China-Russia currency agreement further threatens U.S. dollar

[The Messiah]

"going." BTW, China is already "screwing up" India the big time...

If this is there "screwing up" then we have nothing to fear.

 

[utubekhiladi]

"going." BTW, China is already "screwing up" India the big time...

did u got offended? 8)

 

[asianobserve]

I already edited the post. No offence meant. Somehow China comes up to me like the reincarnation of my grandfather's sworn enemy, the Imperial Japan.

 

[Ray]

The question is do you want to join in a new international economic setup where instead of the US dollar either the Yuan or Rubble or a super Yuan-Rubble hybrid is the currency?

The Rouble is seeking Trouble.

And Yaun is but a Yawn.

 

[utubekhiladi]

I already edited the post. No offence meant. Somehow China comes up to me like the reincarnation of my grandfather's sworn enemy, the Imperial Japan.

i would compare them to nazis...

 

[asianobserve]

i would compare them to nazis...

Our region did not experience the atrocities of the NAZIs but I think the fanatical Imperialist Japanese where just as brutal or even more. Even if the generation that really experienced the brutalities is slowly fading away the wounds are just as felt by the generation left behind.

 

[Ray]

The Chinese hate the Japanese and the Japanese detest the Chinese.

Chinese logic:

The Story of Chen and The Cakes

Chen was extremely hungry, so he left work and went to a local snack bar where he bought a cake. When Chen had eaten the cake, he found that he was still famished, and so he ate a second one.

Even then he was not full up and promptly ate six cakes in succession, but he hadn't satisfied his hunger. Not until Chen had eaten the seventh cake did he feel satisfied.

Then, suddenly, he had a feeling of regret. 'Ah, if I had known this before, I would have eaten the seventh cake first and that would have been enough and there would not have been any need to eat those six others.'

 

[Ray]

If this is there "screwing up" then we have nothing to fear.

If you think Chinese are screwed up chaps, then think again.

Here is some wise Chinese stuff to show who is screwed.

10 of the Best Chinese Proverbs

Wife who put husband in doghouse soon find him in cathouse.

A life with love is happy; a life for love is foolish.

War doesn't determine who is right, war determines who is left.

A bird does not sing because it has an answer. It sings because it has a song.

Three humble shoemakers brainstorming make a great statesman.

Visiting monks give better sermons.

He who asks is a fool for five minutes, but he who does not ask remains a fool forever.

An ambitious horse will never return to its old stable.

A conversation with a wise person is worth of ten years' study of books.

 

[agentperry]

usa needs time out of global warfare to set its house in order. till then there should be no trouble by enemies. they are setting every center of trouble on fire and replacing the new formed govt to follow usa dictate. but in case of china they simply cant challenge them because of multiple reasons one being that there wont be war with china but a holocaust. once arabs are eliminated from international business they have less things to worry, wrt israel's threat emanating from deserts of arabia.
the govts of tunisia and egypt will use a platform to launch themselves and usa is a good stage.

with few losses usa will go out of global politics in next 5 years but because of the presence of an active competitor china, there come-back will be a weak response movie

 

[amoy]

Asia Observe, pls ask your gvmt not to do below

Malaysia Slaps "Dollar As Reserve Currency" Thesis, As It Buys Renminbi-Denominated Bonds

Submitted by Tyler Durden on 09/20/2010 08:54 -0400

Bond Budget Deficit Central Banks China Citigroup Dollar Destruction Foreign Central Banks Hong Kong Iceland Japan None Renminbi Reserve Currency


Overnight gold hit a fresh all time record as increasingly more people make their own decision to go back to the gold standard, away from endless currency dilution, and away from the dollar as reserve currency. Curiously, the latest salvo in the case of the latter came from Malaysia which, courtesy of the FT, we learn has "bought renminbi-denominated bonds for its reserves, marking a significant advance for Beijing's attempts to internationalise the use of its currency, pitched by Chinese policymakers as a long-term rival to the US dollar." While relatively under the radar, this development will have huge implications for global capital flows: as Credit Agricole's Dariusz Kowalczyk, says, "the central bank's move is also expected to herald further diversification into Chinese government securities by other Asian countries. This brings the renminbi's credibility to a whole new level. It will have a domino effect, starting among China's trading partners in Asia. Then it will gradually spread globally." Of course, it also shows that what China does to Japan by buying up its bonds, the world can do to China. However, in exchanging the renminbi for the dollar as global reserve currency of choice, Beijing will be more than happy to allow this, even as the US, its infinite budget deficit, and its outright lack of a budget, grows increasingly isolated.

More from the FT:

The Malaysian central bank refused to comment on the move, saying that it never discusses the composition of its reserves, which amounted to M$311bn (US$100bn) at the end of August, which was then equivalent to US$95bn.

However, people with knowledge of the transaction said it had taken place recently and was thought to have been accompanied or followed by purchases by other Asian central banks, although none of these has yet been identified.

In August, China opened its domestic interbank bond market to foreign central banks that have access to renminbi through a series of bilateral currency swaps totalling Rmb800bn ($120bn).

The agreements, signed since 2008, are with Argentina, Belarus, Hong Kong, Iceland, Indonesia, Malaysia, Singapore and South Korea, although there are no details about how many of these swap lines have actually been activated. Commercial banks such as HSBC and Citigroup that have accumulated renminbi through cross-border trade settlement were also told last month they would be able to invest in China's interbank bond market, although none has yet been given formal approval.

The decision to allow some central banks to invest in the domestic bond market is part of a push by Beijing to increase the international use of the Chinese currency. An expanded role for the renminbi would be a threat to the position of the US dollar, although many economists believe it will be years before it becomes a major reserve currency, given China's tight financial market controls.

To be sure, our idiot politicians are sure to welcome this move as it will lead to further appreciation of the CNY, and more dollar destruction, which presumably will make the export of US-based financial innovation cheaper. Which of course, when faced with $10 trillion in budget deficits over the next decade, which will need about $15 trillion in incremental debt issuance, is completely irrelevant. Instead of focusing all its attention on the one thing that matters, i.e., making US Treasury debt purchases as attractive as possible for as long as possible, the US is now happy to throw future bond buyers under the bus, just so a few incumbents can get reelected on a myopic campaign promise. In the meantime, follow the price of gold: it speaks volumes about what the world thinks of the current reserve currency system.

 

[Param]

Our region did not experience the atrocities of the NAZIs but I think the fanatical Imperialist Japanese where just as brutal or even more. Even if the generation that really experienced the brutalities is slowly fading away the wounds are just as felt by the generation left behind.

The Nazis were humane compared to the actions of the imperial Japanese army during the 1930s and 1940s.

Forget about what happened in China, most Indians don't know what happened in the Andaman and Nicobar Islands under Japanese occupation during WW2.

I feel if the Japs had defeated the Brits in India, we all would have faced the same things that happened to the residents Port Blair and other islands.

 

[The Messiah]

Yes they were savages.

 

[Tianshan]

I already edited the post. No offence meant. Somehow China comes up to me like the reincarnation of my grandfather's sworn enemy, the Imperial Japan.

not the reincarnation, but the original confucian nation.

and about ten times bigger as well.

 

[charlyondfi]

The Nazis were humane compared to the actions of the imperial Japanese army during the 1930s and 1940s.

The Jews survived holocaust will surely disagree on that, Param. In essence, the Nazis want to eliminate every non-German, and the Imperial Japan army said "why waste? better to enslave every non-Japanese." NOT that sure who is more "humane".

Nevertheless, I agreed most Messiah, Pmitra, (& Mikkis?) points, this US$-based reserve/trading currency looks like causing more & more trouble than good.

Yet, I hold strong doubt about gold-based economy. Two reasons: first, any "based" material must has its value. Today, at a more complicate world -- and finance environment, since I believe the worst in 2008/09 subprrime crisis is human kind has proved: how genius we can mess our own credit system, and how easily capitalism can be screwed by greed -- NO one dare to say gold will persist as the basic value-preservation one. A good example can be growing anxiety toward energy, resources, food, etc. Second, extended from first, gold-based has worked before but aborted at last - reason as indicated, gold-based currency simply can NOT meet the explosion of international trade since 1950/60s.

I welcome your opinion as long as it's NOT apart from topic.

 

[LETHALFORCE]

If all of the European Nations combined (bigger economy than Russia -China combined) could not bring down the dollar these two can?? highly unlikely. Euro is crumbling right now.

 

[charlyondfi]

Also, I am wondering how India will/can prepare, just like what Russia and China are doing. Perhaps my Indian friends can teach me.

@LF: I don't think we are talking about "bringing down" dollar, but just like the topic indicated, "threaten". A big economy like US will always retain the basics/value for all those want to do trade with it -- although, this "threaten' can be real: once you have "expanded" your currency so huge as worldwide, dumping of certain scale will backfire from interest rate, consumer price, to trade volume, etc. This has never happened before in mankind and finance history. If we can forget about the impact which in big chance can be chaotic & bloody, it can and should be very interesting and educational...

 

[LETHALFORCE]

Any new currency is always perceived as a threat to the dollar.