Where's The Us$ Heading To ?

[lannarebirth]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

I don't understand why it should be so incomprehensible. GBP/USD traded at 2.40 -2.60 for many years and everything runs in cycles. As I recall at one time it swung the other way to par but that was an anomaly.

I don't find it incomprehensible at all. In fact there is precedent for it. The $USD index has previously had rapid falls of 50% of it's value. The GBP, even more. Anything at all is possible. When I speak of these things on this forum, I'm forecasting nothing, only pointing out areas that are prone to success/failure based on historical evidence. It's only what happens next that has any real meaning. Still one looks for clues.

[sonicdragon]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

I don't understand why it should be so incomprehensible. GBP/USD traded at 2.40 -2.60 for many years and everything runs in cycles. As I recall at one time it swung the other way to par but that was an anomaly.

I don't find it incomprehensible at all. In fact there is precedent for it. The $USD index has previously had rapid falls of 50% of it's value. The GBP, even more. Anything at all is possible. When I speak of these things on this forum, I'm forecasting nothing, only pointing out areas that are prone to success/failure based on historical evidence. It's only what happens next that has any real meaning. Still one looks for clues.

I think people find it incomprehensible because of the damage it will do to the US economy (and therefore the global economy), and given the state of china's economy which is so reliant on a steady high growth rate driven primarily by exports, the natural assumption is that it is not in their best interests.

[LaoPo]

"The dollar will keep its status as the ``world currency'' for 15 to 20 years, said Stephen Roach, chairman of Morgan Stanley Asia Ltd.,..."

From:

Morgan Stanley's Roach Says Dollar's Status Intact

"The dollar's share of global currency reserves fell to 64.8 percent in the second quarter, down from 66.1 percent in the same period a year earlier, International Monetary Fund statistics show. The euro's share increased to an all-time high of 25.6 percent from 24.8 percent a year earlier. The pound's share is at 4.7 percent and the yen's at 2.8 percent."

http://www.bloomberg.com/apps/news?pid=206...amp;refer=china

LaoPo

[lannarebirth]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

I don't understand why it should be so incomprehensible. GBP/USD traded at 2.40 -2.60 for many years and everything runs in cycles. As I recall at one time it swung the other way to par but that was an anomaly.

I don't find it incomprehensible at all. In fact there is precedent for it. The $USD index has previously had rapid falls of 50% of it's value. The GBP, even more. Anything at all is possible. When I speak of these things on this forum, I'm forecasting nothing, only pointing out areas that are prone to success/failure based on historical evidence. It's only what happens next that has any real meaning. Still one looks for clues.

I think people find it incomprehensible because of the damage it will do to the US economy (and therefore the global economy), and given the state of china's economy which is so reliant on a steady high growth rate driven primarily by exports, the natural assumption is that it is not in their best interests.

I see you point, but I can't see Chian selling out their $USD holdings. They may buy less in future and spread it around a bit more. I think that would be healthy. Might get those UST yields up a bit.

[naklang]

This EUR/$ run to 1.50 is almost complete. I remember when 1.30 was the "pain threshold" for the ECB, then it went to 1.40, now it will be 1.50. Sometime soon, it will be time to buy dollars with Euro because things are now getting serious enough for a combined CB effort to halt this slide. Enough money has been made on this run already. To push it much further risks lasting consequences for stability and dare I say, widening military conflict. Waiting with dry powder to short the Euro soon. Almost there, but not quite.

[Mighty Mouse]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

Allow me to add to my comment.

The US’s power in today’s world comes from two sources — the powerful US military and the reserve status of the dollar.

I won't go into the US military power as it is outside the scope of this thread.

The reserve status of the dollar allows the US to run up incredible deficits, deficits that long ago would have sunk any other currency. If the deficits continue they could sink the dollar.

The US buys and pays for everything in US dollars. The Feds' printing presses are running white hot churning out virtually useless pieces of paper with a $ sign printed on it that people (and some countries ) hold as wealth.

We hear rumblings and rumors about various countries “diversifying” out of dollars. No nation wants to boldly announce that it is unloading its dollar hoard. A nation will simply announce that it is diversifying or thinking about diversifying. This includes the Arab Emirates, China, Russia, Italy, and Iran. The quotes above are part of these rumblings.

China now possesses the largest hoard of foreign reserves in the world — over one trillion dollars. About 70 percent of China’s reserves are in dollars. With the value of the dollar sinking each day, the value of China's hoard is reducing in value by a similar scale. China is not going to dump its dollars, instead it will diversify out of a portion of its dollars. This is the coming trend with some of the other countries that hold US dollars. At some point in time, the world will no longer want dollars and countries will refuse to accept dollars as payment for their goods. (think resources, oil, gas, uranium etc.)

If and when that happens the dollar will unofficially lose its reserve status. US interest rates will surge higher as the Fed attempts to render the dollar more attractive to hold. The US will lose one of its main powers and will then have to rely soley on military power. The reserve status of the dollar will be minimized or lost, and the US will slip into a situation that it may never recover from.

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

[britmaveric]

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

[naklang]

An extraordinary amount of diversification out of the dollar has already occured over the past 5 years. For sure there is still some more ahead, but IMO the lions share of this devaluation is complete. The sentiment is so bearish and the hyperbole from the pundits and govt officials has become so shrill, I'm just waiting for a picture of a burning dollar bill to show up on the cover of TIME magazine. After all, everybody knows the dollar is toast. Very soon will be time to be a contrarian. Takes balls, but that's why most people miss out on the big moves.

And the boondoggle of the Iraq war will die with the Bush presidency. Big lessons have been learned here and it will be a long, long time before another folksy Texan (aka Lyndon Johnson/Vietnam) is allowed in the oval office.

[britmaveric]

In 08 dollar will rise.

[chiang mai]

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

It's not so much about stopping America from dominating the world as it is about making America and Americans think they do! But I sense that all of this will change after the elections in 08 as Britmaveric points out so yes, buy USD at 2.15/2.20 but be prepared to hold it for at least a year, possibly two.

[lordofdelusion]

An extraordinary amount of diversification out of the dollar has already occured over the past 5 years. For sure there is still some more ahead, but IMO the lions share of this devaluation is complete. The sentiment is so bearish and the hyperbole from the pundits and govt officials has become so shrill, I'm just waiting for a picture of a burning dollar bill to show up on the cover of TIME magazine. After all, everybody knows the dollar is toast. Very soon will be time to be a contrarian. Takes balls, but that's why most people miss out on the big moves.

And the boondoggle of the Iraq war will die with the Bush presidency. Big lessons have been learned here and it will be a long, long time before another folksy Texan (aka Lyndon Johnson/Vietnam) is allowed in the oval office.

May your last 2 sentences find their way to the appropriate power.

Some on CNBC yesterday were saying it's getting time to be long dollars. Cycles, like everything else. Those shorting dollars now are late to the party. Good time to buy real estate in the US too. Buy low sell high applies to everything!

[sonicdragon]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

Allow me to add to my comment.

The US's power in today's world comes from two sources — the powerful US military and the reserve status of the dollar.

I won't go into the US military power as it is outside the scope of this thread.

The reserve status of the dollar allows the US to run up incredible deficits, deficits that long ago would have sunk any other currency. If the deficits continue they could sink the dollar.

The US buys and pays for everything in US dollars. The Feds' printing presses are running white hot churning out virtually useless pieces of paper with a $ sign printed on it that people (and some countries ) hold as wealth.

We hear rumblings and rumors about various countries "diversifying" out of dollars. No nation wants to boldly announce that it is unloading its dollar hoard. A nation will simply announce that it is diversifying or thinking about diversifying. This includes the Arab Emirates, China, Russia, Italy, and Iran. The quotes above are part of these rumblings.

China now possesses the largest hoard of foreign reserves in the world — over one trillion dollars. About 70 percent of China's reserves are in dollars. With the value of the dollar sinking each day, the value of China's hoard is reducing in value by a similar scale. China is not going to dump its dollars, instead it will diversify out of a portion of its dollars. This is the coming trend with some of the other countries that hold US dollars. At some point in time, the world will no longer want dollars and countries will refuse to accept dollars as payment for their goods. (think resources, oil, gas, uranium etc.)

If and when that happens the dollar will unofficially lose its reserve status. US interest rates will surge higher as the Fed attempts to render the dollar more attractive to hold. The US will lose one of its main powers and will then have to rely soley on military power. The reserve status of the dollar will be minimized or lost, and the US will slip into a situation that it may never recover from.

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

I fully agree.

[jazzbo]

For the flip side, comments from the President of The European Central Bank...

http://www.nytimes.com/2007/11/08/business...08cnd-euro.html

[lannarebirth]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

Allow me to add to my comment.

The US's power in today's world comes from two sources — the powerful US military and the reserve status of the dollar.

I won't go into the US military power as it is outside the scope of this thread.

The reserve status of the dollar allows the US to run up incredible deficits, deficits that long ago would have sunk any other currency. If the deficits continue they could sink the dollar.

The US buys and pays for everything in US dollars. The Feds' printing presses are running white hot churning out virtually useless pieces of paper with a $ sign printed on it that people (and some countries ) hold as wealth.

We hear rumblings and rumors about various countries "diversifying" out of dollars. No nation wants to boldly announce that it is unloading its dollar hoard. A nation will simply announce that it is diversifying or thinking about diversifying. This includes the Arab Emirates, China, Russia, Italy, and Iran. The quotes above are part of these rumblings.

China now possesses the largest hoard of foreign reserves in the world — over one trillion dollars. About 70 percent of China's reserves are in dollars. With the value of the dollar sinking each day, the value of China's hoard is reducing in value by a similar scale. China is not going to dump its dollars, instead it will diversify out of a portion of its dollars. This is the coming trend with some of the other countries that hold US dollars. At some point in time, the world will no longer want dollars and countries will refuse to accept dollars as payment for their goods. (think resources, oil, gas, uranium etc.)

If and when that happens the dollar will unofficially lose its reserve status. US interest rates will surge higher as the Fed attempts to render the dollar more attractive to hold. The US will lose one of its main powers and will then have to rely soley on military power. The reserve status of the dollar will be minimized or lost, and the US will slip into a situation that it may never recover from.

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

I fully agree.

I too, agree for the most part. Can't agree with the last sentence however. China barely dominates Asia, let alone the world. It is building an empire with $100/bbl oil, while continuing to kill off it's own environment. I think it's superpower status will peak, long before it becomes a "supreme" superpower.

[Naam]

In 08 dollar will rise.

what century?

[sonicdragon]

And as if by magic the £/$ hits 2.10 this morning and China says it may diversify its holdings into the Euro! I think 2.20 is easily on the cards.

LONDON (MarketWatch) -- The U.S. dollar stumbled to new lows on Wednesday after a top Chinese official called for the country to shift more of its huge foreign exchange stockpiles out of the beleaguered greenback.

Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.

Should China follow through on this threat, the damage it could cause to the greenback and the USA, is incomprehensible.

Allow me to add to my comment.

The US's power in today's world comes from two sources — the powerful US military and the reserve status of the dollar.

I won't go into the US military power as it is outside the scope of this thread.

The reserve status of the dollar allows the US to run up incredible deficits, deficits that long ago would have sunk any other currency. If the deficits continue they could sink the dollar.

The US buys and pays for everything in US dollars. The Feds' printing presses are running white hot churning out virtually useless pieces of paper with a $ sign printed on it that people (and some countries ) hold as wealth.

We hear rumblings and rumors about various countries "diversifying" out of dollars. No nation wants to boldly announce that it is unloading its dollar hoard. A nation will simply announce that it is diversifying or thinking about diversifying. This includes the Arab Emirates, China, Russia, Italy, and Iran. The quotes above are part of these rumblings.

China now possesses the largest hoard of foreign reserves in the world — over one trillion dollars. About 70 percent of China's reserves are in dollars. With the value of the dollar sinking each day, the value of China's hoard is reducing in value by a similar scale. China is not going to dump its dollars, instead it will diversify out of a portion of its dollars. This is the coming trend with some of the other countries that hold US dollars. At some point in time, the world will no longer want dollars and countries will refuse to accept dollars as payment for their goods. (think resources, oil, gas, uranium etc.)

If and when that happens the dollar will unofficially lose its reserve status. US interest rates will surge higher as the Fed attempts to render the dollar more attractive to hold. The US will lose one of its main powers and will then have to rely soley on military power. The reserve status of the dollar will be minimized or lost, and the US will slip into a situation that it may never recover from.

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

I fully agree.

I too, agree for the most part. Can't agree with the last sentence however. China barely dominates Asia, let alone the world. It is building an empire with $100/bbl oil, while continuing to kill off it's own environment. I think it's superpower status will peak, long before it becomes a "supreme" superpower.

Time will tell ! For sure China faces some formidable challenges. It will be very interesting in the years and decades ahead.

As for dominating asia; business has been dominated by the chinese for a long time already in Hong Kong, Singapore, Malaysia, Thailand, Indonesia and the Phillippines.

[lannarebirth]

This is not my work, but here is what the smartest Hurst Cycle practitioner I know has to say:

"Dollar index in the time window for the Hurst nominal 18 month nest of cycle lows (18mnth,9mnth, 20wk,10wk, etc)."

You will note that prior bounces did not amount to much and he ascribes this to the fact that longer term cycles are down and weigh heavily on shorter term cycle projections. My recollection is that this coming 18 month cycle bottom is the third 18 month cycle in the current 4.5 year cycle, so one would expect it to be severely left translated. Not much for dollar bulls to hang their hat on I'm afraid.

[naklang]

This is not my work, but here is what the smartest Hurst Cycle practitioner I know has to say:

"Dollar index in the time window for the Hurst nominal 18 month nest of cycle lows (18mnth,9mnth, 20wk,10wk, etc)."

You will note that prior bounces did not amount to much and he ascribes this to the fact that longer term cycles are down and weigh heavily on shorter term cycle projections. My recollection is that this coming 18 month cycle bottom is the third 18 month cycle in the current 4.5 year cycle, so one would expect it to be severely left translated. Not much for dollar bulls to hang their hat on I'm afraid.

The $ will certainly not hit bottom and start an immediate ascent. It will bottom and bounce in a range for a time until the political and fiscal insanity wanes. By that time, the world economy should be slowing considerably, especially China. Oil should decline significantly, reducing the primary deficit driver in the US. All of this is $ bullish longer term, especially when it is already beaten into the dirt with its teeth kicked in. The ECB will NOT be raising rates again anytime soon. I can almost guarantee that.

[lannarebirth]

This is not my work, but here is what the smartest Hurst Cycle practitioner I know has to say:

"Dollar index in the time window for the Hurst nominal 18 month nest of cycle lows (18mnth,9mnth, 20wk,10wk, etc)."

You will note that prior bounces did not amount to much and he ascribes this to the fact that longer term cycles are down and weigh heavily on shorter term cycle projections. My recollection is that this coming 18 month cycle bottom is the third 18 month cycle in the current 4.5 year cycle, so one would expect it to be severely left translated. Not much for dollar bulls to hang their hat on I'm afraid.

The $ will certainly not hit bottom and start an immediate ascent. It will bottom and bounce in a range for a time until the political and fiscal insanity wanes. By that time, the world economy should be slowing considerably, especially China. Oil should decline significantly, reducing the primary deficit driver in the US. All of this is $ bullish longer term, especially when it is already beaten into the dirt with its teeth kicked in. The ECB will NOT be raising rates again anytime soon. I can almost guarantee that.

I don't follow macro events. I'm only discussing cycles.

Here's a longer term, big picture view from the same trader, together with his comments at that time:

"the 4 to 4.5 yr cycle is not that dominant on the $USD, the nominal 9 yr ( 8 to 9 yrs) and the nominal 18 yr (16 to 18 yrs) play a more important role. 1995 was a 4.5 yr, 9 yr and 18 yr cycle bottom, the end of 04/beginning of 05 was the start of a new 4.5 yr and 9 yr cycle. this second 9 yr cycle occurs as the 18 yr is trending down. we just bottomed off the 1 st nominal 18 month cycle low after that new 4.5 and 9 yr cycle bottom."

[LaoPo]

This is not my work, but here is what the smartest Hurst Cycle practitioner I know has to say:

"Dollar index in the time window for the Hurst nominal 18 month nest of cycle lows (18mnth,9mnth, 20wk,10wk, etc)."

You will note that prior bounces did not amount to much and he ascribes this to the fact that longer term cycles are down and weigh heavily on shorter term cycle projections. My recollection is that this coming 18 month cycle bottom is the third 18 month cycle in the current 4.5 year cycle, so one would expect it to be severely left translated. Not much for dollar bulls to hang their hat on I'm afraid.

The $ will certainly not hit bottom and start an immediate ascent. It will bottom and bounce in a range for a time until the political and fiscal insanity wanes. By that time, the world economy should be slowing considerably, especially China. Oil should decline significantly, reducing the primary deficit driver in the US. All of this is $ bullish longer term, especially when it is already beaten into the dirt with its teeth kicked in. The ECB will NOT be raising rates again anytime soon. I can almost guarantee that.

I don't follow macro events. I'm only discussing cycles.

Here's a longer term, big picture view from the same trader, together with his comments at that time:

"the 4 to 4.5 yr cycle is not that dominant on the $USD, the nominal 9 yr ( 8 to 9 yrs) and the nominal 18 yr (16 to 18 yrs) play a more important role. 1995 was a 4.5 yr, 9 yr and 18 yr cycle bottom, the end of 04/beginning of 05 was the start of a new 4.5 yr and 9 yr cycle. this second 9 yr cycle occurs as the 18 yr is trending down. we just bottomed off the 1 st nominal 18 month cycle low after that new 4.5 and 9 yr cycle bottom."

Cycles are nice but the world is changing, FAST. The 9 and 18 year previous cycles had no impact by the upcoming growing economies in the East, especially India and China.

Nowadays, -previous- cycles are no guarantee they will occur again.

LaoPo

[lannarebirth]

This is not my work, but here is what the smartest Hurst Cycle practitioner I know has to say:

"Dollar index in the time window for the Hurst nominal 18 month nest of cycle lows (18mnth,9mnth, 20wk,10wk, etc)."

You will note that prior bounces did not amount to much and he ascribes this to the fact that longer term cycles are down and weigh heavily on shorter term cycle projections. My recollection is that this coming 18 month cycle bottom is the third 18 month cycle in the current 4.5 year cycle, so one would expect it to be severely left translated. Not much for dollar bulls to hang their hat on I'm afraid.

The $ will certainly not hit bottom and start an immediate ascent. It will bottom and bounce in a range for a time until the political and fiscal insanity wanes. By that time, the world economy should be slowing considerably, especially China. Oil should decline significantly, reducing the primary deficit driver in the US. All of this is $ bullish longer term, especially when it is already beaten into the dirt with its teeth kicked in. The ECB will NOT be raising rates again anytime soon. I can almost guarantee that.

I don't follow macro events. I'm only discussing cycles.

Here's a longer term, big picture view from the same trader, together with his comments at that time:

"the 4 to 4.5 yr cycle is not that dominant on the $USD, the nominal 9 yr ( 8 to 9 yrs) and the nominal 18 yr (16 to 18 yrs) play a more important role. 1995 was a 4.5 yr, 9 yr and 18 yr cycle bottom, the end of 04/beginning of 05 was the start of a new 4.5 yr and 9 yr cycle. this second 9 yr cycle occurs as the 18 yr is trending down. we just bottomed off the 1 st nominal 18 month cycle low after that new 4.5 and 9 yr cycle bottom."

Cycles are nice but the world is changing, FAST. The 9 and 18 year previous cycles had no impact by the upcoming growing economies in the East, especially India and China.

Nowadays, -previous- cycles are no guarantee they will occur again.

LaoPo

I would agrww with you if events weren't playing out just as the cycles suggested they would.

[Mighty Mouse]

If China has any desire to bump the USA off its perch and to dominate the world in its own right, it could do it without firing a single gun shot. Success is all in the timing and currently the timing may not be right for such a move.

Thanks Brit. I don't mind when people disagree with me but if posting a single emoticon is the best you can do then why bother? It certainly doesn't add to the discussion.

I don't want to go too much into China as it takes this thread off topic but China is having an impact on the greenback.

Take a good look at the Shanghai market. It is going gangbusters and it can't keep going up. Will the Chinese market crash? The Chinese regulators hope not and are trying to control the rise. If the China stock market collapses there will be a huge negative impact on all stock markets around the world.

As for China dominating the world, it could do that by opening up its huge wallet and buying up what it wants.

It has just put $3 billion into the Blackstone Fund for investment purposes. That $3 billion is only a fraction of China’s massive $1.2 trillion in reserves. No complaints from the US Govt. so far, so now China can take the next step and buy some more US assets. They are already up to their eyeballs in US treasury bonds and notes, so why not now diversify into US businesses. (How much of the USA is owned by Japan...and Japan lost the war.)

China is flooding the world with its goods. Next time you are in your supermarket, look at where the majority of that supermarket's stock was made. China and India now manufacture most of the worlds goods. How many Western clothing manufacturers still make their own line of clothes in the West? Western manufacturers can't compete. More power to China.

China has already embarked on a buying spree for resource companies. It recently acquired an Australian mining company and is sniffing around for some others. It wants to buy oil, gas and uranium producers. If given the chance it will.

China has $20 billion of additional reserves coming in every month, so money isn't a problem.

A full-page article in the June 12 Financial Times carried the headline, “Dragon Fleet. China aims to end the US Navy’s long Pacific dominance.” China is building its Navy as it moves to become the dominant power in the Pacific. At the same time, Russia wants to be the dominant power in Europe, and it wants all Europe to depend on Russian oil and gas. Both China and Russia want to “neutralize” the US.

Don't underestimate China.

My apologies to the OP for taking this thread off topic.

[ray23]

Ok you don't have a ton of cash, your retirement is paid in Dollars and you can't change that. What a can you do to offset this somewhat?

[bmanly]

This following is from a newsletter from a leader Stockbroker and Financial Advisory Firm in Australia.

The markets have approached cross-roads. As the USD sunk to fresh record lows against the Euro last

night, China announced that it would plan to diversify the country’s USD1.43trillion foreign currency

reserves.

That is $1,430,000,000,000 in free cash flow.

It is another reason why the gold price keeps rising. The sub-prime meltdown in the US is accelerating

and one of the reasons why the Fed Reserve is lowering interest rates: to ease the burden on US home

borrowers who are in the process of re-negotiating the low “honeymoon” rates on their mortgage. Many

will probably just walk away from their homes for good since they now have negative equity anyway.

This is the main reason why Citibank – the world’s largest bank recently wrote off an additional $8-$11b

in their latest results. It cost the CEO his job but he is hardly worried since he got paid an USD99m

bonus for leaving anyway.

With the US market dropping 300+pts last night (Wednesday evening), Australian investors awoke

Thursday morning and suddenly remembered we had an interest rate rise as well. So, irrespective of

how much we tell ourselves we are no longer welded to the Dow Jones Industrial Index – and that our

future lies in Asia – a US recession is imminent and it will have a material impact on our markets.

So too will the further fall in the US dollar which has already seen a raft of profit downgrades hit the

Australian markets.

My comments: I tend to agree with the above sentiment as well as Mighty Mouses comments. I currently hold a Mutual Fund that is basically USA invested, in 6 years it has done nothing but go backwards. When I questioned the Fund Manager he blamed it all on the slide of the USD. I am in process of cutting my losses, I will diversify out just like the Chinese.

[naklang]

My comments: I tend to agree with the above sentiment as well as Mighty Mouses comments. I currently hold a Mutual Fund that is basically USA invested, in 6 years it has done nothing but go backwards. When I questioned the Fund Manager he blamed it all on the slide of the USD. I am in process of cutting my losses, I will diversify out just like the Chinese.

You're going to "cut your losses" after 6 years? Oh my.

[LaoPo]

I don't want to go too much into China as it takes this thread off topic but China is having an impact on the greenback.

Take a good look at the Shanghai market. It is going gangbusters and it can't keep going up. Will the Chinese market crash? The Chinese regulators hope not and are trying to control the rise. If the China stock market collapses there will be a huge negative impact on all stock markets around the world.

As for China dominating the world, it could do that by opening up its huge wallet and buying up what it wants.

It has just put $3 billion into the Blackstone Fund for investment purposes. That $3 billion is only a fraction of China’s massive $1.2 trillion in reserves. No complaints from the US Govt. so far, so now China can take the next step and buy some more US assets. They are already up to their eyeballs in US treasury bonds and notes, so why not now diversify into US businesses. (How much of the USA is owned by Japan...and Japan lost the war.)

China is flooding the world with its goods. Next time you are in your supermarket, look at where the majority of that supermarket's stock was made. China and India now manufacture most of the worlds goods. How many Western clothing manufacturers still make their own line of clothes in the West? Western manufacturers can't compete. More power to China.

China has already embarked on a buying spree for resource companies. It recently acquired an Australian mining company and is sniffing around for some others. It wants to buy oil, gas and uranium producers. If given the chance it will.

China has $20 billion of additional reserves coming in every month, so money isn't a problem.

A full-page article in the June 12 Financial Times carried the headline, “Dragon Fleet. China aims to end the US Navy’s long Pacific dominance.” China is building its Navy as it moves to become the dominant power in the Pacific. At the same time, Russia wants to be the dominant power in Europe, and it wants all Europe to depend on Russian oil and gas. Both China and Russia want to “neutralize” the US.

Don't underestimate China.

My apologies to the OP for taking this thread off topic.

First there's no need to apologize since we all know that the US $ is in our mutual, world wide, interest and importance, including Thailand, and so is the 'China/India' talk.

As for the Chinese stock markets: are they too high ? Yes, but it is a closed market and normal investors, like us, have no access to these markets, except the HK and NY noted mainland shares.

The Chinese have no other way of making -more- money (from their savings) than to invest in the stock markets. There are now some 130 million (!) private people with a special stock market account.

So, their only option is to 'bet' on the stock markets. Whether they do good or not is in fact of no importance to outside traders/investors.

But, if there would be a serious correction (limited however to -10%/day) during let's say 3, 4 or more days it would have indeed a serious effect on the rest of the world stock markets.

You mentioned: "China is flooding the world with its goods" but that's a one-way view. You could also write "The Western World is buying and flooding the World with Chinese/Indian goods", because that's exactly what's happening. The Chinese/Indian are not selling their goods, they just produce what the West WANTS...

That that fact results in the enormous Chinese surplus is not just a fault of the Chinese. The West needs to look in the mirror, their own mirror.

Yes, China is already buying and diversifying it's investments, outside the 'normal' bonds-markets in the US, and I would think that's normal. Why not ? It's simply putting the money back into the Western economical system where it was made.

You mentioned that Japan lost the war...and yes they did, the same as Germany, and hey, look what they accomplished, with money from the same Western world.

If you follow the merger/take-over news around the world you can see that we now live in a Global World, not longer protected by borders. The borders are long gone, especially in the West. Of course there are still 'protection' rules by the various governments (Thailand springs to mind also) but it's only a matter of time that those will vanish as well.

What concerns me much more is the utterly sick financial system in the US, and I mean the Banking system, Mortgage industry, Hedge Funds, the very sick Credit Card spending system (read Reuters of today !) and the absolute absence of SAVING MONEY.

If there is a financial and economical crisis coming -and it will be there, it's around the corner- the US and it's Greenback will face a situation they're not used to. But they can only blame themselves, the -previous- governments and financial systems that is. The 'man-in-the-street' is hardly to be blamed since his rulers told him for too long: "all is well" and "we're the Boss of the World" .

It's easy to blame China, India, Thailand amongst others, but how come a nation (read: The Administration, Financials and Press) of 300 million people blame some 3.3 Billion for what's happening now ?

Where is the Mirror ?

LaoPo

[Mighty Mouse]

I currently hold a Mutual Fund that is basically USA invested, in 6 years it has done nothing but go backwards. When I questioned the Fund Manager he blamed it all on the slide of the USD. I am in process of cutting my losses, I will diversify out just like the Chinese.

Over the last six years the US markets have been in a second phase bull market. Huge profits have been made.

I just had a quick look at Mutual Fund Investment and all seem to be making money.

Mutual Funds have heavy operating costs. Fees and charges that can really eat into your dividends, but any fund that has not returned a profit for investors over the last six years is probably not worth staying with.

The US markets are rapidly breaking down. They are not yet into a bear market but they are on the brink. It could go either way, more than likely the downward momentum will pick up in intensity and the bull market will be over.

The American housing downturn is fueling negative consumer sentiment. Mr Joe Average doesn't want to spend his money when he can see the value in his home rapidly deteriorating.

If nobody is spending, the economy falters.

This is why the Fed is lowering interest rates. To ease some of the mortgage pain and to induce consumers to spend......and to pander to the desperate pleas of the investing public.

The more that they reduce interest rates, the more the greenback becomes unattractive. The more unattractive it becomes, the more gold will shine.

Finding a profitable place to park your money is currently not easy. Is it better to buy stocks, buy gold bullion or stay in cash? It's becoming vicious out there and not for the faint hearted.

[Mighty Mouse]

You mentioned: "China is flooding the world with its goods" but that's a one-way view. You could also write "The Western World is buying and flooding the World with Chinese/Indian goods", because that's exactly what's happening. The Chinese/Indian are not selling their goods, they just produce what the West WANTS...

That that fact results in the enormous Chinese surplus is not just a fault of the Chinese. The West needs to look in the mirror, their own mirror.

A very good post, LaoPo.

The Chinese/Indian are not necessarily producing what the Western World wants, (quality wise) but they are certainly producing goods for a price that the Western World wants.

If store A in the Western World sells a Chinese made product for X amount of dollars and store B sells a similar better made Western World product for exactly the same price, which product would Western World consumers buy?

The trouble is that the Western World can't produce a similar product for a similar price.

(The Australian Government regularly conduct a "buy Australian" campaign, with limited success.)

Consumers will usually sacrifice quality if they can save a few $$$'s

Western World manufacturers/growers/farmers can't compete, they close up their business, jobs are lost and Governments/businesses are forced to import goods/produce. (no need to explain what that does to an economy.)

If any nation is to be financially strong it must possess what the rest of the world wants. In Australia, we have mining assets. Huge deposits of uranium, iron ore etc. (hopefully our government won't sell these mining companies to foreign interests.) We don't really have much else.

Apart from military might, what does the US have that the rest of the world can't do without? The strength of a nations currency might be reflected in the answer to that question.

[LaoPo]

You mentioned: "China is flooding the world with its goods" but that's a one-way view. You could also write "The Western World is buying and flooding the World with Chinese/Indian goods", because that's exactly what's happening. The Chinese/Indian are not selling their goods, they just produce what the West WANTS...

That that fact results in the enormous Chinese surplus is not just a fault of the Chinese. The West needs to look in the mirror, their own mirror.

A very good post, LaoPo.

The Chinese/Indian are not necessarily producing what the Western World wants, (quality wise) but they are certainly producing goods for a price that the Western World wants.

If store A in the Western World sells a Chinese made product for X amount of dollars and store B sells a similar better made Western World product for exactly the same price, which product would Western World consumers buy?

The trouble is that the Western World can't produce a similar product for a similar price.

(The Australian Government regularly conduct a "buy Australian" campaign, with limited success.)

Consumers will usually sacrifice quality if they can save a few $$$'s

Western World manufacturers/growers/farmers can't compete, they close up their business, jobs are lost and Governments/businesses are forced to import goods/produce. (no need to explain what that does to an economy.)

If any nation is to be financially strong it must possess what the rest of the world wants. In Australia, we have mining assets. Huge deposits of uranium, iron ore etc. (hopefully our government won't sell these mining companies to foreign interests.) We don't really have much else.

Apart from military might, what does the US have that the rest of the world can't do without? The strength of a nations currency might be reflected in the answer to that question.

See....? You're a protectionist also...

But what about Billiton trying to buy Rio Tinto ? Do you object, as an Ozzie ?

So, how can you object that another company, let's say from China, buy into another company from the West...think of it.

LaoPo

[Mighty Mouse]

But what about Billiton trying to buy Rio Tinto ? Do you object, as an Ozzie ?

So, how can you object that another company, let's say from China, buy into another company from the West...think of it.

LaoPo

You are correct. Being a proud Aussie I want to see Australia prosper and grow. If that means taking over other companies then so be it, but when overseas companies try to buy Aussie companies, I shudder.

Look what happened to our Vegemite. All of the profits from these sales now go overseas.

I know, I want to have my cake and eat it too.

BHP is Australia. If BHP is going bad, so is Australia.

When China buys into an Australian mining company, it is good for the share holders but will it be good for the country in the long term?

This is what I like about Thailand. It is very difficult for foreigners to buy into it.