and more in debt to keep up with the hike.

Until we are rendered to nothing but a shadow of what we use to be as a nation.


[edit on 17-10-2007 by marg6043]

Dr.Jerome Corsi be leaves that this will lead to an eventual Total Collapse of the Dollar and introduction of the North American Union..Amero

The Amero while been the conspiracy of the moment do not take the fact that it will not fix what is killing our economy Free trade.

With Amero or not we are still an outsourced nation with not substantial manufacturing base any longer keeping up with the demands of a crazy spending spree that are addicted to foreign goods and foreign nations to buy our our debt.

Fine with me. Golds breaking out as a result, ill be filthy rich when unemployment hits 1930 levels.

It really is simple, the gauranteed solution to fix uo our economy is so easy, it is laughable.

We must begin to shut down many of our overseas and other foreign installations, because that is where the bulk of our defense budget goes to maintaining. And seeing that the defense gets at least half if not more than our annual budget, that would be a great deal of alot of money to re-invest into our communities, and our people.

We can retain the majority of our staff to handle civil duties, like repairing damaged ecosystems, and helping in a variety of trade skills which they are very handy in.

This will also significantly reduce the hostilities towards our society from many across the globe, and then we can let the Europeans worry about controlling the world again, because thats what they have been doign for generations now. At least now they won't have us to do all their dirty work anymore.

There is plenty right here in America to support us, and maintain fair and healthy trade relations with oir neighbors across the world without dictating our policies down their throats.

I would also suggest just dismantling the bulk of oru nuclear program. Not necessarily the subs, they do a great deal to make sure bigger foreign powers get to cocky, but our domestic missle silos. They can be retrofitted to use as the beginning of the renewal of our space industry. consider if the bulk of our missle silos were converted to usable launching sites, we could be the worlds largest supplier of orbital platform launching services. After all, with such icnrease in developing nations in their technology and infrastructure, we could soon see a boon in more basic global connectivity services for the rest of our planet,s smaller and less wealthy nations.

It is all completely possible, and frankly, will soon be our only choice. If we refuse to go out in a humble manner, we may only end up destroying our sturctural integrity that bonds the states together man....

If that happens, the american heartland (CONus) will never be United again.

reply to post by Beachcoma


I think what you just quoted is referring to the government spending deficit that is currently being funded by foreign investors. Inflation(falling dollar value) would be seen as a good thing to the Whitehouse (even with Paulson stressing a high dollar is our target), since we could "float" ourselves out such a large deficit by paying our debts back with lesser valued cash. Inflationary environments are always good for debt holders, not lenders.

I don't think the article was talking about the trade deficit OBE1. Unfortunately everything else sounds dead on, a perfect storm is brewing beneath.

Anyone read any Dollar positive news today?

The Dollar fell-out of bed early this morning, and rightly so...oil was strong, Bernanke/Paulson left the door open for another rate-cut yesterday, and that TIC report was a LuLu. Then the miraculous happened....again. Like clockwork, thirty minutes before President Bush held his national 'It's All Good' press conference, the Dollar did an abrupt 180, and Gold was taken-down. This might sound like CT, but you'll find that it's a verifiable pattern whenever the Bush, Bernanke, or Paulson address the nation. Despite the manipulation, the President's brief comments on the state of the economy were not believable.

We live in an age of puppetry, and well scripted illusion folks.

reply to post by marg6043


lol free trade is the only thing that can save us

Free trade = good for economy

you ever taken any university economics courses?

reply to post by Beachcoma


cheaper currency leads to a higher current

anyways, anyone thinking the ca is going to collapse is wrong

and anyone who thinks were trying get a north american currency is also wrong.

[edit on 10/17/07 by RedDragon]

reply to post by OBE1


sad news indeed-----the usa that helped them to recover/saved their minds and bodies from ww2------now they turn on their benefactor -------for financial gain?