Financial Crisis

[cloudhopper]

while the west sits in its own world playing in its own shyt like a baby child in a crib - CHina is quietly buying gold and arranging for trade with other countries in its own GOLD backed currency. Join the BRIC countries together and make the financial torpedo that will sink the US$.

Look watch and wait till it happens

Not a conspiracy theory as its happening now.

Watch to see if CHina buys more of the IMF gold to futher strengthen its currency.

Thats a good one.

When the US credit bubble burts proper, and all USD denominated credit implodes to worthlessness, remaining physical USD will go through the roof.

The Euro is the only currency with anything close to, even remotely, almost, a whisper of a claim as a reserve currency.

Its comprised of the entire 'Old World'.

BRIC countries are irrelvant in this capacity.

I generally agree with this theory, and it should be noted that a substantial amount of USD denominated debt also exists internationally outside of the US's credit bubble.

I am curious though - what exactly constitutes "physical USD" in your theory, if anything, besides paper money and coins? The argument can be made that even those instruments are nothing but debt.

[cloudhopper]

It's an article everyone needs to read and understand it is not the exception but the rule. We who trade markets know it is at its core a scam. I think most people don't and have become co-opted puppets in the money machine.

Still, if they blow me a Dollar bubble, I might be disposed to feeling more charitible in my opinions.

Speculative investment flows are tens of multiples of trade flows and GS is a key intermediary. The result of the financial crisis is that virtually all its core competitors have been wiped out.

From their perspective the crisis was creative destruction. That is why they are laughing all the way to the bank.

Indeed, but it is not from creative destruction, at least not as I understand the term. It's what I call an "inside job".

...a recent example of which is illustrated here-

http://market-ticker.denninger.net/archive...e-The-Cops.html

[flying]

.......sorry they cut the response by congress to Bernankes testimony in this video.

So incomplete video

edit: as much as I dislike CNBC

they do have many video parts of the responses to Bernanke's testimony

http://www.cnbc.com/?id=15839263&tabid....64871314161273

Edited June 25, 2009 by flying

[Abrak]

...a recent example of which is illustrated here-

http://market-ticker.denninger.net/archive...e-The-Cops.html

This is just an example of 'insider' trading. The point about GS is that it IS the 'inside'. It creates the markets and it facilitates them, it knows where the funds are flowing because it is such a big player. This places it in an enviable position to not only know how to place its book but to inform key market participants about those flows of funds. In return, those participants place their flow of funds through GS.

As such GS is the key participant that controls the game. It is first in and first out. The bigger the bubble the more the bucks. The bigger the scam (say Russia) the greater the returns. In the past it had to compete with other players in the same game but now they are out of business.

I remember be interviewed for a job by GS once - in fact it involved 6 different interviews in 3 different countries - at the end they offered me a package that was roughly half of what I was currently earning. Given all the effort I felt this was pretty stingy 'but its all in the bonuses and as an analyst what you have to remember is when you come up with a bright idea you have to hope it comes right, while at GS we makes sure it comes right.' they replied. And I was only looking to join on the basis it might help me pull chicks.

[Naam]

Thomson Reuters

IMF says dollar adjustment might be needed

06.22.09, 06:39 AM EDT

PARIS, June 22 (Reuters) - An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday.

'For the US, it is absolutely no question that a sustained recovery has to come from a large increase in exports, that may not be very easy to do. This may require fairly substantial adjustments in the dollar,' he told a conference.

http://www.forbes.com/feeds/afx/2009/06/22/afx6569595.html

I posted that earlier today in this thread one page back....

http://www.thaivisa.com/forum/Financial-Cr...23#entry2828123

Interesting too this just out....

http://www.cnbc.com/id/31535631

China Should Buy Gold to Hedge Dollar Fall: Researcher

It is funny how things sometimes go.... Whispers are becoming audible & soon may be blatant yelling

it is always refreshing to read some wishful thinking which doesn't sound overly exaggerated

[flying]

it is always refreshing to read some wishful thinking which doesn't sound overly exaggerated

Actually in my case it is always just wondering not thinking.

Also it is never wishful as I have said before I really care not where the chips fall.

I only hope they fall where they deserve to be

[badge]

while the west sits in its own world playing in its own shyt like a baby child in a crib - CHina is quietly buying gold and arranging for trade with other countries in its own GOLD backed currency. Join the BRIC countries together and make the financial torpedo that will sink the US$.

Look watch and wait till it happens

Not a conspiracy theory as its happening now.

Watch to see if CHina buys more of the IMF gold to futher strengthen its currency.

Thats a good one.

When the US credit bubble burts proper, and all USD denominated credit implodes to worthlessness, remaining physical USD will go through the roof.

The Euro is the only currency with anything close to, even remotely, almost, a whisper of a claim as a reserve currency.

Its comprised of the entire 'Old World'.

BRIC countries are irrelvant in this capacity.

I generally agree with this theory, and it should be noted that a substantial amount of USD denominated debt also exists internationally outside of the US's credit bubble.

I am curious though - what exactly constitutes "physical USD" in your theory, if anything, besides paper money and coins? The argument can be made that even those instruments are nothing but debt.

ALL USD denominated debt will implode.

Physical USD is exactly that; Dollars and cents. However Dollars and cents inside banks, who are part of the implosion, will never be seen again.

Dollars and cents are not debt, they're cash. Im not going to argue the definition of cash

[badge]

while the west sits in its own world playing in its own shyt like a baby child in a crib - CHina is quietly buying gold and arranging for trade with other countries in its own GOLD backed currency. Join the BRIC countries together and make the financial torpedo that will sink the US$.

Look watch and wait till it happens

Not a conspiracy theory as its happening now.

Watch to see if CHina buys more of the IMF gold to futher strengthen its currency.

Thats a good one.

When the US credit bubble burts proper, and all USD denominated credit implodes to worthlessness, remaining physical USD will go through the roof.

The Euro is the only currency with anything close to, even remotely, almost, a whisper of a claim as a reserve currency.

Its comprised of the entire 'Old World'.

BRIC countries are irrelvant in this capacity.

not sure what u are saying here "remaining physical USD will go through the roof"

remaining physical dollars - there are trillions of them - and their worth is plummeting - each day

My post did not say anything about the Yuan becoming a "reserve currency"

China is seeking to promote the yuan as an international currency after signing 650 billion yuan (US$95 billion) in swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus in recent months.

CHina will eventually ignore the US dollar (where it can) and trade with its neighbours and BRIC in "their" own currencies and to add worth to their currencies they will back it up with gold as is happening now!!!

are we clear

yes sir

crystal

You appear to be having a conversation amongst yourself, and he has all the answers so I wont interupt

Lets briefly see if markets agree with you though, by looking at the recent USDCNY exchange rate....

....nope, nothing going on there

[Abrak]

OK so I have a plan to help the economic recovery process. Like all the plans it does have it downsides but I believe it would be net beneficial.

As I see it, China's peg is a drag on US recovery prospects through its constant import of inputs from the US. If that isnt obvious at least people should see that it is difficult for the US$ to have the necessary downward revision in value while its currency is pegged to a country with a US$400bn surplus.

China may now wish to depeg but a big stumbling block is its holdings of USTs. Not only would it take a large capital loss when its currency appreciated but there would be no logic for such large holdings, so they would be sellers increasing those losses and not helpful to US rates.

So the US and China could do a deal whereby, China swapped the majority of its USTs for Yuan Treasuries and in return floated its currency and made it freely convertible. Then the dollar could fall freely and the increased competitiveness results in an improvement of US growth rates and not China's. Obviously its debt would have increased but by a trivial amount (less than 2.5% of GDP).

[flying]

So the US and China could do a deal whereby, China swapped the majority of its USTs for Yuan Treasuries and in return floated its currency and made it freely convertible.

So where do all these Yuan Treasuries that the USA uses to buy back their paper with come from?

Not like anyone else is going to take all that paper off their hands right?

I mean they are USA IOU's that China holds right?

Hey I bet if the FED offered to give them gold from Fort Knox ( if they have it ) China would gleefully accept.

Also what form of currency/money will be used for all the future goods USA will need to purchase from China?

Edited June 26, 2009 by flying

[Abrak]

OK so I have a plan to help the economic recovery process. Like all the plans it does have it downsides but I believe it would be net beneficial.

As I see it, China's peg is a drag on US recovery prospects through its constant import of inputs from the US. If that isnt obvious at least people should see that it is difficult for the US$ to have the necessary downward revision in value while its currency is pegged to a country with a US$400bn surplus.

China may now wish to depeg but a big stumbling block is its holdings of USTs. Not only would it take a large capital loss when its currency appreciated but there would be no logic for such large holdings, so they would be sellers increasing those losses and not helpful to US rates.

So the US and China could do a deal whereby, China swapped the majority of its USTs for Yuan Treasuries and in return floated its currency and made it freely convertible. Then the dollar could fall freely and the increased competitiveness results in an improvement of US growth rates and not China's. Obviously its debt would have increased but by a trivial amount (less than 2.5% of GDP).

[Abrak]

......

Edited June 26, 2009 by Abrak

[flying]

OK so I have a plan to help the economic recovery process. Like all the plans it does have it downsides

[Abrak]

......

Edited June 26, 2009 by Abrak

[flying]

.......

Edited June 26, 2009 by flying

[Abrak]

So the US and China could do a deal whereby, China swapped the majority of its USTs for Yuan Treasuries and in return floated its currency and made it freely convertible.

So where do all these Yuan Treasuries that the USA uses to buy back their paper with come from?

The idea is the USTs are cancelled and new YTs are issued in their place.

There is a very rational argument for doing this. There is now no yuan based trade. If the yuan was an independent freely convertible currency there would be and CBs might wish to hold yuan as a reserve currency to hedge. If they bought existing YTs of the Chinese CB then it would not effect the domestic monetary system, while if the CB issues new YTs then it would push up rates. Essentially freeing the yuan must be accompanied by some expansion of the money supply.

Here is an interesting piece arguing that the yuan is undervalued by 40%.

Also note, it ranks the baht as one of the most undervalued currencies in the world - undervalued by 17%. This certainly runs contra to most TVers views who seem to consider the baht overvalued. To me on basic fundamentals, it surely must be x% undervalued versus the dollar (x being between 0 and say 20%). I always fail to see these I 'think' arguments which often suggest 20 or 30% devaluation of the baht and sometimes more.

http://mpettis.com/2009/06/can-the-rmb-be-...r/#comment-2265

[flying]

So where do all these Yuan Treasuries that the USA uses to buy back their paper with come from?

The idea is the USTs are canceled and new YTs are issued in their place.

So now the FED would be able to print not only USD but also Yuan?

Or are you suggesting China pay themselves back for US debt?

[Abrak]

So where do all these Yuan Treasuries that the USA uses to buy back their paper with come from?

The idea is the USTs are canceled and new YTs are issued in their place.

So now the FED would be able to print not only USD but also Yuan?

Or are you suggesting China pay themselves back for US debt?

I am suggesting this.

To the extent that the yuan is pegged to the dollar, the yuan and dollar together are simply one money supply. Destroying one amount of money and replacing it with the other doesnt actually effect the total money supply.

However, the peg partially dollarizes the yuan money supply in that transactions that might take place in yuan actually take place in dollars and CB hold dollars rather than yuan. The end of the peg would see a natural rise in demand for yuan and a fall in demand for dollars simply as a result of the policy change irrespective of the fundamentals. So to the extent say CBs wish to hold yuan as a reserve currency now it is better they buy YTs off the Chinese CB than disrupt the private sector and its money supply.

No if China holds YTs instead of USTs then the US would simply have a yuan liability instead of a US dollar one. It could of course pay that back in US dollars but I suspect the exchange rate is not going to be that favorable.

[BlackJack]

while the west sits in its own world playing in its own shyt like a baby child in a crib - CHina is quietly buying gold and arranging for trade with other countries in its own GOLD backed currency. Join the BRIC countries together and make the financial torpedo that will sink the US$.

Look watch and wait till it happens

Not a conspiracy theory as its happening now.

Watch to see if CHina buys more of the IMF gold to futher strengthen its currency.

Thats a good one.

When the US credit bubble burts proper, and all USD denominated credit implodes to worthlessness, remaining physical USD will go through the roof.

The Euro is the only currency with anything close to, even remotely, almost, a whisper of a claim as a reserve currency.

Its comprised of the entire 'Old World'.

BRIC countries are irrelvant in this capacity.

not sure what u are saying here "remaining physical USD will go through the roof"

remaining physical dollars - there are trillions of them - and their worth is plummeting - each day

My post did not say anything about the Yuan becoming a "reserve currency"

China is seeking to promote the yuan as an international currency after signing 650 billion yuan (US$95 billion) in swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus in recent months.

CHina will eventually ignore the US dollar (where it can) and trade with its neighbours and BRIC in "their" own currencies and to add worth to their currencies they will back it up with gold as is happening now!!!

are we clear

yes sir

crystal

You appear to be having a conversation amongst yourself, and he has all the answers so I wont interupt

Lets briefly see if markets agree with you though, by looking at the recent USDCNY exchange rate....

....nope, nothing going on there

give it some time as stated in the other previous posts - they are trialling it now

with 6 other countries

cant get the USA to upset - but hey I if I held that much in reserves I would be cage rattling as well

[Abrak]

So now the FED would be able to print not only USD but also Yuan?

Or are you suggesting China pay themselves back for US debt?

BTW Flying my argument really is that to the extent that China will accept the inevitable - that it should have its own independent currency, the US will reward them by agreeing to repay its debts in that appreciated currency rather than its depreciated currency. It will do this for the sake of its growth.

The transaction will also create a natural rebalancing of money supplies that will take place from increased trade in yuan and increased CB reserves of yuan and a consequent reduction in demand for US$ irrespective of the fundamentals.

I think you dont like this plan because you suspect there is a scam somewhere. In this you are indeed correct. But as you cant spot it I am hoping the Chinese wont either.

[flying]

I think you dont like this plan because you suspect there is a scam somewhere. In this you are indeed correct. But as you cant spot it I am hoping the Chinese wont either.

I see

Ok well carry on then. You could be right or you could be doing it to draw the chicks as you said in your other post

When I read that I thought the same as I think now.

It is no wonder we could be headed for WWIII

Certain principles are dead & like you say in so many words perhaps they always were.

The financial system has been a scam ever since money became currency

ie: backed by nothing or worse yet backed by just another scam.

The ones supposedly responsible <sic> for our system all describe a new scam daily.

Like you say they hope none spot it. Good Luck

Edited June 26, 2009 by flying

[MJP]

I think you dont like this plan because you suspect there is a scam somewhere. In this you are indeed correct. But as you cant spot it I am hoping the Chinese wont either.

I see

Ok well carry on then. You could be right or you could be doing it to draw the chicks as you said in your other post

When I read that I thought the same as I think now.

It is no wonder we could be headed for WWIII

Certain principles are dead & like you say in so many words perhaps they always were.

The financial system has been a scam ever since money became currency

ie: backed by nothing or worse yet backed by just another scam.

The ones supposedly responsible <sic> for our system all describe a new scam daily.

Like you say they hope none spot it. Good Luck

Can't go the war route again. MAD. Mutually Assured Destruction.

Is this what everyone's talking about now on the big thread?

http://news.bbc.co.uk/2/hi/business/8120835.stm

[Datsun240Z]

[flying]

Can't go the war route again. MAD. Mutually Assured Destruction.

Is this what everyone's talking about now on the big thread?

http://news.bbc.co.uk/2/hi/business/8120835.stm

Yes MAD but there are many forms of war these days.

I do wish China would walk on the US since it would probably end our ability to fund our stupidity in Iraq, Afghanistan & Pakistan. That would be a start

Yes that link you posted is basically a big subject these days. They started out whispering it & now it is getting louder & louder.

IMHO....They probably had hopes of dumping a lot of the worthless paper but they see now that we are truly FUBAR So there is no point in whispering.

They know they will not be paid back & even if they are it will be a fraction of what the debt was worth since it will be devalued dollars doing the repaying.

But we will see what the financial scammers.... errrr.... economists/experts come up with.

[MJP]

Can't go the war route again. MAD. Mutually Assured Destruction.

Is this what everyone's talking about now on the big thread?

http://news.bbc.co.uk/2/hi/business/8120835.stm

Yes MAD but there are many forms of war these days.

I do wish China would walk on the US since it would probably end our ability to fund our stupidity in Iraq, Afghanistan & Pakistan. That would be a start

Yes that link you posted is basically a big subject these days. They started out whispering it & now it is getting louder & louder.

IMHO....They probably had hopes of dumping a lot of the worthless paper but they see now that we are truly FUBAR So there is no point in whispering.

They know they will not be paid back & even if they are it will be a fraction of what the debt was worth since it will be devalued dollars doing the repaying.

But we will see what the financial scammers.... errrr.... economists/experts come up with.

What China is suggesting is fair, sensible and possibly equitable. Can't see how the US can argue against it?

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the PBOC report said.

Surely this would free the US up to sort out it's problems?

Loved this bit;

"The economic development model of debt-based consumption is most difficult to sustain," the PBOC said.

[flying]

What China is suggesting is fair, sensible and possibly equitable. Can't see how the US can argue against it?

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the PBOC report said.

Surely this would free the US up to sort out it's problems?

Loved this bit;

"The economic development model of debt-based consumption is most difficult to sustain," the PBOC said.

Yes of course it is fair & I am sure many wish for it. It is just China who is large enough to voice it.

Of Course the US can & will argue against it as it would mean the loss of their seignorage benefits.

The last time someone (Saddam Hussein ) tried to remove the US as a peg from even just oil you saw what occurred. Look forward to some *event* to distract yet again if this talk continues.

Also from your article....

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the PBOC report said.

This is actually no small feat & one that could take years to sort if ever.

Eventually currency will have to be backed by something other than promises & faith in corrupt systems.

Again IMHO only

Edited June 26, 2009 by flying

[MJP]

What China is suggesting is fair, sensible and possibly equitable. Can't see how the US can argue against it?

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the PBOC report said.

Surely this would free the US up to sort out it's problems?

Loved this bit;

"The economic development model of debt-based consumption is most difficult to sustain," the PBOC said.

Yes of course it is fair & I am sure many wish for it. It is just China who is large enough to voice it.

Of Course the US can & will argue against it as it would mean the loss of their seignorage benefits.

The last time someone (Saddam Hussein ) tried to remove the US as a peg from even just oil you saw what occurred. Look forward to some *event* to distract yet again if this talk continues.

Also from your article....

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the PBOC report said.

This is actually no small feat & one that could take years to sort if ever.

Eventually currency will have to be backed by something other than promises & faith in corrupt systems.

Again IMHO only

I think we have a little time, but not much. Imagine when the USD goes pop, the chaos on the commodity markets.

Trouble is, when these things are rushed, mistakes are made, often making the situation even worse.

I've no idea what the answer is.

[flying]

I've no idea what the answer is.

You & me both brother

But at the same time it does not help that those who we entrust seem so shady...

It has been asked for some time now for more transparency in the hopes this does not happen again. As we assume we will get out of this alive.......

But...folks like this claim any audit of their work will basically cause world chaos???Must be the unveiling of yet another scam

[MJP]

I've no idea what the answer is.

You & me both brother

But at the same time it does not help that those who we entrust seem so shady...

It has been asked for some time now for more transparency in the hopes this does not happen again. As we assume we will get out of this alive.......

But...folks like this claim any audit of their work will basically cause world chaos???Must be the unveiling of yet another scam

Made me laugh this.

http://www.ft.com/cms/s/0/16da5c0a-627f-11...?nclick_check=1

Britain’s strictures to foreign governments are being mocked from Iran to the Turks and Caicos Islands, as world leaders seize on stories about MPs’ bloated expenses claims as evidence of moral decay in the UK.

Accounts of MPs billing the taxpayer for duck houses and moat cleaning have been lapped up around the world and have posed a problem for British diplomats who have previously been vocal in criticising corruption.

Mark Malloch-Brown, the foreign office minister, deleted sections of a speech he gave in Mozambique this month, fearing that his comments on higher standards of governance might be greeted with scorn.

His fears may have been justified, judging by the apparent delight being shown by leaders in recent days over the Westminster expenses scandal.

In a speech broadcast last Friday after the disputed June 12 elections, Ayatollah Ali Khamenei, Iran’s supreme leader, said: “Many countries of the world, including western countries, that claim to fight corruption and money-laundering, are corrupt to their core.

“You have all heard about the [expenses scandals in the] British government and the parliament. The whole world heard the story and those were just parts of the story.”

Britain is being dogged by the expenses affair as it attempts to stamp out corruption in the Turks and Caicos Islands, a British overseas territory with a population of 32,000.

Ministers are preparing to suspend the islands’ constitution and dissolve its parliament after an official inquiry found signs of “systemic corruption” and “political amorality”.

But Galmo Williams, the islands’ premier, told the Financial Times that British politicians “no longer have the moral authority to lecture other countries on corruption”.

The attack was echoed by Michael Misick, the former premier who resigned following revelations over his lavish lifestyle. “We have a saying on the island – it is like the pot calling the kettle black,” Mr Misick told the FT. “How can you want to dissolve our parliament when you have these problems at home?”

One British diplomat admitted: “There’s no question that it feels a touch more uncomfortable, whether you are a minister or official, to talk about the importance of good governance or tackling corruption.”

The government is dismissive of suggestions that the expenses scandal has lowered Britain’s standing in the world.

This view is echoed by Alex Stubb, Finland’s foreign minister and a strong campaigner against corruption.

“Britain doesn’t usually lecture others about its own system and in any case we know about this affair because of transparency,” he said. “All democracies have to stay awake, but if there’s a problem you change the system.”

Vince Cable, the Liberal Democrat Treasury spokesman, claimed the expenses affair was also denting the ability of ministers to lecture City bankers on lower pay and bonuses.

Amid signs the City is returning to “business as usual”, he said: “You pick it up – the expenses issue has changed the psychological climate.”

One long-time City executive said: “Who are these people to lecture us on values? At least we don’t lie on our expenses.”

[Datsun240Z]

Fact is every country relies on another country somehow. What happened if every country kept it's people in, and shut it doors? Think of that!