China shifting out of dollars ???


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Waitone
January 7, 2006, 07:46 AM
Are the chickens headed home???????.

First, Iran shifts away from the dollar to the euro

Now this

http://www.marketwatch.com/news/story.asp?guid=%7B7C488FC6-E0A6-412A-A561-59C4C7CE4B28%7D&siteid=google&dist=

China signals gradual dollar exit
Analysts see broad impact even as market yawns
By Chris Oliver & Rachel Koning, MarketWatch
Last Update: 12:56 PM ET Jan. 6, 2006
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HONG KONG (MarketWatch) - China's latest signal this week that it will diversify foreign exchange reserves away from U.S. dollars and government bonds could ripple through U.S. and global markets, analysts said Friday.

China announced several steps this week in follow-up moves to its decision last summer to drop a decade-long yuan-dollar peg. Policy changes continue to come at a pace frustrating to U.S. manufacturers and some global financial officials but more change may be in store.

"They are allowing more flexibility in their foreign exchange and leaning towards currency appreciation," said ABN Amro's chief Asian strategist in Hong Kong, Eddie Wong.

As of November last year, China had $769 billion in foreign exchange reserves. Up to $247.6 billion are invested in U.S. Treasurys. Unofficially, China is believed to invest roughly 70% of its reserves in U.S. dollar assets.

The latest move "is going to have a profound effect on most financial markets and the U.S. economy," said Peter Grandich, who pens the Grandich Letter, tracking gold and currencies.

He thinks part of China's diversifcation will go into gold.

"It seems to us that the Chinese had made a bargain with the United States," said Richard X. Bove, analyst at Punk, Ziegel & Co.

"Let us keep the yuan pegged to the dollar and we will buy your debt. Force us to float our currency and we will put our funds elsewhere."

Yet the news had a limited impact in financial markets initially.

China was cited among the issues weiging in the dollar Friday, but interest-rate differentials remain in focus. The greenback fell sharply after mostly strong U.S. employment data still weren't considered enough to keep the Federal Reserve raising rates deep into 2006. See Currencies.

The dollar hit its lowest in more than two months against the Japanese yen, largely considered the proxy currency for Asia.

China's yuan slipped to 8.0668 per dollar, a decline of 0.001 yuan on the day Friday.

On Thursday, China's foreign exchange administrator posted a statement on its Web site citing a desire to "improve the operation and management of foreign exchange reserves," although it did not specify details.

The statement added: "The objective is to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves. We want to ensure that the use of foreign exchange reserves supports a national strategy, an open economy and the macro-economic adjustment."

Earlier this week, China implemented a new over-the-counter trading system for domestic currency investors and banks and a more market-oriented parity benchmark rate that may lead to faster yuan appreciation.

During the past two months, new reserve accumulation lifted total foreign exchange reserves to between $800 billion to $1 trillion, according to ABN Amro's Wong.

Chinese banks have another $125 billion in foreign currency assets held in greenbacks, which represents a growing risk should the value of the U.S. dollar decline suddenly, Wong said.

China, last summer, dropped a strict, decade-old dollar-yuan peg, which kept the yuan artificially low so that Chinese goods are competively priced on export markets. The yuan trades instead within a narrow daily band against a basket of major currencies.

U.S. Treasury Secretary John Snow said on cable chanel CNBC Friday that China should take additional steps to let its currency move under market forces.

These moves will benefit China and the global economy, Snow said.

"One of the things China is worried about is one-way bets that the yuan can only rise," he said. "So if [currency market] speculators are beginning to think that might not be the case, it may create an environment where China may have more latitude ... to let the currency move," he said.

"Early this year, I expect Beijing to move into the second stage of its [yuan] reform by permitting more genuine currency flexibility. As a result, yuan could meaningfully appreciate against the dollar," said Morgan Stanley analyst Stephen Jen

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Joejojoba111
January 7, 2006, 08:45 AM
It's actually a really big deal. China has had the theoretical ability to throw the final straw on the camel's back, economically speaking, for years. But it was theorized that they never would, because it is to their benefit to keep it alive.

Essentially the Chinese buy the US debt, and the US consumers go into debt to buy Chinese goods.

If China has chosen to sin kthe ship, it might signal they have chosen to move in what they perceive as a 'window of opportunity'.

Notice that Asian politics often don't focus on the West, though we feel they do. For instance, in WW2 Japan was actually at war with China first and foremost, and the reason they had to attack was that there was a 'window of opportunity' where China was weak and Japan was strong, and it was not expected to happen again for a long time.

As well, China could freeze the entire Japanese economy by closeing the Malacca strait, giving Japan approximately 2 days of energy reserves and whatever ships are docking at the moment...

Sodbuster
January 7, 2006, 09:56 AM
I'd dump the dollar if I could.

Kodiaz
January 7, 2006, 11:24 AM
What is amazing to me is that this didn't make the papers here in the U.S. I read about it in a UK paper online. Also Iran has said they wion't accept dollars for oil in March of 06. This could be the start of a very bad year.

Art Eatman
January 7, 2006, 01:48 PM
Since the actual Chinese monetary policy isn't at all THR stuff, let's shift emphasis:

Add up all the issues of currencies, federal deficits and balance of trade deficits, and assume all these chickens do come home to roost. I've long assumed a serious recession is in the offing, if not an outright Depression.

What do you think will be the sociological repercussions? What behavior patterns across society if we have truly high unemployment? If there is any correctness in the belief that violence would increase, what repercussions would come from city councils, state legislatures and the Congress?

We've talked about government intrusiveness in information gathering. Would that increase? Would the Schumers/Feinsteins see street violence as a way to justify anti-gun legislation?

Art

thumper723
January 7, 2006, 02:01 PM
That is a real concern.

Normally honest people will do desperate things when they are up to their necks in stuff.

Now, the 1929 crash and resultant depression WAS bad, and we had people standing in line in soup kitchens and going hungry in large numbers.

That brought us a ton of psuedosocailist programs, which helped short term, but have caused long term problems. I see this as a possible way the blissninnies will get the sheeple to allow MORE socialism in America.

Lord help US if this comes to pass.

I prepare for the worst, and hope for the best. Reality will probably be somewhere in the middle.

longeyes
January 7, 2006, 02:06 PM
Sociopolitical implications?

Gold will skyrocket (up $13 yesterday).

But "lead" will prove more valuable than gold...

The U.S. and China are at war by other means.

longeyes
January 7, 2006, 02:12 PM
If we had the political leadership we need in a time of crisis, which this clearly is, we'd be mobilizing--not just militarily but economically. If we stay on the escapist spendoholic path we're on, dissipating our middle class, importing cheap foreign labor, ignoring the deficiencies in our schools, we are merely a decadent power that happens to still have a powerful military. But even our military strength is increasingly dependent on foreign engineers, technology, and, above all,off-shore manufacturing--can we still rely on GM to make our tanks? America needs to do some soul-searching and begin to understand what makes a nation sustainably great: discipline, hard work, strong moral and civic values, a sense of purpose and honor, a sense of a national culture.

jungle
January 7, 2006, 02:41 PM
Any Chinese effort to dump the dollar will hurt them as much as us, in a practical sense most of the major currencies prop each other up.
Even if the Chinese could do major damage to the US economy, then they will have only destroyed their primary market. We sell them many vital technical things, like commercial aircraft and certain other types of capital equipment. They primarily are selling dirt cheap labor to support a society that is 85% by population agrarian.

Gold holds no magic except as a tool for occasional financial hedging, but anybody can use virtually any commodity to do this. If the SHTF in a very big way, water, food and ammo will be far more valuable-even more so if you think wrongly that you'll be able to waltz down to the local bank to retrieve your coins.

Edit-Our own spending is hurting us far more than the Chinese. Top three: Social security, Medicaid, Debt service, this is where most of the Federal budget is going right now and it is caused by allowing the Government to spend money it does not have and will not be able to confiscate without some very ugly social engineering.

Joejojoba111
January 7, 2006, 02:48 PM
Add up all the issues of currencies, federal deficits and balance of trade deficits, and assume all these chickens do come home to roost. I've long assumed a serious recession is in the offing, if not an outright Depression.
Art

Effects of an economy where no-one has any money in a country where the majority of jobs exist to service the whims of effluence... I'd have to agree. In the 30's there was actually a tangible product still being made. Today what the heck happens to people who fluff poodle's hair for a living, and crap like that? They become suddenly politically active and will demand that those with tangible jobs support them too.

Possible happy outlook - economy in tatters big gov't is forced to disband big brother programs since employees won't work for free. People re-learn self-reliance and the whole country is transported spiritually back 150 years. States take over what the feds no longer try to do, and the country it reborn,

Hopefully China really has no ambitions of western conquest, and there might be a couple skirmishes with neighboring nations.


...On the other hand North Korea doesn't seem to be going anywhere, so that's another possibility to consider.

jungle
January 7, 2006, 03:11 PM
The failure of the Social programs will cause many to rethink the role of government and if they think carefully the result will be a government that is more concerned with prosperity than taking from one half to care for the other.

Go to Japan and count the number of US cars you see on the street in an hour. Trade is great, but there has to be a limit on the restrictions that we can accept in such lopsided arrangements.

rick_reno
January 7, 2006, 03:58 PM
What do you think will be the sociological repercussions?

Watch - we're going to trade Taiwan for continued support of the dollar. This is the plum the Chinese mainland has wanted for years and they're in a position to take it. It'll be a peaceful transition, no one wants to ruin the manufacturing infrastructure that Taiwan has to offer. The US will back off any support for Taiwan and the Chinese will pick it off the tree.

bogie
January 7, 2006, 04:25 PM
Well, I'm not sure what's going on, but my mutual funds are up almost 4% in the past week...

Fred Fuller
January 7, 2006, 04:34 PM
"I'd dump the dollar if I could."
=======================

There's nothing stopping you, if you have dollars TO dump. Go to www.everbank.com and click on WorldCurrency Accounts. And/or go to www.tulving.com or any one of dozens of other dealers in precious metals.

lpl/nc (dump early, avoid the rush)

Waitone
January 7, 2006, 06:52 PM
We are a culture built on debt. Period. Full stop. We are not a society producing wealth. There is an eventual price to be paid. Whether or not we can survive the consequences of our own stupidity remains to be seen. I am not certain we can. In the near term if countries like China fail to purchase US debt I am confident the fed.gov's response will be to go after the last big pot of untouched wealth left. . . . private retirement. Right now the PBGC is the dumping ground of private and underfunded pensions. Corporations get intro trouble and the first stop is to unload pensions which the USG happily accepts. I also think USG is capable of acting very fast when its own interests are at stake.

I am very concerned over decisions made by Iran and now China. I fully expect other countries to go and do likewise. Of equal concern is the FEDs' decision to stop publication of the M3 figure. Stopping publication just happens to coincide with Iran's change over date. Sorta makes me wonder if our handlers see bad ju-ju coming down the road and want to control available information.

I don't need conspiracy theories when I have AP, MarketWatch, and Bloomberg.

jungle
January 7, 2006, 07:16 PM
The PBGC is already hundreds of Billions in the red and about to go deeper, another failed social engineering scheme. Payouts from this fund, even in the best of times never covered the entire pension.

We are a society that produces a great deal of wealth and the single strongest economy in the world. Unfortunately we have allowed government to consume over 50% of our GNP chasing fantasies. If this can be stopped, we will recover rapidly.

As far as controlling information, there is still more than enough out there to make rational guesses, which is all that can be expected from planners,government and economists. I wouldn't worry about Iran, their economy is surpassed by several individual corporations in the US.

Sodbuster
January 7, 2006, 08:44 PM
other dealers in precious metals
Way ahead of you, but thanks for thinking of me. Still sittin' pretty from the 2000 run-up, see the same in 2006.

Art Eatman
January 7, 2006, 10:21 PM
If you believe that the dollar will continue to lose strength against other currencies, and that the 35-year trend of costs outpacing average incomes will continue, do you believe that there will be more problems in urban areas?

If so, are you looking to your own future and that of your kids (if you have any) so as to minimize exposure to problems? It's all well and good to talk about after SHTF, but it seems to me that wisdom would have one looking ahead to the "What if...?"

Not only the personal defense/preparedness, but some notions about how your local levels of government will act.

Art

Manedwolf
January 7, 2006, 10:55 PM
Essentially the Chinese buy the US debt, and the US consumers go into debt to buy Chinese goods.

If China has chosen to sin kthe ship, it might signal they have chosen to move in what they perceive as a 'window of opportunity'.


Oh, this isn't sinking the ship, not yet...but they, and economists here (real economists, not administration cheerful-faced bobbleheads), know that China doesn't need to pick up a single rifle or launch a single missile to defeat the US.

If they should ever decide to expand militarily...and they will, in time, basic fact, since they're using up their resources so quickly that they'll need to follow the age-old path of conquest...we can't oppose them. And they know this. We know this. All it would take is for them to pull out of the dollar entirely, to call in the debt, and the US economy would literally implode. The dollar would look like ruble after the Soviet Union fell.

We've done it to ourselves with our addiction to cheap Chinese products, but the end result is that China now has the US with a firm grip on a sensitive bit of anatomy, and is entitled to a "So we do what we want with our army, what're you gonna do about?" grin.

Brr.

Manedwolf
January 7, 2006, 10:59 PM
If you believe that the dollar will continue to lose strength against other currencies, and that the 35-year trend of costs outpacing average incomes will continue, do you believe that there will be more problems in urban areas?

If so, are you looking to your own future and that of your kids (if you have any) so as to minimize exposure to problems? It's all well and good to talk about after SHTF, but it seems to me that wisdom would have one looking ahead to the "What if...?"

Not only the personal defense/preparedness, but some notions about how your local levels of government will act.

Art

Well, yeah. I expect there to be serious crime issues that quickly become worst in states with the most draconian gun control, as criminals will prey on those less likely to be armed.

I'd rather have stuff put away now, rather than pay 10x the price once everyone realizes "Wow, I need a gun to keep from being killed in the city."

jungle
January 7, 2006, 11:07 PM
The old call in the debt trick. Happens all the time, just happened in Argentina and Brazil. The countries didn't implode, they just didn't pay their debt, had some waived and negotiated payment on the rest. The economies were not that robust to start with.
It is much like an individual bankrupt. Usually some debt is forgiven and the rest negotiated, otherwise the creditors have to eat the entire amount

If China calls or sells dollars, they lose, we repay in cheaper dollars or tell them to try later if they want their money. We developed the answer to communist aggression in the '40s and have perfected it since, they can't move against us militarily with any hope.

Ryder
January 7, 2006, 11:21 PM
What do you think will be the sociological repercussions?

Hmmm, I predict that all the people in this country who cut their own throats and stabbed their neighbors in the back by buying inferior Chinese crap will immigrate over there for a job.

Hey a guy can dream can't he? :D

CAnnoneer
January 7, 2006, 11:44 PM
We as a society live way beyond our means. There is A LOT of fat to be cut without reaching the muscle or bone. Just look at how much junk people buy without really needing it, while they have no savings to speak of. All of that will be fixed over time, either slowly and bearably, or fast and painfully. People will have to take their pick.

As far as debt goes, the easiest way to get rid of it is to declare war on China over the natural resources in the mid-East and take the debt as reparations. Also, we should confiscate the assets of all terrorist-supporting regimes, e.g. Saudi Arabia and Iran.

Finally, switching to euro makes no sense to me, because Europe is rotting much faster than Canada or ourselves. That'd be equivalent to the US buying reichsmarks in 1919. Total insanity.

P.S. You can't eat gold.

benEzra
January 8, 2006, 01:53 AM
Watch - we're going to trade Taiwan for continued support of the dollar. This is the plum the Chinese mainland has wanted for years and they're in a position to take it. It'll be a peaceful transition, no one wants to ruin the manufacturing infrastructure that Taiwan has to offer. The US will back off any support for Taiwan and the Chinese will pick it off the tree.
Good point. I hadn't thought of that angle.

Coronach
January 8, 2006, 07:15 AM
Any Chinese effort to dump the dollar will hurt them as much as us, in a practical sense most of the major currencies prop each other up. Even if the Chinese could do major damage to the US economy, then they will have only destroyed their primary market. We sell them many vital technical things, like commercial aircraft and certain other types of capital equipment. They primarily are selling dirt cheap labor to support a society that is 85% by population agrarian.The only problem I see with this analysis is that it is made, very rationally, from the perspective of a capitalist.

The leadership in China is, at its core, communist. Communists never were afraid to knock down the whole house of cards and try to achieve the Worker's Paradise amid the ruins.

The real question is just how deeply capitalism has eroded the Maoists' foundation. Is China a capitalist nation with some communist figureheads ostensibly in charge, or are the guys pulling the levers still hard-line communists? It is possible that we shall see.

Mike

cracked butt
January 8, 2006, 07:55 AM
When I saw the topic, I had a whole slew of ideas to 'put to paper' but Jungle has pretty much outlined my views perfectly.

Waitone
January 8, 2006, 08:10 AM
Anytime fed.gov changes its publicity policies alarm bells go off. Buckets of information are indeed available and to those who live in those buckets nothing changes. What does change is Joe and Martha Sixpack no longer have access that that figure since M3 is the single number used to portray the state of the money supply. And we all know how our illustrious media love to have one number to pound.

I think the FED dropped the M3 figure because it is about to do some things that will raise questions by Joe and Martha. Similar situation at the end of the Clinton administration when relevant agencies announced changes to the way inflation and unemployment figures were derived. No reason was given, just that changes were implemented. Bush after taking office did nothing to revert those changes. The cynical side of me is ever alert to government games and those changes to simple, key, and highly publicized figures stuck me as questionable. . . .just like I question the reason for stopping publication of a figure used since creation of the FED.

I'll admit to being paranoid. Don't mean I wrong, just means I'm paranoid. :scrutiny:

Joejojoba111
January 8, 2006, 08:16 AM
Hmm, silver lining - massive crippling debt, what do you do? Follow Germany's lead in Versailles reparations, just print more money! Rampant inflation, this means that all those pensions are suddenly manageable, because they are 1/100 of their former value. The economic crisis of the baby-boomers is avoided!

lol, :uhoh:

jungle
January 8, 2006, 09:01 AM
Anyone who thinks China is a communist country should do a little more study. They still have the red flags as window dressing, but in reality they are more capitalistic than we are.
The government debt, I believe , will largely be brought to manageable levels by reductions in the so called benefits of social programs. In much the same way as GM as had to reorganize and shed some of their pension programs to survive, the government already realizes that SS and other programs are a dead end street.
People who have not saved for their own retirement will be hurt by this, but even now the SS administration is telling 25 year olds that a lifetime of paying into the program has a zero expectation of payout.
All the worlds economies are now somewhat intertwined and it is a mistake to think that the Chinese can thrive without us, and we rely on them to provide a market for our goods too. Only capitalistic countries will be able to compete in the long run for economic freedom, the more deeply mired in socialism a country becomes, the less competitive it will be in every way.

LAK
January 8, 2006, 09:45 AM
And the traitors in Washington can, a few months, or years, down the road say;

"We didn't know ..."

"We did not anticipate ...."

"No one imagined that ..."

"Who could have predicted ..."

"We did not expect ..."

... etc

We know, "it was a big mistake". "They made some bad decisions".

etc
--------------------------------------------

http://ussliberty.org
http://ssunitedstates.org

Coronach
January 8, 2006, 03:58 PM
Anyone who thinks China is a communist country should do a little more study. They still have the red flags as window dressing, but in reality they are more capitalistic than we are.On the whole, I agree with you. However, we're talking about the decision-makers in China, not the population as a whole. If 99% of the population are capitalists but the guys with the guns are hard-line Maoists, the decisions the nation makes with regards to economic warfare will be from the perspective of a communist.

Now, what I'm less sure about is how deeply freedom and capitalism has 'corrupted' the leadership. Do they see it as benefiting them to have a good economy? Remember, their solution to riots is to kill the rioters, so I don't see public outcry as being the motivating factor it is in the West.

Mike

Manedwolf
January 8, 2006, 04:01 PM
And the traitors in Washington can, a few months, or years, down the road say;

"We didn't know ..."

"We did not anticipate ...."

"No one imagined that ..."

"Who could have predicted ..."

"We did not expect ..."

... etc

We know, "it was a big mistake". "They made some bad decisions".

etc
--------------------------------------------

http://ussliberty.org
http://ssunitedstates.org

That, and also the revisionist history. As in:

War college military analysts, 2003: "If you do that, bad things A and B are likely to happen."

Administration, 2006: "We had no way of knowing that bad things A and B could happen."

:banghead:

longeyes
January 8, 2006, 04:07 PM
Any Chinese effort to dump the dollar will hurt them as much as us, in a practical sense most of the major currencies prop each other up. Even if the Chinese could do major damage to the US economy, then they will have only destroyed their primary market. We sell them many vital technical things, like commercial aircraft and certain other types of capital equipment. They primarily are selling dirt cheap labor to support a society that is 85% by population agrarian.

Chinese capitalism has a different flavor. For one thing these guys are nationalists, not just "Communists." China has no problem with stealing technology and any intellectual property it can get its hands on. Sure, they are businessmen; they are also predatory. We need to wise up.

The suppression of the M3 data by the Fed is indeed troubling. What happened in Argentina comes to mind, along with the SHTF thread that details the what-ifs.

http://www.buildanark.net/argentinean.html

telomerase
January 8, 2006, 05:33 PM
before FDR wrecked their monetary system in the 1930s (http://www.lewrockwell.com/orig5/walker3.html).

Chinese taxpayers have been holding up the dollar for years. I'm sure they're tired of it.

Borachon
January 8, 2006, 05:56 PM
Just look at how much junk people buy without really needing it, while they have no savings to speak of. All of that will be fixed over time, either slowly and bearably, or fast and painfully. People will have to take their pick.

Possibly true...but ask yourself this....do you work in an industry that people can do without? Are you a travel agent or a new car dealer? Or does your business sell insurance or sell houses? Do you work in a factory that makes "knick knacks" that people buy? If so..then you will feel DIRECT effects when people stop buying YOUR stuff.

OR do you sell a vital good? Like food or gasoline? You still aren't safe. When less money comes to people who DO make 'knick knacks' (your customers in other words) then they aren't going to be able to purchase what YOU sell. When your customers suffer, then you will suffer.

Bank on it.

Borachon
January 8, 2006, 06:01 PM
The suppression of the M3 data by the Fed is indeed troubling. What happened in Argentina comes to mind, along with the SHTF thread that details the what-ifs.

Suppression of the data isn't in and of itself troubling. Numerous explanations for that...none of them very supportive of the idea of Democracy of course, but not necessarily the end of the world either.

What IS troubling is the date "coincidence" which corresponds to a switch in Iran to Euros for oil purchases. Not many options exist now for stopping their move and protecting our economy. War is actually the best one available. All the other options would demand a reduction in our lifestyle.

Sucks to be them, in other words.

Malone LaVeigh
January 8, 2006, 08:02 PM
War is actually the best one available.
Actually, the "best" option is to have Israel do the dirty work. I'm sure it's being worked on.

longeyes
January 8, 2006, 08:05 PM
Suppression of the data isn't in and of itself troubling. Numerous explanations for that...none of them very supportive of the idea of Democracy of course, but not necessarily the end of the world either.
.

Suppression of information by the Gov't should give us all pause. Suspicion is best. Troubling is an understatement.

Sir Aardvark
January 9, 2006, 12:08 AM
Since the US is funding China's massive Socio-Economic boom, I really don't see them as seriously contemplating shaking-the-tree.

The US is still the Big-Kid-on-the-Block, so I expect China will continue feeding our Wal-Mart addiction for years to come.

Also, China has a next door neighbor, India, who is also riding the crest of an extraordinary boom and will soon be competing fiercely with them for scarce resources, such as oil, which is going to make for some interesting times ahead.

mrmeval
January 9, 2006, 12:42 AM
The depression effected my mother and her family very little. They were rural farmers and almost entirely self sufficient.

Now we don't have that as we once did.

That is a real concern.

Normally honest people will do desperate things when they are up to their necks in stuff.

Now, the 1929 crash and resultant depression WAS bad, and we had people standing in line in soup kitchens and going hungry in large numbers.

That brought us a ton of psuedosocailist programs, which helped short term, but have caused long term problems. I see this as a possible way the blissninnies will get the sheeple to allow MORE socialism in America.
Lord help US if this comes to pass.
I prepare for the worst, and hope for the best. Reality will probably be somewhere in the middle.

Manedwolf
January 9, 2006, 01:50 AM
Possibly true...but ask yourself this....do you work in an industry that people can do without? Are you a travel agent or a new car dealer? Or does your business sell insurance or sell houses? Do you work in a factory that makes "knick knacks" that people buy? If so..then you will feel DIRECT effects when people stop buying YOUR stuff.

OR do you sell a vital good? Like food or gasoline? You still aren't safe. When less money comes to people who DO make 'knick knacks' (your customers in other words) then they aren't going to be able to purchase what YOU sell. When your customers suffer, then you will suffer.

Bank on it.

This is why I tell people heading for grad school to aim for the medical industry. One, people are not going to stop getting sick, injured and older. Two, because the FDA is VERY strict about manufacturing processes, it's far harder to overseas-outsource the production of medical devices and have them certified for use in the US.

Good industry to be in.

CAnnoneer
January 9, 2006, 04:11 AM
Also, China has a next door neighbor, India, who is also riding the crest of an extraordinary boom and will soon be competing fiercely with them for scarce resources, such as oil, which is going to make for some interesting times ahead.

Indeed they will. I vote we export our products to both while they fight each other. Of the two, India may ultimately be the more dangerous to us, as their population growth is out of control while their government is less stable.

The above strategy however requires that our soldiers are rested and ready at home, rather than stuck in a Turd World hellhole doing nation-building for homegrown globalists on both sides of the aisle. GWB:cuss:

LAK
January 9, 2006, 06:16 AM
What IS troubling is the date "coincidence" which corresponds to a switch in Iran to Euros for oil purchases. Not many options exist now for stopping their move and protecting our economy. War is actually the best one available. All the other options would demand a reduction in our lifestyle.
War? That is almost amusing. War with what, and whose, money? With what resources; what army?

And if such an insane idea was put into motion; just what is your contingency plan for a major attack on U.S. assets, bases, etc in another theatre by another country or two?
--------------------------------------------

http://ussliberty.org
http://ssunitedstates.org

LAK
January 9, 2006, 06:28 AM
Actually, the "best" option is to have Israel do the dirty work. I'm sure it's being worked on.
I put forward this idea on another forum several months ago. It wasn't a very popular observation; but one which I still think is in the works.

Ther are some potential major hangups - for the state of Israel that is. But they have become so brazen they may try it all the same.
---------------------------------------

http://ussliberty.org
http://ssunitedstates.org

Gabe
January 9, 2006, 07:11 AM
If US economy crash, so does China's. If China's economy crash, the communist leadership will be thrown out very quickly. Hence the Chinese would be extremely interested in the economic well being of the US, perhaps more so than any other country in the world. As for "calling our debt", there's no way that would happen. US would simply print money and screw our creditors. China would lose hundreds of billions of dollars.

The US economy is most likely headed for a recession this year and the dollar will almost certainly decline. With those projections, it would be crazy for the Chinese to keep buying the dollar. What they're doing is in their interest. China simply must have a strong US economy to grow theirs. The US economy would not have cimbed out of the mess in the late 90's without their propping the dollar up. However though China will march up a hill with us they won't follow us off a cliff.

Americans have a simple way of securing our retirement funds in the event of serious economic woes: buy Canadian and Australian. That is to say buy stocks and funds in their banking, energy, and precious resources sector. The Canadian and Australian dollars will retain value and their resource based economy would benefit from growing economies like China and India for a long time to come. If the dollar takes a dive, Chinese money will have to go somewhere, and it's not going to Europe.

Gabe
January 9, 2006, 07:21 AM
On that note I recommend:

Fording Canadian Coal Trust (FDG)
Royal Bank of Canada (RY)
Australia & New Zealand Banking Group Ltd. (ANZ)

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