China calls for new reserve currency

chefdennis

Veteran Expediter
With most of the ME G-20 Countries and the UK looking for a new currency for the minetary peg, and now with China on board....this can't be good for Barry and Turbo Tax Tim!!! china has already started using the long term (30 yr) tresuries to pay up coomerical property in the U.S. and other countries. so they are making an effort to lessen their chances of loss on those long term tresuries. Yea they are still buying short term tresuries BILLs, as they can be moved quickly and don't roll over...this won't happen over night, but over time, more of a slow burn as Barry and Tim screw the economy up more each day here, create inflation and devalue the dollar until we are nothing more then a "banana republic!" It ain't lookin good...

China calls for new reserve currency

By Jamil Anderlini in Beijing

Published: March 23 2009 12:16
Last updated: March 23 2009 23:24
FT.com / Asia-Pacific - China calls for new reserve currency

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.



Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.

“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.

China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, and this is unlikely to change in the near future.

To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s.

Today, the value of SDRs is based on a basket of four currencies – the US dollar, yen, euro and sterling – and they are used largely as a unit of account by the IMF and some other international organisations.

China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.

Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.

Mr Zhou said the proposal would require “extraordinary political vision and courage” and acknowledged a debt to John Maynard Keynes, who made a similar suggestion in the 1940s.
 

greg334

Veteran Expediter
Here is what I was told this afternoon.

The other countries lost their confidence in our government when Bush decided to lower the interest rates and screw the dollar. They continued to watch as we started to bail out companies who should have done their risk mitigation but took on bad debt right from the beginning.

They hoped that Obama would bring in new blood and didn't anounce his cabinet until it was too late and the world noticed the same old people who gave us the problem in the first place getting promoted.

They watched Obama make a joke about all of this, take more time off than any other president and just last week decided that the economy is going to be ok, not the doom and gloom that he was saying for a while.

They now realize that Obama is imature, that when they call the treasury department that no one is home watching the place and it is really making them question our ablity to be stable in the future.

Some, particulary in eastern europe of all places have suggested loweting taxes to spur growth and it may be that one of these eastern european countries will bring their economy to the recovery long before ours.

Some others want to know why is the government monitizing debt, taking on assets that are bad and so on while keeping interest rates low. Some want to see the US do somehtig other than to follow programs that will take down the economy. But again, it may be one of these things where China and the EU will start telling us to get it solved or else.
 

chefdennis

Veteran Expediter
While this thread is about the Financial aspects of this economic mess and the lack of confidence that the foreign powers have in our government to fix it, this article also shows how the world looks at the weakness barry and his "boys & girls in the band" have shown and how they are weakening us as a world power..........

People of more intelligence then me have come to the painfull conclusion that while we know that barry has great distain for the military and is working to weaken them as fast as he can, he is also letting the world powers know that we are now turning away from our old allies (the UK, and Israel) and embracing the terrorist groups and countries (hamas, Palestein, Iran, Syria....) of the world. The world sees this as weakness in embracing these group as fear of them and they are mocking it... barry has sent secret letters to both russia and iran, thinking they would "talk" with him and they simply published and made them public as a way to show his inexperience...then laughed at him.... LOL, the common way of experienced foreign relation diplomats is to not send letter that can be held up to be used against you later, but to TALK behind closed doors and then be able to deny it happened if it leaks out, but a letter, published isn't easily denied by a goof that has no experience and is the butt of jokes by his counterparts around the world.....

GAFFNEY: Our enemies sense weakness

Retrenchments are perceived as exploitable openings


Frank J. Gaffney Jr.
Tuesday, March 24, 2009
Washington Times - GAFFNEY: Our enemies sense weakness



COMMENTARY:

President Obama's stewardship of the national security portfolio to date amounts to a wrecking operation, a set of policies he must understand will not only weaken the United States but embolden our foes. After all, the communist agitator Saul Alinsky, a formative influence in Mr. Obama's early years as a “community organizer,” made the following Rule No. 1 in his 1971 book “Rules for Radicals” — “Power is not only what you have but what the enemy thinks you have.”

According to this logic, the various steps Mr. Obama is taking with respect to the armed forces, the foreign battlefields in which they are engaged, our allies as well as our adversaries will not only diminish our power. They will encourage our enemies to perceive us as less powerful - with ominous implications. Consider some illustrative examples:

• The Obama administration is cutting the defense budget by 10 percent. The result will preclude much, if not virtually all, of the modernization that will be required to prepare the U.S. military to contend with tomorrow's wars. Most of what the Pentagon spends goes to fixed - and growing - personnel-related costs (pay, bonuses, health care, etc.) and operations. As a result, at Obama funding levels, there will not be much available even to “reset” today's forces by refurbishing the equipment being used up in present conflicts.

• The president is on a path to denuclearizing the United States by refusing to modernize the arsenal or even to fund fully the steps necessary to assure the viability of the weapons we have. He hopes to dress up this act of unilateral disarmament by seeking to resume arms-control negotiations with Russia, as though such throwbacks to the old Cold War and its bipolar power structure apply today - let alone that there are grounds for believing the Kremlin would adhere to new treaties any better than the previous ones it systematically violated.

• For good measure, Mr. Obama is mounting a frontal assault on the armed forces. The president plans to repeal the law prohibiting gays from serving in the military. It is absolutely predictable that significant numbers of servicemen and -women - including many of the most experienced commissioned and noncommissioned officers - will retire rather than serve in conditions of forced intimacy with individuals who may find them sexually attractive. The effect will be to break the all-volunteer force.

• Then there are the Obama initiatives in Iraq and Afghanistan. The president's adoption of a deadline for withdrawing most U.S. forces from the former and his signaling that - despite a near-term 17,000 troop “surge” - he is preparing to turn the latter over to the oxymoronically dubbed “moderate” Taliban convey unmistakable messages to friends and foes alike: Under Mr. Obama, it is better to be a foe of America than one of its friends.

This message is, of course, being reinforced strongly by the treatment he is doling out to nations in each category.

(1) Friends like the Poles and Czechs have been left in the lurch as the Obama administration intimates that the United States now thinks Europe after all does not need to be defended against Iranian nuclear-armed missile threats. Not since former President Jimmy Carter abandoned the NATO deployment of so-called “neutron bombs” has a president conveyed such a devastating message of weakness and irresolution in the face of hostile threats to our European alliance partners.

(2) Other allies have not fared much better. Israel is on notice that its security interests will be sacrificed to the Obama administration's pursuit of a Palestinian state - even one ruled by a terrorist organization like Hamas (or, for that matter, Fatah) committed to Israel's destruction. Britain has been told it neither deserves nor has a “special” relationship with the United States.

(3) Meanwhile, virtually every enemy of the United States is the object of assiduous cultivation and overtures for rapprochement by the Obama administration. It will reward Iran for “going nuclear” with normalized relations. Syria can expect the Golan Heights and removal from the terrorism list even as it pursues nuclear arms, renews its overtly colonial hold on Lebanon, supports the terrorists of Hezbollah and helps its abiding master, Iran, destabilize Iraq.

(4) As mentioned above, Russia gets to be treated like a superpower again while it arms Iran, inserts bombers and naval units into our hemisphere, wields its energy leverage against our friends in Europe, Ukraine and Georgia and squeezes our supply lines into Afghanistan. There are no repercussions for China as it makes a mockery of the administration's beloved Law of the Sea Treaty by threatening an unarmed U.S. naval vessel in its Exclusive Economic Zone.

(5) Last but hardly least, a “respectful” Obama administration seems keen to embrace those in the Muslim Brotherhood and like-minded Islamist organizations who seek to impose the toxic theo-political-legal program authoritative Islam calls Shariah on distant populations - and insinuate it into our country.

Can there be any doubt what America's adversaries make of all this? Great grief will come our way if they conclude, as Mr. Alinsky surely would, that our power is waning and that they can exercise theirs with impunity against our interests - and those of whatever friends we have left.

Frank J. Gaffney Jr. is president of the Center for Security Policy and a columnist for The Washington Times.
 
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