China's gonna dump the U.S. dollar.

this conclusion requires the agreement of all the countries in the world.

Do you want to live in China? I don't think anyone else wants to either.

So how are they going to be the new reserve currency?

We buy half of the stuff they make why would they want to screw that up? All their slaves would be out of work. The slaves would revolt and then the yuan wouldn't be such a great currency huh?

Reuters fear message...what else it new.

The November summit in Washington could produce some unwelcome surprises which were hinted at by Thailand's Deputy Prime Minister, Olarn Chaipravat, who told Bloomberg News: ,

"The message of this initiative is for China to consider whether or not China would open up its banking system and allow the strongest currency in the world, which is the Chinese yuan, to be the rightful and anointed convertible currency of the world."

Surely, the present financial malaise which has its roots in Wall Street and at the Federal Reserve, has demonstrated that the dollar must be replaced as the world's "reserve currency" and that America must be deposed as the de facto steward of the global economic system. Leadership implies responsibility and the US must be held to account for its failings. It's time for a change.
http://www.informationclearinghouse.info/article21090.htm

dollars" is intended to signify some massive sell-off of U.S. debt instruments that they currently hold prior to maturity. One can offer something for sale, but the sale requires a willing buyer in order to complete the transaction. The scale of USD-denominated debt held by China would require a discounting in order to induce other buyers, with access to sufficient investment capital, to provide the other side of such a sale. Is China willing to endure that discount on unmatured obligations?

All that China needs to do, in order to inflict serious pain on the U.S., is to either stop buying U.S. debt or to significantly cut back on their purchases of those debt instruments. With fewer willing buyers of that debt, the yields on those instruments will have to increase (higher interest return - less dollars paid to the U.S. in exchange for acquiring the debt obligation) in order to make them attractive enough for the remaining pool of buyers. Here in the U.S. it would mean that each bond would supply fewer actual borrowed dollars for our deficit-spending politicians while still creating the same amount of debt obligation. In order for them (politicians) to get the same number of dollars to throw away for various dubious projects, an increasing percentage of debt obligations would have to be sold. Other results - higher amounts for debt interest service and an increasingly higher percentage of tax revenue going for that purpose.
_________________________________________
"An economy built on fiat money is a society on its way to ashes."

Gee, financial saber rattling by the Chinese causes nuclear saber rattling by the current emperor and his court via mr gates.

what a shock.... /yawn/

I can see how a country imports and exports products, but how does a country get rid of a currency? Does the country's treasury simply do a currency exchange on the open market? And who would absorb all those dollars that the Chinese would dump?

Eventually, yes... and I think they are merely "laying the groundwork" right now.

I think their (eventual/inevitable) "dumping" of the dollar will be in the future (six months? a year? two years? -- relatively "soon" in long-view terms anyway).

The dollar is up on extreme forced buying by hedge funds that were forced to de-leverage. It is extremely over-bought. Could fall hard and fast when the forced buying is over. So say some of the pundits I follow. Do your own due dilligence.

http://calculatedrisk.blogspot.com/2008/10/cliff-diving-volv...

~Mikael / Peace, love, Light and unity ~

http://biz.yahoo.com/ap/081012/as_china_economy.html

combine that with these 2:

http://www.theviewfromthepeak.net/newsblog/2007/03/crash-pro...

http://www.financialsense.com/editorials/petrov/2004/0902.html

and I think it should be readily apparent to everyone what is coming down the pipe concerning china. There is about to be a huge global power and financial shift away from the US and towards Russia/China unfortunately.

I cant believe China would do that to us.I mean China and US are buddies. Who else is willing to buy our natural resources and in return give us led filled toys, poison baby formula and dog foods?

Prime Minister Vladimir Putin warned against buying dollars Wednesday as the ruble fell to its lowest level in two years against the currency.

The ruble slid for a sixth day against the dollar as oil declined almost 2 percent to $69.46 a barrel.

"It's a dubious business. It's not clear what will happen to the dollar," Putin said, Interfax reported.

The ruble slid as much as 1 percent to 26.98 per dollar, the weakest since Oct. 16, 2006. "There is an overwhelming demand for dollars that the banks are just not able to meet," said Elina Rybakova, chief economist at Citigroup.

The ruble, however, was little changed on Wednesday, as the Central Bank sold about $4.5 billion from its reserves to support the currency. It was at 30.393 against the euro-dollar basket to which it is pegged, from 30.387 on Tuesday.

~Mikael / Peace, love, Light and unity ~

China
http://republican.meetup.com/609/pages/China_-_The_Red_Dragon/

bailout. They held the biggest percentage of Fannie's $3 TRILLION bonds. China held their comrade Paulson over the coals and he came up with the bailout. The equity holders (the pensions, mutual funds, regular joes) get wiped out and the bondholders (China) stay happy, until the next failure.

China does not need us,only as much as the banks need the guy who couldn't afford his house. Once, the bank is burned, the guy who can't afford the house is cut off. Maybe China will start lending money to nations that SAVE and PRODUCE.

They will stop holding down their currency and let it appreciate in buying power. China will be able to afford all commodities while inflation
destroys our buying power.

And finally, China will look internally to their BILLIONS of people who will enjoy the fruits of their labor:

http://biz.yahoo.com/ap/081012/as_china_economy.html

do it on Friday, is now heating up with the Fed "interviewing" Citadel counterparties. http://www.reuters.com/article/businessNews/idUSTRE49O27H200...

The Chinese press are surely talking up a dollar dump. Not sure the Chinese government is ready to dump just yet. Although I did read on 321gold.com that Taiwan was closer to dumping the dollar than PRC.

http://online.barrons.com/article/SB122482470725666021.html?...

(which is the US) :( ????????

Post is below

it would lead to a collapse of the value of their reserves. They are more likely to go for a gradual rebalancing rather than making any sudden moves IMHO.

"Let us suppose six castaways are stranded on a desert island, five Asians and one American. Their problem is hunger. So they sit down and divide labor as follows: One Asian will do the hunting, another will fish, the third will scrounge for vegetation, the fourth will cook dinner, and the fifth will gather firewood and tend the fire. The sixth, the American, is given the job of eating.

So five Asians work all day to feed one American, who spends his day sunning himself on the beach. The American is employed in the equivalent of the service sector, operating a tanning salon that has one customer: himself. At the end of the day, the five Asians present a painstakingly prepared feast to the American, who sits at the head of a special table built by the Asians specifically for this purpose.

Now the American is practical enough to know that if the Asians are going to continue providing banquets they must also be fed, so he allows them just enough scraps from his table to sustain them for the following day's labor.

Modern-day economists would have you look at the situation just described and believe that the American is the lone engine of growth driving the island's economy; that without the American and his ravenous appetite, the Asians on the island would all be unemployed.

THe reality, of course, is that the American is not the engine of growth, but the caboose, and the best thing the Asians could do would be to vote the American off the island--decoupling the caboose from the gravy train. Without the American to consume most of their food, they'd have a lot more to eat themselves. Then the Asians could spend less time working on food-related tasks and devote more time to leisure or to satisfying other needs that now go unfulfilled because so many of their scarce resource are devoted to feeding the American.

Ah, you say, but that analogy is flawed because in the real world the United STates does pay for its "food" and Asians do receive value in exchange for their effort.

Okay, then let's assume the American on the islands pays for his food the same way real-world Americans pay, by issuing IOUs. At the end of each meal, the Asians present the American with a bill, which pays by issuing IOUs claiming to represent payments of food.

The castaways all know that the IOUs can never be collected since the American not only produces no food to back them up, but also lacks the means and the intention of ever providing any. But the Asian accept them anyway, each day adding to the accumulation of worthless IOUs. Are the Asians any better off as a result of this accumulation? Are they any less hungry? Of course not.

Suppose an Asian Central Banker suddenly washes up onto the island and volunteers his services. Now each day the central banker taxes the other Asians on the island by confiscating a portion of the scraps of food the American throws them each day from his table. The central banker then agrees to return these morsels to the other Asians each day, in exchange for each Asian's daily accumulation of the American's IOUs, less a small percentage for himself because he, the central banker, also has to eat.

Does the existence of a central banker change anything? Do the Asians have any more to eat because their own central banker gives them back a portion of the food he took from them in the first place? Do the American IOUs have any more value because they can now be exchanged in this manner? Of course not.

The Asians will be better off without us

The real world lessnon is that if it doesn't make sense for the six make believe Asians to support millions of real-world Americans. The fact that they do so in exchange for worthless IOUs in no way alters this reality.

There is no question that in the short run, by allowing the U.S dollars to collapse (in effect, voting millions of Americans off the island), there will be some disruptions of Asian economies. Of course, there will be some initial losers, particularly among those Asians who currently profit from the present arrangement. However, these profits come only at the expense of greater losses borne by the entire Asian population.

In the end, the cessation of America's excess consumption, which is not a benefit Asians enjoy but rather a burden they now disproportionately bear, will be the best thing that can happen to them. Like the serfs being liberated from their lords, their scarce resources will be freed to satisfy their own needs and desires, and their standards of living will rise accordingly. As their savings finance increased capital investment, rather than being squandered on American consumption, their future standards of living will rise that much faster as well."

PEOPLE ARE stupid to sell ...The FED operators were just given monies BAILOUT to buy back the sell off at CHEAP RATES..GET IT ???BUY UP AMERICA CHEAP YOUR supposed friendly FED ...GET IT YET...DON'T SELL.....REUTERS is probably in on it....weee