2007-03-25:

Das Ende der Kredit-Fahnenstange, Zeit für Helikopter-Geld:

Aus Bill Bucklers Privateer #574:

The Credit Cycle Is OVER:
With NO major asset class left to borrow against, the US credit machine hits the wall. There is no place left to go where the US credit expansion sequence can be extended in either direction or in volume terms. Historically, the economic evidence of the past is that any credit expansion leads to a collapse of the collateral foundation against which the loans were issued. This is resolution through bankruptcy. If the monetary authorities try to “inflate” the problem away through a massive monetary issuance, the
end result is a Weimar Republic solution to towering debts. In that circumstance, it is the value of the currency that crashes which in turn enables debts to be repaid in worthless money. This is resolution through currency collapse.

Also eine weitere Kreditausdehnung (zumindest in den USA) ist nicht mehr möglich. Es gibt keine grosse Asset-Klasse mehr, gegen die man Kredite vergeben könnte. Das Ende der Kredit-Fahnenstange. Inflationieren auf diesem Weg geht nicht mehr.

Hilft vielleicht das Monetisieren von Bonds durch die Zentralbank?

Der frühere Banker Robert McHugh: The Coming Credit Crunch

Seiner Meinung nach hilft es nicht, an der Wall Street durch die Fed Bonds (auch MBS) mit neuem Geld aufzukaufen (monetisieren) - was man derzeit offenbar schon fleissig macht. Man muss den Haushalten die Schulden direkt abnehmen. Das wären hundertausende Dollar pro Haushalt! Abgesehen von den Ungerechtigkeiten, die das auslöst, wird das wohl das Ende des Dollars durch Hyperinflation sein. Und es muss bald geschehen! Mit höchster Wahrscheinlichkeit wird das den Einsturz der Derivaten-Pyramide nicht verhindern, denn die Summen die hier monetisiert werden müssten, sind gigantisch, siehe auch den Endgame-Artikel.

Jetzt stellen Sie sich vor, die spanische Regierung macht das bei ihrer eigenen platzenden Bubble. Das wird dann wohl den Euro zerreissen.

2007-03-25:

Was die Plunge Protection Teams so alles treiben:

Edgar Steele: Splish, Splash - The Dollar's Taking a Bath!

Ein ausgezeichneter Bericht: Seit Hank Paulson US-Finanzminister (Secretary of Treasury) ist, sind die Manipulationen aller Märkte besonders intensiv geworden. Und die anderen Staaten machen fleissig mit. Denn sie haben alle ds gleiche Problem: Fiat-Money und zu viel Schulden.

Splish, Splash - The Dollar's Taking a Bath!

By: Edgar J. Steele, ConspiracyPenPal.com

March 24, 2007 My name is Edgar J. Steele.  (To my long-time faithful readers:  Tomorrow I return from my brief semi-exile...I promise.  Something to outrage everybody and, then, a follow-on discussion that I think you will find more than a little interesting.) This past week saw the dollar flail like the new kid in swimming class, accidentally in over his head.  Remember him?  Splish...splash...splosh....gurgle...  He's up!  He's down!  Finally, the instructor takes pity and hauls him closer into the shallow end.  For a time, despite significant rescue attempts, it seemed as though the dollar might actually be allowed to sail under 82.00.  Then, just like a clock, on Friday the dollar straightened out and held the line....at 83.00.  Precisely, too - not 82.99 and not 83.01.  Precisely, exactly 83.00 was its close.  What a coincidence!  I must be psychotic.  Or is that psychic?  I keep confusing the two. With all American markets up somewhat and, despite steady gains in recent days, both gold and silver solidly took it on the chin Friday, unaccountably (unless you account for market rigging, of course) plunging $7.10 and $.26 per ounce, respectively, on the day's trading, where they now sit until the overseas market opens again, late tomorrow. Ever since Henry Paulsen took office as Treasury Secretary, market manipulation now takes place with no regard to either common decency or legality.  No longer does there seem to be any pretense that "they" are not rigging the markets.  After all, what are we going to do about it?   Call it the Bush doctrine all over again, just being employed in the financial world. Did you notice that the major brokerage firms recently reported record profits yet again?  Not hard when you know, each and every day, exactly what the markets will do.  Tell me exactly the figure at which the S&P index will close each day for the next month and, starting with $1,000, I will round out the month being worth more than Bill Gates.  Their only danger is in making too much money, of course.  We have a saying here in North Idaho:  Pigs get fat and hogs get slaughtered. I was amused recently to read in one on-line forum how one fellow who holds himself out as an expert in all things financial literally laughed at my assumption that these markets are being manipulated.  Why, even the mainstream media now talks openly about the rigging.  When MSNBC's commentators dare to mention the Plunge Protection Team, as many have in recent weeks, the fix has become so institutionalized that, next, I would not be surprised to see it made into a cabinet post.  The Secretary of Investment Security, perhaps, in the modern Orwellian fashion that has the Secretary of Defense making war and the Department of Homeland Security, based upon results, intent upon making Americans feel anything but secure. So, it appears that the dollar's new reality has become 83.00, a commonly-reported index composed of six foreign currencies, just as I cautioned more than once recently.  Next will come 82.00, of course, then 81.00.  Where will the dollar index be when the global dominoes all fall down?  We won't notice or care, so distracting will WWIII have become by then.  I do know the dollar's ultimate destination, however:  Zero.  By then, we will have been switched over to the Amero, with the all-digital Globo then being openly discussed as the Amero's replacement.  Read my book for the gory details and how to keep from becoming a part of the statistical nightmare now shaping up. What escapes one's attention by focusing upon that index, however, is that all western fiat currencies (which means all Western currencies, of course) are being inflated like there is no tomorrow.  The dollar's apparent decline merely is against some of those currencies. Nor can we get an accurate handle on how quickly all the currencies are plunging in buying power, due to the worldwide rigging of markets; just that the dollar is moving a bit faster than the others.   Without paper gold and paper silver, which is all that futures and options on them really are (and which I increasingly suspect ETFs like GLD and SLV have become, given the nagging rumors of their having leased out their gold and silver, just as did most central banks long ago), the prices of both now would be in orbit, if not well on their way to the Moon, their inevitable destination.  Here, let me say it one more time:  Cash in your GLD and SLV and buy the real thing.  Holding ETFs is the same thing as playing musical chairs, with only a fraction of the necessary chairs available for those circling the room.  Had you switched over just a couple of weeks ago, Friday's decline notwithstanding, already you would have recovered the commission incurred in making the conversion.  I still have not entirely followed my own advice, in case that somehow reassures you.  Call it lethargy or an attempt to bottom fish or whatever.  Regardless, it is foolish.  See?  I readily admit to it.  Don't dare even mention stocks or bonds to me.  Holding equities today is beyond foolish and can best be described as downright stupid. My name is Edgar J. Steele.  Please visit my web site, www.ConspiracyPenPal.com, for other messages just like this one.  -ed Copyright ©2007, Edgar J. Steele   On-Line link to this article in HTML format:  http://www.conspiracypenpal.com/columns/update0706.htm  Edgar J. Steele, Attorney at Law PO Box 1255 Sagle, Idaho 83860 Admitted in Idaho, Oregon, Washington & California email: steele@conspiracypenpal.com

The Dollar's Full-System Meltdown

By Mike Whitney

10/30/06 "Information Clearing House" -- -- The U.S. Dollar is kaput. Confidence in the currency is eroding by the day.

A report in The Sydney Morning Herald stated, “Australia’s Treasurer Peter Costello has called on East Asia’s central bankers to ‘telegraph’ their intentions to diversify out of American investments and ensure an ‘orderly adjustment’….Central banks in China, Japan, Taiwan, South Korea, and Hong Kong have channeled immense foreign reserves into American government bonds, helping to prop up the US dollar and hold down interest rates,’ said Costello, but ‘the strategy has changed.’”

Indeed, the strategy has changed. The world has come to its senses and is moving away from the green slip of paper that is currently mired in $8.3 trillion of debt.

The central banks now want to reduce their USD reserves while trying to do as little damage to their own economies as possible. That’ll be difficult. If a sell-off ensues, it will start a stampede for the exits.

There’s little hope of an “orderly adjustment” as Costello opines; that’s just false optimism. When the greenback begins listing; things will turn helter-skelter quickly.

In September, we saw early signs that the dollar was in trouble. The trade deficit registered at $70 billion but the Net Foreign Security Purchases (NFSP) came in at a paltry $33 billion. That means that our main trading partners are no longer buying back our debt which puts downward pressure on the greenback. The Fed had two choices; either raise interest rates substantially or let the currency fall. Given the tenuous condition of the housing bubble and the proximity of the midterm elections, the Fed did neither.

A month later, in October, the trade deficit hit $69.9 billion but, then, without warning, a miracle occurred. The Net Foreign Security Purchases skyrocketed to a “historic high” of $116.8 billion; covering both months’ shortfalls almost to the penny.

Coincidence?

Not likely. Either the skittish central banks decided to “stock up” on their dollar-denominated investments or the Federal Reserve (and their banking-buddies) is buying back its own debt to float us through the elections.

This is exactly the kind of hanky-panky that people expected when Greenspan stopped publishing the M-3 last March keeping the rest of us in the dark about what was really going on with the money supply.

Are we supposed to believe that the skeptical central banks suddenly doubled up on their T-Bills while they’re (publicly) moaning about the dollar’s weakness and threatening to diversify?

That’s a stretch.

According to the Wall Street Journal the Chinese Central-bank governor Zhou Xiaochuan stated unequivocally that “We think we’ve got enough.” The Chinese presently have nearly $1 trillion in USD and US Treasuries.

“Enough”?

The United States runs a $200 billion per year trade deficit with China. If they’ve “got enough” we’re dead-ducks. After all, it doesn’t take a sell-off to kill the dollar, just unwillingness on the part of the main players to stop purchasing at the same rate.


Of course, everyone in Washington already knew that doomsday was approaching. That’s the way the system was designed from the very beginning. It’s all part of the madcap scheme to “starve the beast” and transfer the nation’s wealth to a handful of western plutocrats. That’s explains why the Fed and the White House whirred along like two spokes on the same wheel; every policy calculated to thrust the country headlong toward disaster.

The administration never created a funding mechanism for the $400 million tax cuts or for the 35% expansion of the Federal government. Defense spending increased by leaps and bounds as did the “no-bid” contracts for friends of the Bush clan. At the same time, interest rates were lowered to rock-bottom to put as much money as possible into the hands of people who couldn’t meet the traditional criteria for a mortgage. And, if gluttonous waste, reckless overspending and “Mickey Mouse” loans were not enough; the Fed capped it off by doubling the money supply in 7 years; a surefire prescription for hyper-inflation.

So, which one of these policies was not deliberate?

The financial crisis that we now face was created by design. It is intended to destroy the labor movement, crush the middle class, quash Medicare, Medicaid and Social Security, reduce our foreign debt by 50 or 60%, force a restructuring of America’s debt, privatize all public assets and resources, and create a new regime of austerity measures which will divert more wealth to the banking and corporate establishments.

The avatars of neoliberalism invariably use crooked politicians to spawn enormous “unsustainable” debt so that the nations’ riches can be transferred to ruling elites. It works the same everywhere. It’s a form of corporate colonization, only this time the victim is the good old USA.

“The Phase of Impact”

According to Richard Daughty in his prescient article “The Phase of Impact” the Federal Reserve and the Treasury Dept have already manned the battle-stations. Here’s an excerpt:

“Mr. Paulson, the Secretary of the Treasury, is, by virtue of his ascension to the throne, now the head of the shadowy President’s Working Group of Financial Markets (which was created by Presidential Order 12631) and he is insisting that they meet more often, namely every 6 weeks!

This whole Working Group thing was originally set up as a fallback, ad-hoc, if-then defense to deal with possible economic emergencies, but now they are routinely meeting every 6 weeks. He has even ordered Jim Wilkinson, his chief of staff, to ‘oversee the creation of a Treasury Command Center to track markets world-wide and serve as an operations base in a crisis”! (Wall Street Journal) World-wide!! The American government is moving to take control of the world-wide economy as the result of an anticipated crisis? Yikes!”

Daughty goes on to say: “So a lot of the hubbub is obviously being caused by some approaching upheaval, perhaps reflected in something sent to me by Phil S., which is the Global Europe Anticipation Bulletin No8 which reminded us that last May they predicted that the economy would have a ‘phase of acceleration’ that would begin in June, and it “would be spread out over a period of a maximum of 6 months’, which it subsequently did. They said then, and are saying again now, that a ‘phase of impact will begin in November 2006’, and that this impact phase would be the ‘explosive phase of the crisis’.

This ‘phase of impact’ that is due to begin momentarily is, they explain, ‘a period when a series of brutal crises starts affecting by contamination the total system. This explosive phase of the crisis, which will last 6 months to one year, will affect directly and very strongly financial players and markets, the owners of investment schemes with fixed incomes in dollars, pension funds and the strategic relations between the United States on the one side, and Europe and Asia on the other.” (Richard Daughty; “The Phase of Impact” Kitco.com)

Predictions, of course, are rarely reliable and Daughty’s scenario may be a bit too apocalyptic for many. But if we accept the premise that the tax cuts, the expansion of the federal government, the doubling of the money supply, and the $10 trillion that was sluiced into the housing bubble were not merely “honest mistakes” made by “supply side” enthusiasts; then we must assume that this is all part of a loony plan to demolish the economic foundation-blocks of the current system and remake society from the ground up.

Domestically, that plan appears to involve the activation of the police state.

In the last few weeks the Bush administration has passed the Military Commissions Act of 2006 which allows the president to arrest and torture whomever he chooses without charging him with a crime. Also, unbeknownst to most Americans, Bush signed into law a provision which, according to Senator Patrick Leahy, will allow the president to unilaterally declare martial law. By changing The Insurrection Act, Bush has essentially overturned the Posse Comitatus Act which bars the president from deploying troops with the United States. The John Warner Defense Authorization Act of 2007 (as it is called) also allows Bush to take control of the National Guard which has always been under the purview of the state governors. Bush now has absolute power over all armed troops within the country, a state of affairs which the constitution purposely tried to prevent. The administration’s dream of militarizing the country under the sole authority of the executive has now been achieved although the public still has no idea that a coup that has taken place.

Internationally, the falling dollar means that America’s debt will be reduced proportionate to the percentage-loss of the dollar in relation to other currencies. This is a great deal for the U.S. First the Fed prints fiat money to buy valuable resources and manufactured goods and then it nabs a discount by depreciating its currency. It’s a “win-win” situation for Washington, although it will undoubtedly cheat unwitting foreign-creditors out of their hard-earned profits. It’s doubtful that their interests will weigh very heavily on the money-lenders at the US Treasury or the Federal Reserve.

The dollar faces a second crisis at home which is bound to play out throughout 2007. The $10 trillion dollar housing bubble is quickly losing air causing a precipitous drop in GDP. The housing industry is seeing its steepest decline in 30 years and home equity is beginning to shrivel. Housing has been the one bright spot in an otherwise bleak economic landscape. With the housing market slowing down and prices decreasing, the $600 billion of consumer spending which was extracted in 2005 from home equity will quickly evaporate triggering an overall slowdown in the economy. (Consumer spending is 70% of GDP)

By the Fed’s own calculations; “The total amount of residential housing wealth in the US just about doubled between 1999 and 2006 up from $10.4 trillion to $20.4 trillion. (“Times Online”) If these figures are accurate than we can assume that much of America’s “perceived” growth has been nothing more than the expansion of debt. In fact, that seems to be the case. Wages have been stagnant since the 1970s, 3 million manufacturing jobs have been outsourced, savings have shrunk to below 0%, and personal debt is soaring. We have become an “asset-based” society and when the principle asset begins to loose its value, we are in deep trouble. As housing prices continue to decline through 2007 we can expect a full-blown recession. If energy prices rear their ugly head again, (were they lowered for the elections?) it will just be that much worse.

So, how will recession affect the dollar?

Capital has no loyalties. It follows the markets. When America’s bustling consumer market stalls, we’ll undergo capital flight just like everywhere else. The 3 million lost manufacturing jobs, the 200,000 lost high-paying high-tech jobs, the tax incentives for major corporations doing business outside the country; all signal that corporate America has already loaded the boats and is headed for more promising markets in Asia and Europe. A sluggish consumer market could further weaken the dollar and force Americans to begin saving again but, (and here’s the surprising part) the decision-makers at the Federal Reserve and the Treasury Dept don’t really care if the face-value of the greenback goes down anyway.

What really matters is that the dollar retains its position as the world’s reserve currency. That allows the Federal Reserve to continue to print the money, set the interest rates, and control the global economic system. The dollar presently accounts for 66% of foreign currency reserves in central banks across the globe, an increase of nearly 10% in one decade alone. The dollar has become the international currency, a de-facto monopoly. This is the goal of the globalists and the American ruling elite who dream of one system, the dollar-system; with us running it.

So, how will this cadre of plutocrats coerce the other nations to continue to use the dollar while it plummets from its perch?

Oil.

As long as oil is denominated in dollars, the central banks will be forced to stockpile American scrip regardless of its value. It’s no different than holding a gun to someone’s head. They will use our debt-plagued greenbacks or their cars and trucks will sputter, their tractors and factories will wheeze, and their economies will grind to a halt. It’s just that simple.

America cannot maintain its superpower status unless it continues to control the global economic system. That means the linkage between the dollar and oil must be preserved. The Bush troupe sees this as an existential issue upon which the future of America’s ruling class depends. By 2020, 60% of the world’s oil will come from the Middle East. Bush will do everything in his power to control the resources of the Caspian Basin, thereby expanding US dollar-hegemony and paving the way for a new American century

#91253 von darcon 11.11.06 09:08:54    Beitrag Nr.: 25.281.837
Pläne zu Währungsreserven drücken Dollar China. Spekulationen über Chinas mögliche Verringerung seiner in Dollar angelegten Devisenreserven haben die US-Währung heute belastet. Von den Äußerungen des chinesischen Zentralbankchefs zur geplanten Veränderung des Portfolios profitierten Euro, Yen und Schweizer Franken. Der Euro kostete am Vormittag 1,2881 Dollar nach 1,2826 Dollar am Vorabend in New York. Bis zum Nachmittag gab der Euro auf 1,2866 Dollar nach. Der chinesische Zentralbankchef Zhou Xiaochuan hatte am Donnerstag gesagt, genaue Pläne zur Diversifikation der Devisenreserven des Landes zu haben. Er konkretisierte die Pläne jedoch nicht weiter, was an den Finanzmärkten Spekulationen darüber auslöste, was China verkaufen und dafür kaufen könnte. „Der Markt spekuliert nun darüber, ob China seine Reserven zu Gunsten des Euro oder anderer Währungen und zu Lasten des Dollar diversifiziert“, sagte ein Frankfurter Devisenhändler. „Was Zhou mit diesen Äußerungen bezwecken wollte, ist mir allerdings ein Rätsel. Denn dadurch schwächt er seine eigenen Reserven.“ Börsianer wiesen auch darauf hin, dass sich China in der Vergangenheit bereits ähnlich geäußert hatte. Die chinesischen Fremdwährungsbestände sind mit einer Billion Dollar die weltweit größten. Vermutet wird, dass ein Großteil dieser Reserven in Dollar-Anlagen angelegt ist. Sollte der Euro über die Marke von 1,29 Dollar klettern, könne die Gemeinschaftswährung Kurs auf ihr bisheriges Jahreshoch bei 1,2979 Dollar nehmen, ergänzte der Händler. Investitionen in Rohstoffe Die Spekulationen über eine Umschichtung der chinesischen Devisenreserven haben europäischen Staatsanleihen am Freitag Auftrieb gegeben. Der richtungweisende Bund-Future legte bis zum Mittag 13 Ticks auf 117,95 Punkte zu. „Wir werden sicher eine Diversifikation in europäische Bonds sehen“, sagte Rentenexperte Padhraic Garvey. „Aber sicher nicht in dem großen Umfang, wie viele Leute denken.“ Zwar bemühten sich Zentralbanken weltweit darum, ihre Devisenreserven zu Lasten des Dollar auf eine breitere Basis zu stellen. „Das ist aber eine langfristige, allmähliche Entwicklung“, betonte Garvey. Einige Devisenhändler und Finanzmarktexperten gehen davon aus, dass China bereits damit begonnen hat, in risikoreichere aber renditestärkere Anlagen aus Schwellenländern sowie amerikanische Unternehmensanleihen zu investieren. In der Vergangenheit hatten einzelne chinesiche Politker darüber hinaus angeregt, Teile der Reserven in den Kauf von Hochtechnologie oder Rohstoffen zu investieren. Die chinesische Regierung veröffentlicht so gut wie keine Details zu seinen Devisenreserven. Brad Setser, Ökonom bei Roubini Global Economics in New York, glaubt, etwa 70 Prozent der Reserven seien in US-Dollar angelegt, 20 Prozent in Euro und zehn Prozent in anderen Währungen. [10.11.2006] mka/rtr darcon

Neu 2006-11-11:

Haben die Chinesen genug vom Dollar?

In letzter Zeit sind verschiedene Meldungen aufgetaucht, dass sich die Chinesen von ihren riesigen Dollar-Reserven verabschieden wollen.

Etwa hier: Dollar, gold move on China's diversification talk

Hier eine interessante Story, wie soetwas in China intern kommen könnte: THE CHINA TRIGGER

Irgendwann werden die Chinesen sicher "den Trigger ziehen" = ihre Dollars verkaufen. Denn wer finanziert einen bankrotten Schuldner ewig, besonders wenn dieser wegen interner Schwierigkeiten nicht mehr weiter konsumieren kann. Es ist nur eine Frage der Zeit.

Neu 2006-11-24:

Der US-Dollar fällt rasch.

Der US_Dollar-Index ist schon auf 83.75 gefallen, unterhalb der absoluten Verteidigungslinie von 84 von Jim Sinclair.

Ich hoffe, ich kann Ihnen bald ein Radio-Interview mit einem Wall-Street-Insider hier anbieten, wo dieser berichtet, dass Mitglieder des Plunge Protection Teams inzwischen Insider vor einem "Meltdown" der Märkte warnen. Dazu gehört auch ein schneller Dollar-Verfall von 50%.

Sehen sie auch den Artikel von Bud Conrad: THE LONG VIEW

Darin ist ein Diagramm über die 3 grössten "Investoren" in US-Wertpapieren in den letzten Monaten.
Interessanterweise ist es UK (wird daher Tony Blair noch gebraucht?), die 50% im September 2006 gekauft haben.

Offenbar sind diese Tricks jetzt nicht mehr haltbar.

Death Knell of the US Dollar...

Clive Maund
Nov 27, 2006

The dollar plunged with startling ferocity late last week, driven by heavy selling. This was very bearish action that signals panic, and the probable onset of a severe downtrend. A break below the crucial support at 80 on the dollar index is expected to mark the transition from a clandestine unloading of dollar assets to an all-out stampede to "get what you can for them" before it's too late.

The conditions leading to an inevitable dollar panic sell-off did not come about overnight. They are the result of years of abuse, principally by the Federal Reserve of the US, which has created a veritable blizzard of dollars, and the universal acceptance of this "funny money" has, up until now, allowed the United States to freeload economically on the rest of the world, living way beyond its means. The exponential growth in dollars has been and is created electronically at the touch of a button, so that paying for anything is never a problem, whatever you want you simply print the extra money to pay for. Because foreigners have so far played along with this game, they are now widely, and to some extent understandably, regarded as stupid. However, it is a dangerous mistake to underestimate the mental capacities of other peoples.

The Chinese, in particular, have an ancient and deep culture, and when it comes to strategic considerations, can outthink - and outflank - virtually anyone. So what's going on? - why have they accepted a mountain of paper and IOUs over many years in exchange for real hard work and a vast quantity of real tangible products? The Chinese, and others, have done this to carry them over a bringing period during which they have built up their economies and infrastructure. Their goal - which they are fast moving towards - is to arrive at the point where there is sufficient domestic and regional demand that they no longer need to rely on orders from countries like the United States. At this point - which we may arrive at sooner rather than later - things will become very dangerous for the US dollar, and the situation is actually far worse than many now believe, because the Chinese and others are preparing to WRITE OFF THEIR DOLLAR ASSETS AS A BAD LOSS - they will try to get what they can for them, of course, but otherwise will be ready to fall back on domestic and regional demand and tough it out, thus severing the umbilical with the United States, which will be left stranded, with no takers for its funny money, a gutted manufacturing base, astronomic debts and fiscal chaos, and a huge military it can no longer afford to service.

When the forces of globalization are let loose, as they have been, this is actually a natural and inevitable process, as orders and work simply move to the lowest bidders. Europe and the United States are uncompetitive and will be sidelined by the powerhouse economies of China and South East Asia. The Chinese and other trading partners with the US are already rotating out of dollars and into Dinars, Euros, commodities generally and Precious Metals at an ever increasing pace. As we already know, this has been a primary driver for the commodities boom. The recent attempt by the United States to maintain its dominance by brute force - a big reason why Iraq was invaded was that it was planning to sell its oil in Euros - is right now, quite literally, running into the sand, and it is now only a question of when, not if, the helicopters arrive on the rooftops to evacuate the last of the embattled US service personnel, like in the film "The Killing Fields", although a last wildly dangerous attack on Iran still cannot be ruled out.

Having looked at the fundamentals, let's now see what the charts have to say about the dollar.

On the 1-year chart for the dollar index we can see how the plunge on Thursday broke the dollar down out of a gentle uptrend that had been in force from the May low. It fell steeply again on Friday to arrive in the support zone at the May - June low. This support may provide temporary relief, but the severity of the decline suggests that it won't be long until it resumes, assuming it pauses at all that is, which it may not. Note the bearish alignment of the moving averages, with the 50-day having closed up the gap with the 200-day in recent months, creating the potential for another severe decline.

On the 6-year chart we can see that the dollar had been marking out a potential Head-and-Shoulders bottom pattern since early 2004, but that the action of the past few days signals that the pattern is aborting, and a clear break below the May lows, which we are close to, will project the index down to the crucial long-term support at and approaching 80. What is the origin of this strong long-term support? To see this we will have to look at a chart going back many years.

The chart going back to early 1987 shows the origins of the strong long-term support at and above 80, for on this chart we can see that it has bounced repeatedly from this level. It approached this level way back in 1978 (not shown), and again in late 1990, and it bounced from it in 1992, again in 1995, and in late 2004. Clearly it is unlikely that the dollar will drop to this level and fall straight through it, without first pausing above it for a while or staging a weak rally. That said, however, the fundamental outlook for the dollar is truly awful for reasons made clear above, and so, despite the strength of support at this level, the dollar is not expected to hold above it for very long. Over the past couple of months it has become obvious to all but those who started it that the US has lost the war in Iraq, and can now only engage in a face-saving or damage limitation exercise. This has further damaged US credibility worldwide. The deficits are a running sore that continues to exert a bearish influence, and big dollar asset holders such as the Chinese are scrambling to unwind their dollar positions, in a manner that avoids precipitating a panic, which will be quite a feat if they achieve it.

What will happen to the dollar if it breaks below the immensely important support at 80? The prospect is an all-out panic and a rout, and its anyone's guess where it will finally bottom out.

Many forward thinking and intelligent US readers are already aware of the gravity of the situation, and have been mobilizing themselves to get at least a portion of their assets either out of the country, or at least out of US dollar denominated assets. This is the way to go, and is what has been emphasized repeatedly on the site.

Nov 26, 2006
Clive Maund

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Clive Maund is an English technical analyst, holding a diploma from the Society of Technical Analysts, Cambridge, England. He now lives in Chile.

Will China Lead A Stampede Out Of The US Dollar?

By Gary Dorsch November 29, 2006   www.sirchartsalot.com The $2 trillion per day foreign exchange market never sleeps. Yet for the past six months, the big-3 central banks, the Federal Reserve, the European Central Bank, and the Bank of Japan managed to lull the currency markets into a deep trance. Since last May, the big-3 central banks corralled the US dollar to within a 3% to 5% trading range against the British pound, the Euro and Japanese yen. The big-3 central banks utilized their three major weapons, (1) relentless jawboning, (2) Japanese threats of intervention, and (3) coordinated rate hikes, telegraphed far in advance to avoid any nasty surprises in the markets. But the big-3’s spell-binding magic act began to wind down on November 25th, when Chinese deputy central banker Wu Xialong jolted the foreign currency markets, warning other Asian central bankers of the future risk of a US dollar devaluation. Beijing is having second thoughts about the composition of its $1 trillion portfolio of FX reserves, with 70% held in low yielding US fixed income securities. “Firstly, long-term US interest rates are falling. Secondly, the exchange rate of the US dollar, which is the major reserve currency, is going lower, increasing the depreciation risk for east Asian reserve assets,” Wu said. On October 10th, Fan Gang, another member of People’s Bank of China’s policy committee, made similar comments, “China risks an erosion of its holdings because the US dollar will probably decline.”  On August 29th, Gang wrote, “The US dollar is no longer a stable anchor in the global financial system, nor is it likely to become one, therefore it is time to look for alternatives.”  Central banks are key players in the currency markets, and traders are always on the lookout for signals that the heavy hitters are diversifying their FX reserves away from the world’s reserve currency, the US dollar. Global central bank reserves have more than doubled to $4.9 trillion in just three years, with particular focus on the massive US dollar stockpiles built up by Asian central banks, which could be switched into other currencies such as the Euro, Japanese yen, British pound, or Gold. China’s FX reserves are on track to hit $1.5 trillion in the second quarter of 2008, and might hit $2 trillion by the end of 2010. China’s holdings of US Treasuries have skyrocketed from $59.5 billion to $342 billion since January 2001, and have kept interest rates artificially low in the face of large federal budget deficits. So the slightest hint of a bearish Chinese disposition towards the US dollar instantly sent the Euro spiraling above the psychological $1.30 level last week. US Democrats on the Joint Economic Committee argued on Nov 4th, that “the United States must reduce its heavy dependence on foreign borrowing in order to avoid a run on the dollar and a steep rise in interest rates. Even without a run on the dollar, the need to pay interest of $100 billion or more per year on foreign holdings of Treasury securities will reduce US national income.” “Our reliance on China and other nations to finance our debt is the result of a deliberate policy by the Bush administration, one that reversed course from the Clinton administration, and has favored deficit financing of tax cuts and federal spending over a prudent fiscal policy. It will take years of sound fiscal policy to reduce our reliance on foreign lenders and return the federal debt to a prudent level,” the Congressional Democrats concluded. The Bush administration grants Beijing free and unfettered access to US consumer markets, in return for massive Chinese purchases of US bonds. But since Beijing decoupled the yuan from the rigid peg of 8.27 /US$, the yuan has appreciated by 5.6% to 7.835 per US dollar. That’s translated into a 10% loss for Beijing’s holdings of 10-year US Treasury notes when converted back into Chinese yuan. During the same time, the price of Gold gained 40% against the Chinese yuan. “We have had a very clear diversification plan,” said Chinese central bank chief Zhou Xiaochuan on Nov 9th. “We are considering lots of instruments for diversification, including currencies, investment instruments, and emerging markets.” Asked if diversification included gold, Zhou coyly replied, “That’s a separate thing.” Forward traders in Hong Kong predict the dollar will fall another 4% to 7.53 yuan within the next 12-months. US Treasury chief Henry Paulson and Federal Reserve chief Ben Bernanke will meet with Chinese officials on Dec 14-15th in Beijing. The yuan had its largest monthly gain in September, when Paulson held talks in Beijing with President Hu Jintao and Premier Wen Jiabao. “There has been a fair amount of tension in the economic relationship,'” said Paulson at a business conference in London on Nov 27th. “For this to be successful, issues such as greater currency flexibility must be addressed,” he said. Ahead of the December meeting, traders think Beijing might allow the dollar to fall 0.5% to 7.80 yuan, to equal the Hong Kong dollar’s peg against the US dollar. Korean Experience with US T-Notes Interestingly enough, the December 14th meeting in Beijing would be exactly one year since PBoC chief economist Yu Yongding called for East Asian central banks to come up with a plan to slow the rate of accumulation of US dollars and eventually cut their holdings. “Asian countries don’t need more than $2 trillion of foreign exchange reserves, and dangerously exposed to a decline in the dollar.” Yu said China faced big losses on its reserves if the US dollar does decline by as much as 30 percent. “That is a very big problem and I think the Chinese government should take some action to reduce the growth rate of the accumulation of foreign exchange reserves as we’re still facing the possibility of a big devaluation of the US dollar, so capital loss will be huge,” Yu warned. “China's economy would take a big hit if the US dollar weakened sharply due to such factors as a bursting of the US property bubble. The loss for China’s foreign exchange reserves would be extremely serious. If that happens, it will be a tremendous hit to the Chinese economy,” he said. Yet Chinese leaders were slow to accept Yu’s advice and didn’t see the light until a few weeks ago. China faces a much graver situation than the Bank of Korea, which abandoned its defense of the US dollar at 1140-won two years ago. In Korean won terms, US Treasury 10-year notes have since plunged 22% lower, with the dollar falling to 930-won. Soon after the dollar collapsed from 1140-won towards the psychological 1000-won level in February 2005, the BoK said it would not sell US bonds outright, but instead, would diversify future reserve accumulation into high yielding currencies such as Australian and Canadian dollars, and the British pound. Yet despite the Korean won’s 20% appreciation against the US$ from two years ago, Korean exports hit a record $30 billion in September ’06, or 22% higher than a year earlier. In the first nine months of 2006, Korean exports gained 14.9% year-on-year to US$238.62 billion. Bilateral trade between China and Korea was $61.9 billion last year, up 24% from the previous year, as Seoul started to wean itself off the US market. Needless to say, traders will closely scrutinize the monthly reports on foreign purchases of US Treasury securities, to see if China is shying away from the depreciating US dollar, and instead, following the example of the Bank of Korea. That might account for the urgency of next month’s meeting in Beijing, especially with Democrats preparing a protectionist plan in Congress. Underpinnings of US dollar remain weak After the 3-year bear market for the US Dollar Index, which shaved a third of its value by December 2004, there was cautious optimism among FX traders that the greenback had finally bottomed out. In 2005, the US dollar began a counter-trend rally, recovering a third of its 2002-04 losses, under a wave of slow but steady rate hikes by the Federal Reserve to as high as 5.25 percent. Yet despite the Fed’s best efforts to rescue the dollar, the underpinnings of the US currency stayed weak. Since December 2001, the monthly US trade deficit has increased $37.7 billion, saddling its economy with huge foreign debts and taxing domestic growth. In the third quarter, the trade deficit subtracted 0.6% from GDP growth. American economic output would be 20% greater today, were it not for the trade deficits accumulated over the past twenty years. Despite the sharp devaluation of the US$ Index, the US trade deficit hit a record high of $69 billion in August. Three major segments account for the 90% of the US trade deficit Energy, automobiles, and Chinese and Japanese imports. On Nov 14th, General Motors CEO Rick Wagoner said Detroit automakers share a “strong conviction that the Japanese yen is systematically undervalued, which helps them to maintain significant trade balance surpluses in our industry.” Diplomatic efforts to persuade China to stop manipulating the yuan for the past 5-years were a sham Energy imports have increased $17.1 billion per month since 2001, with the average price of imported oil soaring from $15.46 to $62.52 per barrel, and monthly imports increased 352 to 414 million barrels. Automobiles and parts account for $10.7 billion of the monthly trade deficit. Japanese and Korean manufacturers have snatched market share from GM and Ford by offering more attractive and reliable vehicles. The US trade deficit with China was $23.0 billion in October, and has increased $17.5 billion per month since December 2001. Imports from China increased to a record $27.6 billion in September, but US exports to the Asian nation fell to $4.6 billion. China will soon replace Mexico as America’s second-largest trading partner behind Canada. So far this year, the value of trade between China and the US is $246.7 billion. That compares with $248.3 billion in trade with Mexico.   Fed Rates hikes trumped by Foreign Central Bank sales of US$ Fed rate hikes began to lose their potency to support a US dollar rally after Fed chief Ben Bernanke indicated on March 21st, that he wouldn’t lose any sleep over a weaker dollar. "Although US trade deficits cannot continue to widen forever, these deficits need not engender a precipitous decline in the dollar, nor should such a decline, were it to occur, necessarily disrupt financial markets, production or employment.” While Bernanke’s comments were greasing the skids under the US dollar, it was Russian finance minister Alexel Kudrin, speaking to the annual IMF meeting in Washington on April 20th, dealt the hammer blow to the US$. “Russia cannot consider the US dollar as a reliable reserve currency because of its instability. This currency has devalued by 40% against the Euro in recent years. The international community can hardly be satisfied with this instability,” Kudrin said. Kudrin touched a raw nerve among FX traders, and knocked the US$ Index about 6.6% lower over the next four weeks, until European finance ministers began to voice their displeasure with a Euro above $1.30. Two months later, Russia revealed that it had reduced its US$ exposure by 20% to 50% of its foreign exchange reserve, while boosting the Euro to 40% from 25% earlier. Then on June 8th, the Russian Trading System launched futures contracts in gold and Urals crude oil denominated in Russian rubles instead of US dollars. Record oil prices have boosted Russia’s foreign exchange holdings by 54% to $279.8 billion, so that the Kremlin’s reserves are outstripped only by those of China and Japan. On October 16th, Alexei Ulyukayev, the Russian central bank’s first deputy chairman, said the Japanese yen would be increased as a proportion of the total reserves in 2007, and Russia would build stocks of other currencies, including the Australian and Canadian dollars. Izvestia newspaper reported on Nov 6th that Russia’s central bank bought six tons of gold in October to boost its reserves to 400 tons. Italy’s central bank slashed its US dollar reserves to 63% from 84% in the first half of 2006, while holdings of sterling rose to 25% from zero in 2004. Italy’s official reserves equal 61.2 billion euros ($79 billion). Britain’s Daily Telegraph newspaper said the Bank of Italy was acting in advance of an expected slide in the dollar, once the Federal Reserve ended its two-year credit tightening campaign, leading traders to focus again on the gaping US current account and trade deficit. As recently as November 7th, San Francisco Fed chief Janet Yellen warned, “many Asian and OPEC countries have a global savings glut and are holding US dollars to protect their economy from volatile capital flows such as the Asian currency crisis. There is a mutuality of interest. That doesn’t mean that it won’t change. It could be that countries will decide to channel less of it into dollar assets and that could have some impact at some stage,” she said.   Is the Federal Reserve out of Rate Hike Ammunition? So far this year, the US dollar has shed over 10% of its value against the Euro, 12% against the British pound and 6% versus the Australian dollar. The Euro’s surge above $1.30 on November 24th unfolded 3-½ months after the Federal Reserve signaled a pause in its 2-year rate hike campaign at 5.25%. If the ECB decides to extend its tightening campaign beyond the widely telegraphed rate hike to 3.50% on December 7th, does the Federal Reserve have enough elbow room to match the ECB with a surprise quarter-point hike in the fed funds rate to 5.50% next year “Taking all of the factors on growth and inflation into account, my current assessment is that the risk of inflation remaining too high is greater than the risk of growth being too low,” said Chicago Fed chief Michael Moskow on Nov 7th. “Thus, some additional firming of policy may yet be necessary to bring inflation back to a range consistent with price stability in a reasonable period of time,” Moskow warned. The Chicago Fed chief added that “although crude oil prices have fallen, the potential for another price shock remains a risk to the US economy,” he said. Moskow will join the Fed’s other leading hawk, Jeffrey Lacker, on the Fed’s voting committee in January, in supporting a tougher Fed policy. Also, recognizing the risk of higher inflation from a weaker US dollar, Philly Fed chief Charles Plosser called for higher rates on Nov 27th. “There remains some risk that policy is not yet firm enough to ensure a return to price stability over a reasonable time horizon.” “We need to remain vigilant and recognize that maintaining the current stance of policy, or even firming further, may be in the best interests of the economy's long-run performance,” Plosser argued. Still, the consensus of opinion in the US Treasury bond markets and among foreign currency traders is that the Fed’s next move on interest rates is towards an easing of policy in 2007. Since the Fed’s last rate hike to 5.25% on June 29th, the yield on the 10-year T-note has declined by nearly 70 basis points, producing a deeply inverted yield curve. At last reading, the yield on the 10-year note is roughly 78 basis points below the US$ six-month Libor rate, it’s deepest inversion since 2000, when bond traders correctly forecasted a US economic recession that materialized in 2002.   US home prices were 3.5% weaker in November than a year earlier, which is expected to persuade the majority of the Fed’s interest rate setting committee to hold rates steady at 5.25% thru January. The Mortgage Bankers Association’s Index for US home purchases, a real time indicator for the state of the US housing sector, fell to 401.4 last week, roughly 24% below its all-time high in Q’2 of 2005. The pace of US home construction sank 14.6% in October, as a glut of unsold homes kept builders at bay, hinting economic growth will remain tepid and keeping hopes alive for interest-rate cuts. The annual pace of US housing starts was 1.486 million, the lowest level in more than 6-years, and 27.4% lower from October of last year. The Fed is counting on a limited economic slowdown to help keep inflation in check, but is keeping a careful eye on home prices. Interest rate differentials undermining US dollar Making matters worse for the US dollar is a sharp drop in interest rate differentials with Euro yields, one of the key factors propping up the dollar for the past two years. The gap between US Treasury’s 2-year Note and the German 2-year note is near an 18 month low, hovering at 108 basis points this week, and down from  180 basis points in mid June, just before the Fed’s last rate hike to 5.25%.  While the US Treasury bond market is pricing in a Fed rate cut, the benchmark German bund market is pricing in future ECB rate hikes. Yet it is interesting to note, the US dollar’s interest rare advantage was shrinking from a high of 180 bp in mid-June to as low as 102 bp on October 4th, but the Euro was pinned near $1.25 in mid-October, acting oblivious to the big shift in interest rate differentials. Ironically, the Euro bottomed at $1.25 on October 17th, when the US Treasury reported that the foreign demand for US bonds and stocks soared to a record $116 billion in August, compared to only $32.9 billion in July. Thus, the US dollar topped out a very bullish news, then headed south over the next five weeks, as the arcane foreign exchange market decided to look at shrinking interest rate differentials. Arab Oil kingdoms suffer FX losses on US$ Bonds The foreign exchange market was also guided by statements from former Fed chief “Easy” Al Greenspan, who indicated on October 26th, “We’re beginning to see some move from the dollar to the Euro, both from the private sector and from monetary authorities and central banks. We’ll get to the point at some point that willingness to finance the current account deficit will slow,” Greenspan warned. Greenspan was proven correct on Nov 16th, when the US Treasury said foreigners had scaled down their purchases of US bonds and stocks by 45% in September to $53.7 billion, falling short of the $64.4 billion US trade deficit for that month. Japanese bond traders were net sellers of $5.1 billion of US Treasuries, but Beijing was a net buyer of $3 billion and allowed the dollar to fall 1.5% to 7.84 yuan.    Arab oil kingdoms were net buyers of as much as $6.9 billion thru their brokers in London in September, after adding $11.1 billion to their portfolios in August. Arab oil kingdoms are recycling part of their petrodollar surplus into US Treasury bonds, to help finance the American war effort in Iraq, which costs about $2 billion per week. But the British pound has been a stronger currency than the Euro against the US dollar recently, dealing a bigger blow to Arab holdings of US bonds. But United Arab Emirates central bank chief Sultan Nasser al-Suweidi is avoiding the US Treasury market, “I expect the Euro to become the currency of international trade and investment in 10 years. If we add tourism, the Euro will surpass the dollar as the first currency in the world by 2015.” The UAE central bank is shifting 10% of its $25 billion reserves out of the dollar and largely into British pounds and Euros. European Central Bank Signals higher rates ahead The ECB had already raised its key repo lending rate by 125 basis points since last December and has telegraphed a further 25 bps increase to 3.5% for December 7th. When asked asked about the rate outlook beyond that, Greek central banker Nicholas Garganas said on Nov 7th, “No matter what criteria one uses to characterize monetary conditions, the conclusion is inescapable that there is more than ample liquidity. Despite the interest rate increases to date, real rates remain through the whole maturity spectrum near historically low levels,” he said. “There is little doubt to have further withdrawal of monetary accommodation. Moreover inflationary risks remain on the upside. If one looks at what is happening to producer prices, and non-energy related prices, the picture is one of elevated prices for goods. I think this is a clear indication of significant inflationary pressures remaining in the system,” Garangas said. The Euro zone’s M3 money supply expanded at an annualized rate of 8.5% in October for the second month in a row, far above the ECB’s original 4.5% target. While total Euro zone bank lending growth eased 0.2% to 11.2% in October, loans to the corporate sector hit 12.9% annual growth rate in October, the highest since records began in 1998. Loans have increased in size, largely due to massive borrowing to finance $1.3 trillion of European mergers and acquisitions this year. Futures traders in Frankfurt predict the ECB is on course to raise its repo rate by a quarter-point in the first quarter of 2007 to 3.75%. Meanwhile, traders in Chicago are betting on a 50% chance of a quarter-point Federal Reserve rate cut to 5.00 percent. That would narrow the US$’s rate advantage by 50 basis points and buoy the Euro above $1.300. However, due to the dollar’s structural weakness, any round of Fed rate cuts would be limited, so as to avoid a dollar free-fall into the abyss. Bank of Japan battles Tokyo warlords over Interest rates G-10 central bankers are calling on the Bank of Japan (BoJ) to tighten its monetary policy further, to discourage carry traders from borrowing yen, and reinvesting the funds in inflation assets around the world. European bankers object to unilateral ECB rate hikes without similar moves by the BoJ, which could exert further upward pressure on the Euro beyond 150-yen, already at 8-year highs. The BOJ has left monetary policy unchanged after hiking its key overnight call rate target to 0.25% in July, the first rate hike in six years. Japan's economy grew an annualized 2.0% in the July-September quarter, double the pace the market was expecting and higher than the 1.6% growth in the United States in the same quarter. “I told the G-20 that the Japanese economy continues to expand steadily, amid stable prices. If this trend continues, we will adjust monetary policy gradually, looking at various risk factors ahead,” said BoJ chief Fukui. Japan’s monetary base in October was down 21.3% from a year earlier, marking the eighth consecutive month of decline. The monetary base has been falling on a year-on-year basis since March after the BOJ announced the end of its policy of flooding the banking system an excess of 26-trillion yen on March 9th. But despite the BoJ’s historic draining operation, the Japanese overnight loan rate remains at a paltry 0.25%, hardly reflective of the size of the world’s second largest economy. Still, a top Japanese ruling party politician on Nov 7th, opposed a credit tightening by the BoJ, saying the economy had not yet emerged from deflation. “I believe Japan has yet to come out of deflation,” said Shoichi Nakagawa, the ruling Liberal Democratic Party policy chief. “I’m against the BOJ raising rates. Given the state of the Japanese economy, talking of a rate hike is absurd,” he said. Tokyo financial warlords are closely watching the Bank of Japan, because a tighter monetary policy might cause, “Increases in long-term rates, which would have a big effect on the country's fiscal situation through the government’s debt interest payments,” said Japanese PM Shinzo Abe on October 4th. “We have to keep a close watch on their moves.” A 1% increase in 10-year bond yields would push up the debt-servicing costs by 1.6 trillion yen ($13.6 billion). Debt-servicing costs already account for a quarter of spending in the annual budget. Japan had 765 trillion yen in sovereign marketable securities, or $6.5 trillion, outstanding at the end of June 2006, compared with $4.3 trillion in the US Treasury market. Since then, the spread between the US 10-year yield and the Japanese 10-year yield has narrowed 54 basis points to 2.82%, making US bonds less attractive to Japanese investors, and weighing on the dollar /yen. Is “Stagflation” on the horizon for US Economy? In the months ahead, the Federal Reserve could face the dreaded nightmare of “Stagflation.” Weaker home prices and a sinking US dollar on one hand, and rising gold prices on the other hand. Fed chief Bernanke observed on Nov 27th, “In the case of inflation, the risks to the forecast seem primarily to the upside. A failure of inflation to moderate as expected would be especially troublesome.”

Neu 2006-12-02:

Die Wirtschaftskrise erreicht die deutsche Mainstream-Presse:

Berliner Umschau: Dramatischer Dollar-Verfall bedroht deutschen Export

Die Wirtschaftskrise in Deutschland wird fürchterlich

Der Verfall sei nicht aufzuhalten, ein Euro von $ 1,50 – 1,60 sei denkbar. Der deutsche Export werde zusammenklappen wie ein Kartenhaus und zusammen mit dem Ausbruch der Weltwirtschaftskrise und dem Abschöpfen von Kaufkraft durch die Mehrwertsteuererhöhung werde Deutschland in das tiefste Wirtschaftsloch der Geschichte der Bundesrepublik fallen.

Hier noch ein Artikel aus dem Manager-Magazin: Weltwährung auf Abruf

So, jetzt kommt die Abrechnung für die jahrelange Dollar-Stützung durch die Europäer und Asiaten. Die notwendige Korrektur wird jetzt viel grösser sein, als sie 2002 hätte sein müssen. Das ganze Geld, das in die USA, Spanien oder sonstwo gegangen ist, werden wir nicht wiedersehen.

Führen die Franzosen Euro-Devisenkontrollen ein?

Telegraph: Airbus could trigger 'nuclear option' of currency controls

Um ihr Lieblingskind Airbus zu schützen?

"Should extremely disturbing capital movements endanger the operation of economic and monetary union, Article 59 EC provides for the possibility to adopt restrictive measures for a period not exceeding six months." The freeze could be extended for another six months with a fresh vote, and so on............

was told by an Airbus official last year that if the euro exchange rate went above $1.30 for long, the company was "cooked". He said the chances of this happening were almost nil.

Diese Devisenkontrollen würden den Zufluss von Kapital begrenzen und könnten vorerst für 6 Monate verhängt werden.
Offenbar geht Airbus unter, wenn der Euro längere Zeit über $1.30 ist. Das will man offenbar nicht zulassen.

Hier sieht den französischen Dirigismus am Werk. Wie solche Kontrollen funktionieren sollen, wird natürlich nicht erklärt. Schon 1982 hat Frankreich Devisenkontrollen (gegen Kapital-Abfluss) verhängt, und musste sie bald wieder aufheben.

Hier sieht man deutlich, dass man dem Euro nicht trauen kann, daher bleibt auch für uns Gold/Silber die einzige reale Alternative.

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Monday view: Airbus could trigger 'nuclear option' of currency controls By Ambrose Evans- Pritchard Last Updated: 1:59am GMT 27/11/2006 If you have funds across the Channel, or a ferme in Acquitaine, be vigilant. Keep a close eye on Europe's press, because you might one day find your money is nailed more immovably to its Continental home than you had thought. Four years ago, a small "cellule" inside the European Commission was ordered to draft a report, instigated by Paris, examining the legal basis under EU treaty law for 1970s-style exchange controls. It concluded that Brussels may lawfully freeze capital flows in and out of the EU, and within it, and that this could be done by a "qualified majority" of EU finance ministers, leaving Britain with no veto. One of its authors told me this was not an abstract exercise. It was to enable Europe to stem the rise of the euro if the dollar goes into free fall, the underlying argument being that Washington should not be allowed export the consequences of its own reckless spending policies through a "beggar-thy-neighbour" devaluation. The idea was to stop money coming in, though it could equally be used to stop money leaving. I thought of this study when French premier Dominique de Villepin lashed out this month at the over-mighty euro. "We can't let the European Central Bank act alone on the exchange rate," he said. Ségolène Royal, the new Socialist leader, upped the ante a week later, accusing the ECB of "shattering growth". Then on Friday the euro smashed through $1.30 to the dollar, crossing the line drawn in the sand by Paris and Berlin. This entails a near equal rise against China's yuan. Against Japan's yen, the euro has risen nearly 70pc in six years to an all-time high of Y151. Hence the move by PSA Peugeot-Citroen to build its 4x4 sportif models in Japan. EU finance ministers have other means short of exchange controls to bring the ECB to heel and cap the euro. Article 111-2 of the Maastricht Treaty gives them powers to shape exchange rate policy, a detail missed by the markets. If, for example, the Europols strike a deal with Japan to "manage" the euro-yen rate, the ECB has to adjust monetary policy to meet that objective. This is where it gets ugly. The ECB's Bundesbank bloc would almost certainly resist such a death blow to the bank's independence, which is why the threat of currency controls may ultimately be part of the mix. There is little Frankfurt can do to stop that. To quote precisely, the report reads: "Should extremely disturbing capital movements endanger the operation of economic and monetary union, Article 59 EC provides for the possibility to adopt restrictive measures for a period not exceeding six months." The freeze could be extended for another six months with a fresh vote, and so on. After combing through court judgments, these experts concluded that free movement of capital in the EU is not an "absolute freedom" and could be limited in an emergency. Heavens know where this "nuclear option" would leave the City of London, dependent for its life blood on unhindered dollar flows. Obviously, it would precipitate a membership crisis. In fairness, I am not suggesting that the free-market Barroso commission would hatch such a Delors-era plot. But the decision is now out of their hands. What matters is whether France could ever muster a majority of EU finance ministers behind such a scheme. The answer is yes, perhaps, in a slump. For now, the document sits, waiting to be dusted off when capital flows can be said to "endanger" EMU. That moment has not arrived. Europe's housing boomlet is not quite exhausted. Yet monetary union is subtly unravelling. French growth fell to zero in the third quarter on sliding exports. Italy is trapped in a downward spiral, doomed by a 20pc currency over-valuation. Fitch and S&P have downgraded its debt to Botswana levels. Last week, EU monetary commissioner Joaquin Almunia warned of Italy's "dramatic slowdown", and of a widening gap in growth rates between eurozone states that could threaten the viability of EMU if it continues. "The adjustment in the euro area has been slower than we would like and we cannot ignore this fact," he said. My hunch is that Airbus will bring matters to a head. I was told by an Airbus official last year that if the euro exchange rate went above $1.30 for long, the company was "cooked". He said the chances of this happening were almost nil. Well, "nil" may be here. While Airbus has an order backlog of 2,177 aircraft worth $220.3bn, these delivery contracts are in dollars while costs are in euros. "This is the nub of the problem," said Louis Gallois, the Airbus chief. In 2004, the group was shielded by currency hedges at an average rate of $0.98. This year the rate is $1.12, and the hedges are expiring fast. Soon Airbus will face the full violence of the spot market. The aerospace champion is so deeply tied up with Europe's sense of industrial self-worth that it will not be sacrificed lightly on the altar of free currency flows. When the French premier vowed to do whatever it takes to save Airbus, I believed him. For the full text of the report click here and go to pages 320-339.

FTD: Dramatischer Dollar-Verfall bedroht deutschen Export

Die Wirtschaftskrise in Deutschland wird fürchterlich

Von Karl Weiss

Ein Leitartikel der „Financial Times Deutschland“ malt ein Horrorszenario über die Wirtschaftsentwicklung in Deutschland anhand des Verfalls des Dollars. Der Verfall sei nicht aufzuhalten, ein Euro von $ 1,50 – 1,60 sei denkbar. Der deutsche Export werde zusammenklappen wie ein Kartenhaus und zusammen mit dem Ausbruch der Weltwirtschaftskrise und dem Abschöpfen von Kaufkraft durch die Mehrwertsteuererhöhung werde Deutschland in das tiefste Wirtschaftsloch der Geschichte der Bundesrepublik fallen.

Unter der Überschrift: „Amerika, ein Gruselmärchen“ bringt die „Financial Times Deutschland“ in ihrem Leitartikel vom 28.11.2006 ein Gruselstück, nur ist es leider kein Märchen, sondern verspricht Realität zu werden. Jetzt demnächst.

Die Analyse ist:
Der Zusammenbruch der Immobilienblase in den USA, der immer noch in freiem Fall abläuft, hat eine Abschwächung der US-Konjunktur ausgelöst, die nun folgerichtig trotz mannigfacher Stützungsmaßnahmen in eine Abschwächung des Dollars umgeschlagen ist. Nur ist diese Abschwächung durch grundlegende Daten bestimmt (also vor allem durch die hohe Auslandsverschuldung der USA – weltweit die höchste, durch das hohe Budget-Defizit der USA – weltweit das höchste und durch das hohe Außenhandelsdefizit der USA – weltweit das höchste), nicht durch den konkreten Anlass. Deshalb ist es auch nicht möglich, dieses Abrutschen des Dollars durch Notenbankinterventionen aufzuhalten. Zwar werden solche Interventionen zeitweise die Geschwindigkeit reduzieren können, aber eben weder die Tendenz aufhalten noch das am Ende zu erreichende Niveau, das von dem Wirtschafts-Journalisten auf etwa $1,50 bis 1,60 pro Euro geschätzt wird.

Abgesehen davon, dass der Dollareinbruch in den USA eine Krise verursachen wird, weil die Importe verteuert werden und dadurch Kaufkraft abgeschöpft wird, wird genau diese US-Krise so oder so eine Weltwirtschaftskrise auslösen, weil die Dominanz der US-Wirtschaft so riesig ist, dass sich keine einzige nationale Wirtschaft dem Abwärtstrudel wird entziehen können.

Die US-Fed wird auch nicht durch Maßnahmen wie drastische Zinssenkungen dagegen angehen können, denn das geht nur mit einem starken Dollar. Ein schwacher Dollar trägt Inflation ins Land. Um die nicht überhand nehmen zu lassen, muss die Fed mit lediglich kleinen Abwärtsschritten bei den Zinsen reagieren, was die Krise nicht wird verhindern können.

Speziell für Deutschland allerdings wird das Ganze zum Desaster werden. Das Wachstum ist sowieso schon spärlich, unter 2%, das wird von einem Dollar, der 1,40 Euro erreicht, bereits auf Null gesetzt, denn dieser Dollarkurs beeinträchtigt die deutschen Exporte. Deutschland konkurriert auf vielen Märkten der Welt mit US-Exportprodukten oder anderen aus dem Dollarraum. Wo jene deutlich billiger werden, muß der deutsche Export klein beigeben.

Doch damit nicht genug: Der deutsche Binnenmarkt gibt überhaupt nichts her. Kein Wunder, es hat in der deutschen inflationsbereinigten Lohnsumme seit 1991 nur negative Zahlen gegeben, also ständige reale Kaufkraftverluste. Die Renten, das Arbeitslosengeld, alles wurde zusammengestrichen. Die Massen haben kein Geld, zu kaufen und damit die Krise zu verringern.

Aber auch das ist noch nicht alles: In ihrer unendlichen Weisheit hat die Bundesregierung genau für den Moment, in dem sich dies zuspitzt, zum 1. Januar 2007, die Mehrwertsteuererhöhung von drei Prozentpunkten beschlossen. Das ist die größte Steuererhöhung der Geschichte der Bundesrepublik mit fast

20 % Erhöhung. Dies wird nach Experteneinschätzungen etwa zwischen 1 und 3% bezogen auf die ganze Wirtschaft ausmachen, sagen wir 2%. Damit sind wir für nächstes Jahr nicht mehr bei +/- 0, sondern bei –2%.

Nun kommt aber die Wirkung der Krise als solche dazu: Massenentlassungen, Anstieg der Zahl der Arbeitslosen (der wirklichen, die veröffentlichten Zahlen mag man manipulieren können), Kurzarbeit, Werksschließungen, Lohnkürzungen, Arbeitszeitverlängerungen usw. Das wird die Massenkaufkraft zusätzlich schwächen und weitere Prozente ausmachen, schätzen wir konservativ ebenfalls 2%. Damit sind wir bei –4%

Nun aber: Der Dollar wird nicht etwa bei 1,40 im Vergleich zum Euro stehen bleiben. Er wird bis zu 1,50 gehen. Damit bricht der deutsche Export, die einzige Hoffnung in Deutschland, weiter ein: Weitere 2%, damit kommen wir auf –6%. Das würde bereits die bei weitem tiefste Wirtschaftskrise der Geschichte der Bundesrepublik ausmachen.

Der Rückschlag der Wirtschaftskrise aus anderen Ländern käme noch dazu: Die können nicht mehr soviel deutsche Produkte kaufen, da sie selbst in der Krise stecken. Sind glatt noch einmal 2%, da sind wir auf –8%.

Gar nicht daran zu denken, was passiert, wenn der Dollar tatsächlich die 1,60 im Vergleich zum Euro erreichen würde. Oder der weitere Rückschlag auf Deutschland mit weiteren Pleiten, Entlassungen und Arbeitslosenzahlen, die das Szenario von 2006 als Paradies erscheinen lassen werden. Nicht einmal eine zweistellige Rückgang der wirtschaftlichen Tätigkeit in Deutschland ist völlig auszuschließen für einzelne Quartale im Jahresvergleich. Das kann in seinen desaströsen Auswirkungen bestenfalls noch mit der massiven Weltwirtschaftskrise verglichen werden, die 1929 begann und bis tief in die Dreißiger Jahre hinein ging – und selbst die könnte noch übertroffen werden.

Der Kommentator der Financial Times nennt es eine tektonische Umschichtung, was uns für die nächsten Jahre bevorsteht.

Es ist nicht unbedingt garantiert, daß die momentane Dollarabschwächung bereits direkt in diese Entwicklung übergeht. Es kann auch noch ein wenig dauern. Soeben – nach Erscheinen des Leitartikels in der FTD – wurde die erste Schätzung des Wachstums des GNP der USA im dritten Quartal 2006 von 1,6% auf 2,2% korrigiert. Die Steilheit des Absturzes (im ersten Quartal waren es noch über 6%!) hat sich etwas abgemildert. Ob das aber ausreichen wird, den Ausbruch der Krise wesentlich hinauszuschieben, bleibt abzuwarten. Letztendlich ist der Unterschied von 1,6 zu 2,2 nicht so tiefgreifend.

Am gleichen Tag dieser Meldung (29.11.06) kam aber auch eine andere: Wal-Mart, die bei weitem größte Supermarkt-Kette in den USA, hat zum ersten Mal seit über 10 Jahren eine Verminderung des Umsatzes im Vormonatsvergleich gemeldet. Das könnte auf spezielle Wal-Mart-Probleme zurückzuführen sein, aber eher wahrscheinlich ist, es handelt sich bereits um die Auswirkungen der massiven Kaufkraftabschöpfung durch die Zins- und Immobilienmarktprobleme in den USA.

Der entscheidende Moment wird nach Einschätzung des Berichterstatters sowieso der 1.Januar 2007 sein. An diesem Tag nämlich werden Millionen von US-Bürgern die Rechnung vorfinden, wie viel sie monatlich für ihr Haus abzahlen müssen. Das hängt damit zusammen, daß es in den USA üblich ist, im Jahr des Kaufs bzw. des Bezugs eines Hauses noch keine Zinsen und Tilgung zu verlangen, sondern erst ab dem darauffolgenden Jahr.

Da 2006 sehr viele US-Bürger ein Haus gekauft bzw. gebaut haben, wird die Zahl der Menschen in die Millionen gehen, die nun plötzlich eine unerwartet hohe Rechnung vorfinden werden. Aber auch viele andere, die noch am Haus abzahlen, werde deutliche höhere Monatsraten blechen müssen. Es gibt in den USA keine auf 5 oder 10 Jahre konstanten Zinsen, wie in Deutschland üblich, die monatlichen Raten und Zinsen werden vielmehr jährlich der Zinsentwicklung angepasst – und die Zinsen wurden deutlich gesteigert. Das bedeutet: Ab 1.Januar wird ein deutlicher zusätzlicher Einbruch in der Gesamt-Kaufkraft des US-Konsumenten eintreten. Die Experten streiten darüber, wie viel dies wirklich ausmachen wird, aber niemand meint, es werde wenig sein.

Natürlich hätte die Bundesregierung Mittel in der Hand, diese Krise in ihren Auswirkungen auf Deutschland abzuschwächen (verhindern oder hinauszögern kann sie wohl jetzt sowieso niemand mehr). Man könnte die Mehrwertsteuererhöhung aussetzen, stattdessen Maßnahmen der Förderung der Massenkaufkraft beschließen, z.B. eine massive Steuersenkung für die Masse der niedrigen Einkommen, eine Grundversorgung für alle Bürger, die Verdreifachung des Kindergelds und so vieles mehr. All das könnte einfach finanziert werden, wenn man alle Steuererleichterungen für die Konzerne der rot-grünen Koalition rückgängig machte und wieder auf den Stand der Unternehmenssteuern am Ende der Ära Kohl ginge, sowie die sofortige Einstellung der EG-Beihilfen an Großagrarier und Konzerne und der großzügigen Finanzierung der Kirchen ebenso wie ein Ende aller militärischen Abenteuer im Ausland beschlösse.

Nun, daß dies so getan wird, ist ungefähr so wahrscheinlich wie das Stürzen des Mondes auf die Erde noch in diesem Jahr. Die Bundesregierung ist sogar dabei, ihre letzte größere Waffe in diesem Sinn zu verschenken: Die erhöhten Steuereinnahmen durch die Mehrwertsteuererhöhung werden nicht für ein Konjunkturprogramm verwendet, sondern als Geschenk an Großkonzerne und -banken in Form von weiteren Erniedrigungen ihrer Steuern verschleudert.

Aber so wie alles seine zwei Seiten hat, wird auch dies seine gute Seite zeigen.

Weit mehr Bundesbürger werden nun endgültig sehen: Der Kapitalismus hat keine Zukunft für sie und ihre Kinder. Ein System, das nur unermeßlichen Reichtum für eine winzige Minderheit und Arbeitslosigkeit, Krisen, Hunger, Not, Elend, Kriminalität, Krieg und Gewalt produzieren kann, muß weg! Es wird notwendig sein, den Menschen die konkreten Wege des Kampfes um ihre grundlegenden Interessen aufzuzeigen. Die Zeiten, als kaum einer den Kampf für nötig hielt, werden bald

Veröffentlicht: 1. Dezember 2006

01.12.2006

DOLLAR
 

Weltwährung auf Abruf

Von Gabor Steingart

Der Dollar gilt als Reservewährung der Welt, doch sein Sturz lässt sich nur noch verzögern, nicht verhindern. Die Folge könnte eine globale Wirtschaftskrise sein. manager-magazin.de präsentiert Auszüge aus dem Buch "Weltkrieg um Wohlstand" des SPIEGEL-Journalisten Gabor Steingart.

Zwei Dinge sind es vor allem, die sich jeder Geldanleger wünscht: hohe Rendite und hohe Sicherheit. Weil beides zusammen niemals zu haben ist, sind die Investoren von Haus aus Zeitgenossen mit schwankendem Gemütszustand. Angst und Gier wechseln einander ab, wobei die großen Geldanleger, zum Beispiel Konzerne und Staaten, die Sicherheit eindeutig bevorzugen.

Ihre Angst ist größer als ihre Gier. Sie verzichten freiwillig auf den ganz großen Profit, wenn nur die Haltbarkeit ihrer Milliarden gesichert ist. Sie fürchten politische Unruhen, sie hassen allzu heftige Währungsschwankungen und schon der Gedanke an eine schleichende Geldentwertung kann sie in Panikstimmung versetzen.

Es gibt nur wenige Länder, die angesichts dieser Gefahren eine größtmögliche relative Sicherheit bieten: die USA und die Schweiz. Deshalb ist der Dollar nicht nur Handels- und Anlagewährung, er ist vor allem auch die Reservewährung der Welt. Fast alle Staaten misstrauen ihrer eigenen Währung und legen das Geld aus dem Tresorraum ihrer nationalen Notenbank lieber in den Vereinigten Staaten an, in Schuldverschreibungen, Aktien oder Staatsanleihen.

Politische Unruhen sind dort so gut wie ausgeschlossen. Die Inflation wird von der Notenbank bekämpft. Die Spekulanten können angesichts der Größe des Währungsgebiets und der Menge an weltweit zirkulierenden Dollars keine Purzelbäume schlagen.

Also kaufen die weltweiten Geldbesitzer die US-Währung in rauen Mengen. Die USA besitzen nahezu ein Monopol auf die Ware Sicherheit. Der Erwerb einer US-Staatsanleihe ist für viele Investoren nichts anderes als der Kauf eines Konservierungsmittels. Weltweit wurden 2005 nur 20 Prozent aller Devisenreserven in Euro, aber über 60 Prozent in Dollar gehalten.

Die Euro-Einführung war ein beachtlicher Erfolg, der hier nicht geschmälert werden soll. Aber der Dollar ist die Ankerwährung der Welt geblieben. Liegt dieser Anker auf Grund, bedeutet das große Stabilität für die angeschlossenen Volkswirtschaften. Reißt er sich los und beginnt im Meer der Weltfinanzen zu treiben, gerät mehr in Unordnung als nur das Austauschverhältnis von Währungen.

Aber warum sind dieselben Kaufleute, die früher Waren gekauft haben, nun derart närrisch auf Dollarscheine? Wieso vertrauen sie auf die Ware Sicherheit, die nicht beliebig vermehrbar ist? Jeder Student der Volkswirtschaft lernt doch, dass die Währung eines Landes nur so stabil und damit so wertvoll ist wie das, was die Volkswirtschaft dieses Landes zu bieten hat und produziert. Sieht und fühlt denn keiner, dass sich da eine Spannung aufbaut zwischen dem Traum und der Realität, die sich eines Tages zum Schaden von Millionen Menschen entladen wird?

Und ob das gesehen wird! Die Investoren sehen es, sie staunen, sie schütteln den Kopf, es fröstelt sie sogar, aber: Sie kaufen weiter Dollar. Wie die Besessenen tun sie es. Je größer der Zweifel, desto gieriger ordern sie nach. Denn das Verrückte an diesen Investoren und ihrem Geschäftsgebaren ist eben das: Der Käufer ist nicht nur Käufer. Indem er das Produkt Sicherheit kauft, erzeugt er es. Hört er morgen mit dem Kaufen auf, schmilzt das Vertrauen und die Unsicherheit wächst. Der Traum wäre ausgeträumt, der Dollar geriete ins Trudeln und alle bisherigen Dollarreichtümer würden an Wert verlieren, was der Investor natürlich nicht will.

01.12.2006

DOLLAR
 

Weltwährung auf Abruf (2)

Von Gabor Steingart

Das neue, brandgefährliche Spiel

Das einzige Mittel gegen eine Dollarschwäche ist daher seine Stärkung. Es spielt für viele bereits keine Rolle mehr, ob die amerikanische Währung das Vertrauen noch rechtfertigt oder nicht. Das neue, für alle brandgefährliche Spiel funktioniert genau anders herum: Der Dollar verdient das Vertrauen, weil er es sonst verliert. Man kauft ihn, um ihn nicht verkaufen zu müssen. Der Dollar ist stark, weil nur das gegen seine Schwäche hilft. Es wird mit großer Beharrlichkeit gegen die Realität angeträumt und angekauft, weil das tatsächlich den Traum für einige Zeit zur Realität werden lässt. Oder noch deutlicher gesagt: Jeder verhält sich dadurch rational, indem er sich irrational verhält.

Natürlich wissen die Teilnehmer des Spiels, dass Währungen auf Dauer nicht stärker sein können als die ihnen zugrunde liegenden Volkswirtschaften. Konsum ohne Produktion, Import ohne Export, Wachstum auf Kredit, das alles kann es dauerhaft nur im Jenseits geben, im hiesigen Leben wird es keinen Bestand haben. Es war der ehemalige IMF-Chefökonom Ken Rogoff, ein Mann mit klarem Kopf und losem Mundwerk, der die US-Politik kürzlich lobte, um sie in Wahrheit zu kritisieren: Der Aufschwung in den USA sei "der beste Aufschwung, den man für Geld kaufen kann".

Aber wenn die Dinge derart offensichtlich sind, warum zucken die Investoren dann nicht zurück? Warum lassen sich Ausländer und US-Präsidenten verschiedenster Couleur, ja selbst die für ihre Seriosität bekannten Notenbankgoverneure auf ein so riskantes Spiel ein, das am Ende alles verbrennen kann? Wieso greifen nicht jene Mechanismen der Marktkontrolle, die doch gerade die kapitalistischen Systeme gegenüber den Plansystemen auszeichnen sollten?

Die Antwort ist erschreckend einfach: Alle wissen um die Gefährlichkeit des Spiels, aber es scheint ihnen weniger gefährlich es das Weiterzuspielen, als auszusteigen. Denn was haben sie von einer allzu hektischen Reaktion zu erwarten? Die Investoren sind vor Jahren schon in die Dollarfalle getappt, aus der es kein einfaches Entrinnen gibt. Beginnen sie selbst damit, ihre Banknoten und Staatsanleihen auf den Markt zu werfen, verlieren sie ihr Geld, tröpfchenweise oder in einem Rutsch.

Beides würden sie gern vermeiden, und sei es nur für eine Weile. Der Präsident, der die Situation auch nur als Thema anerkennt, verliert womöglich sein Amt, weil der Unmut der Regierten sich ein Ventil suchen wird. Die Notenbankgouverneure, obwohl noch am ehesten der Wahrheit verpflichtet, haben den Zeitpunkt zur Intervention verpasst.

Der legendäre Notenbankpräsident Alan Greenspan tat vieles, die Dollarillusion zu nähren. Wann immer die Zweifel sich verstärkten, erhöhte er den Zins, der immer auch eine Risikoprämie für die Anleger ist. Wurden Zweifel an der Nachhaltigkeit des Wirtschaftswachstums laut, steuerte der große Nuschler, der die Finanzwelt sonst so gern im Unklaren hält, mit erstaunlicher Präzision dagegen. "Unterm Strich scheint der Sektor der Privathaushalte in guter Verfassung", sagte er zuletzt im Oktober 2004. Die Manager der Weltfinanzmärkte verehren ihn vor allem deshalb, weil er ihren Traum um Jahre verlängert hat.

Sein Nachfolger hat keine andere Chance, als diesen Kurs fortzusetzen. Er weiß, dass es in seiner Position keine folgenfreien Ratschläge gibt. Wenn er vor einer Schieflage warnt, ist sie mit hoher Wahrscheinlichkeit im selben Moment schon eingetreten. Selbst wenn er leise Worte findet, den Umstand zu umschreiben, wird der Finanzmarkt ihn sehr genau verstehen. Alle warten ja nur auf ein Signal zur Trendumkehr, das sie nicht erhoffen, aber vor allem nicht verpassen dürfen.

01.12.2006

DOLLAR
 

Weltwährung auf Abruf (3)

Von Gabor Steingart

Finanzinvestoren lieben den Exzess

Nun ließe sich mit Fug und Recht einwenden, dass die Finanzmärkte normalerweise nicht dem Wollen der Politik gehorchen. Warum also erfolgt nicht mit Hilfe der Selbstregulierung eine Korrektur dieses teuflischen Treibens? Wer oder was hindert die Finanzinvestoren, mit dem Dollar ähnlich zu verfahren wie mit den Aktien der New Economy?

Sie werden es tun. Die Frage ist nur wann. Die Finanzinvestoren sind keine Finanzbeamten. Sie lieben den Exzess, in immer wiederkehrenden Abständen bringen sie die Märkte zum Überschießen. Sie sind nun mal von Berufs wegen Spekulanten, die mit dem Risiko der Übertreibung leben. Ihre Berufseinstellung ähnelt der von Formel-1-Piloten, deren Ziel der Sieg und nicht das unfallfreie Fahren ist.

Unklar ist nur noch, mit welcher Wucht das Großereignis eintritt. Oft schon haben Experten die Folgen einer Dollarschmelze durchgespielt. Setzte der Abwärtstrend ein, würden in Stufen steigende Kreditzinsen folgen, um den Wertverlust zu stoppen. Die Dollarkrise würde dadurch binnen weniger Tage aus der Welt der Währungen in die reale Welt der Fabriken, Geschäfte und Haushaltskassen überspringen.

Private Investitionen von Groß und Klein sind bei steigenden Zinsen weniger rentierlich, die Menschen würden sparen, die Wirtschaft stottern, bevor sie schließlich zu schrumpfen beginnt. Die ersten Massenentlassungen wären zu beklagen. Der Konsum der Amerikaner müsste erneut drastisch zurückgefahren werden, weil nun Arbeitslosigkeit und Pleitewellen das Land erschütterten würden.

Millionen Haushalte könnten ihre Bankkredite nicht mehr bedienen. Nun würden auch die Immobilienpreise und die Aktiennotierungen sinken, die jahrelang überhöht waren und als Beleihungsgrundlage für Konsumkredite genutzt wurden. Platzt die Immobilienblase, sackt unweigerlich auch der Konsum weiter in sich zusammen, der Importsog würde zum Rinnsal, womit nun auch die Lieferländer in Schwierigkeiten gerieten. Es wäre nur noch eine Frage von Tagen, bis in den Zeitungen ein vor Jahrzehnten untergegangenes Wort wieder auftauchte: Weltwirtschaftskrise.

Schon einmal rutschte erst Amerika und dann die übrige Welt in eine tiefe Krise. Sie wurde "Die Große Depression" genannt, weil sie zehn Jahre dauerte und den USA Massenarbeitslosigkeit und Hungertote brachte. Die Wirtschaftskraft des Landes sank um rund ein Drittel. Der Krisenvirus wütete schließlich überall im Westen. In Deutschland waren auf dem Höhepunkt der Fieberkurve sechs Millionen Menschen arbeitslos.

Die heutigen Investoren leben in einem Zwiespalt, um den sie nicht zu beneiden sind. Sie sehen die relative Schwäche der US-Ökonomie und registrieren die tektonische Verschiebung in der Weltwirtschaft. Sie wissen, dass mit großem statistischem Aufwand versucht wird, den amerikanischen Traum in die Zukunft zu verlängern.

So melden die Regierungsstatistiker seit längerem sensationelle Produktivitätserfolge der US-Ökonomie, die seltsamerweise seit Jahren zu keiner Lohnerhöhung führen. Das allerdings ist mehr als merkwürdig: Entweder kassiert die Kapitalseite die Früchte der gestiegenen Produktivität ganz alleine, was selbst im Kernland des Kapitalismus ein Politikum wäre. Oder es gibt diese Produktivitätsfortschritte nur in der Statistik, wofür vieles spricht.

Die halbe Welt staunt über die niedrige Arbeitslosigkeit in den USA. Die andere Hälfte der Welt weiß, dass diese Statistik keine amtliche Statistik ist, sondern das Ergebnis einer freiwilligen Telefonumfrage. Viele derer, die sich als Beschäftigte ausgeben, sind Handlanger und Tagelöhner. Wer auch nur eine Stunde pro Woche arbeitet, wird als "Beschäftigter" geführt. Da es als unsozial gilt, sich arbeitslos zu bekennen, sagt die amerikanische Statistik womöglich mehr über die geltenden Normen der amerikanischen Gesellschaft als über ihre tatsächliche Verfassung.

Auch den hohen Wachstumsraten der Vereinigten Staaten ist nicht so ohne weiteres zu trauen. Sie sind auch eine Folge der hohen privaten und staatlichen Schuldenaufnahme. Sie zeigen keineswegs einen aus eigener Kraft gesteigerten Ausstoß an heimischen Waren und Dienstleistungen, erinnern vielmehr an die Verkaufserfolge von Asiaten und Europäern. Allein die Neuverschuldung der Regierung war 2001 für ein Drittel des Wirtschaftswachstums verantwortlich, 2003 für ein Viertel. Der Wirtschaftsriese USA wird gedopt, damit sein Leistungsabfall nicht so auffällt.

01.12.2006

DOLLAR
 

Weltwährung auf Abruf (4)

Von Gabor Steingart

Der Volksmund spricht von Panikblüte

Für die Investoren auf den Kapitalmärkten ist eine Wirklichkeit erst dann eine Wirklichkeit, wenn die Mehrzahl der Anleger davon überzeugt ist - und sich entsprechend verhält. Derzeit belauert jeder den anderen. Alle wissen: Der Traum von der stabilen Wirtschaftssupermacht ist eigentlich ausgeträumt, aber alle halten die Augen noch eine Weile geschlossen.

Staatsanleihen und Aktien besitzen nun einmal keinen objektiven Wert, nichts was man sehen, wiegen, schmecken oder auch nur verspeisen könnte. Ihr Wert bemisst sich an dem Gottvertrauen der Investoren, dass die Kaufkraft von einer Million Dollar auch in zehn Jahren noch eine Million Dollar beträgt und sich nicht in der Zwischenzeit halbiert hat. Dieses Gottvertrauen wird nahezu im Sekundentakt an den Märkten gemessen und die Maßeinheit ist nichts anderes als das Vertrauen anderer Investoren. Solange es mehr Vertrauensselige als Misstrauische gibt, ist die Welt des Dollars (und der Weltwirtschaft) in Ordnung. Die Probleme beginnen an dem Tag, an dem das Verhältnis kippt.

Kompliziert wird der Vorgang dadurch, dass es keineswegs blindes Vertrauen ist, das die Anleger treibt. Es sind scheinbar zum Teil harte Fakten, die sie darin bestärken, ihren Vertrauensbonus weiterhin zu gewähren. Das Wirtschaftswachstum der USA, auf dem Papier robust und imponierend Jahr um Jahr, ist für sie eine wichtige Kennziffer. Fällt es hoch aus, fühlen sie sich in ihrem Vertrauen in die Leistungskraft der amerikanischen Volkswirtschaft bestärkt. Zwar ist das Handelsbilanzdefizit seit seinem Auftauchen Mitte der siebziger Jahre explodiert. Aber die Wirtschaft, sagen die Träumer mit wachsendem Selbstbewusstsein, wächst trotzdem sehr ordentlich; nicht so steil wie in China, aber immerhin doppelt so schnell wie in Europa.

Dabei ist gerade auch diese Kennziffer nicht so verlässlich, wie sie aussieht. Das Vertrauen der Investoren hat diese Zahl mit hervorgebracht. Denn der Kaufpreis der Anleihe fließt auf nahezu direktem Weg in den Konsum des Staates, der Kaufpreis der Aktie stimuliert die Konsumlust der Firmen und erweitert die Kreditbasis von Millionen von Privathaushalten, was wiederum dem Konsum zugute kommt. So verwandeln sich die Erwartungen der Investoren, auch die, dass die USA weiter wachsen, fast von allein in Gewissheiten.

Das Vertrauenskapital bringt also selbst jene Wachstumsraten hervor, die es für seine Legitimation braucht. Denn die treibende Kraft hinter dem Wachstum der amerikanischen Volkswirtschaft ist eine Ausweitung des Konsums; was angesichts schrumpfender Lieferfähigkeit der Industrie und sinkender Löhne der Beschäftigten eigentlich jeden verwundern muss.

Aber alle kennen ja des Rätsels Lösung. Der wachsende Konsum basiert nicht auf einer Ausweitung der Produktion, einem Anstieg der Löhne oder gar der Zunahme der Exporte, sondern zu seinem größten Teil auf steigenden Schulden. Aber warum gewähren die Banken immer neue Kredite? Sie tun es, weil sie als Beleihungsgrundlage die gestiegenen Preise für Aktien und Wohnimmobilien akzeptieren. So ist ein in sich geschlossener Kreislauf der wundersamen Geldvermehrung entstanden.

In den Bankbilanzen ist das Ausmaß der Selbsttäuschung zu besichtigen: Die Spartätigkeit in Amerika ist zum Erliegen gekommen. Die Auslandsverschuldung der USA wächst an jedem Wochentag um rund anderthalb Milliarden Dollar und liegt bei insgesamt drei Billionen Dollar. Die Privathaushalte sind im In- und Ausland mittlerweile mit neun Billionen Dollar verschuldet, wobei 40 Prozent dieser Schulden allein seit 2001 entstanden sind. Die Amerikaner genießen eine Gegenwart, für die sie immer größere Stücke der Zukunft verkaufen. Mit Fug und Recht kann man heute sagen: Die Wirtschaftskrise, die der Welt ins Haus steht, ist die bestprognostizierte der neueren Geschichte. Der heutige Boom in den Vereinigten Staaten ist nicht die Widerlegung der Krise, sondern ihr Vorbote.

Die Biologen haben ähnliche Symptome bei Pflanzen beobachtet, die unter dem Eintrag von Schadstoffen leiden. Bevor sie vergehen, bringen sie ein letztes Mal derart kräftige Triebe hervor, dass sie von ihren gesunden Artgenossen kaum zu unterscheiden sind. Der Volksmund spricht von Panikblüte.

01.12.2006 DOLLAR   Weltwährung auf Abruf (5) Von Gabor Steingart Eine Schneewehe, die zur Lawine wird Aber wer wird der Erste sein, der die Dollarillusion zerstört? Sind nicht alle Investoren durch ein unsichtbares Band miteinander verbunden, weil jede Attacke gegen die Leitwährung ihre eigenen Wertbestände schmälern und womöglich große Teile davon vernichten würde? Warum sollten die Notenbanken von Japan oder Peking ihre Dollars auf den Markt werfen? Welches Interesse hätten die US-Pensionsfonds, ihren Dollarreichtum mutwillig zu zerstören? Welchen Sinn ergibt es, die USA in eine schwere Krise zu schicken, die womöglich alle Staaten mitreißen wird? Es ist dasselbe Motiv, das die Investoren einst zu Dollarkäufern machte: Angst. Diesmal ist es die Angst, dass andere schneller sind; die Angst, dass die Dollarstärke ohnehin nicht hält; die Angst, dass jeder Tag des Zuwartens ein Tag zu viel ist. Die Angst schließlich, dass der Herdentrieb der Weltfinanzmärkte einsetzt und man selbst hinterhertrottet. Vielen ist der Dollar unheimlich geworden. Eines Morgens werden die vielen seiner Besitzer aufwachen, um mit neuem, glasklarem Blick auf die Daten der US-Wirtschaft zu schauen. So wie die Privatanleger eines Morgens mit ungetrübtem Blick auf die Aktien der New Economy blickten und Firmen sahen, deren Wert sich durch keinen noch so großen Gewinnsprung rechtfertigen ließ. Umsatzprognosen waren aufgestellt worden, die den Gesamtmarkt um ein Vielfaches übertrafen. An der Technologiebörse Nasdaq war ein Aktienmarkt zu bestaunen gewesen, dessen addierter Wert innerhalb weniger Jahre um 1000 Prozent zugelegt hatte, derweil die US-Wirtschaft im selben Zeitraum nominal nur um 25 Prozent gewachsen war. Die Gier hatte für einige Jahre die Angst überwunden, dann aber kehrte sie zurück. Die Kurse der Technologieaktien verloren binnen weniger Monate über 70 Prozent ihres Wertes und liegen heute noch immer bei weniger als der Hälfte ihrer damaligen Notierungen. Selbst der Dow Jones, ein Börsenindex, in dem die wichtigsten und größten Firmen der Vereinigten Staaten zusammengefasst sind, büßte knapp 40 Prozent seines Wertes ein. Dem Dollar und den Dollaranleihen steht Ähnliches bevor. Die USA haben mehr Sicherheit verkauft, als sie zu bieten haben. Es wurden Erwartungen gehandelt, die sich deshalb als wertlos erweisen werden, weil sie nicht erfüllbar sind. So wie die New Economy weder das Wachstum noch die Gewinne liefern konnte, die sie den Anlegern prophezeit hatte, werden die Währungsverkäufer eines Tages einräumen müssen, dass die Wirtschaft hinter der Währung schwächer ist als behauptet. Die Abhängigkeit ausländischer Notenbanken vom Dollar wird dessen Sturz verzögern, aber nicht verhindern. Eine Schneewehe hat sich gebildet, die zur Lawine werden wird. Sie wächst in atemberaubendem Tempo. Sie kann sich morgen lösen, in ein paar Monaten oder auch erst in Jahren. Vieles, von dem die Zeitgenossen glauben, es sei unsterblich, wird eine globale Währungskrise unter sich begraben; womöglich auch die Führungsrolle der USA. Die von Clinton eingesetzte Kommission zur Untersuchung der negativen Handelsbilanz kam übrigens zu dem klaren Schluss, dass die Regierung alles tun müsse, um das weitere Anwachsen der Ungleichgewichte bei Aus- und Einfuhren zu stoppen. Die Öffentlichkeit solle endlich vom Optimismus zum Realismus zurückkehren; die Bürger müssten zum Sparen angehalten werden, der Staat solle die Importe sanft drosseln helfen, um der Wucht einer harten Landung zu entgehen. Nichts davon ist seither geschehen. In Wahrheit passiert von allem, was die Experten empfohlen hatten, sogar das Gegenteil. Die Verschuldung wächst, der Importsog verstärkt sich, ein durch die Wirklichkeit nicht mehr gedeckter Optimismus wurde zur Staatsräson. Kommissionsmitglied Lester Thurow zieht heute eine ernüchternde Bilanz: "Niemand wird eine amerikanische Zahlungsbilanzkrise für möglich halten", sagt er. "Bis sie eintritt."

AMERICANS WILL SHOP TILL THEIR DOLLARS DROP
by Peter Schiff
Euro Pacific Capital
November 30, 2006

It never ceases to amaze how televised media reports on the U.S. economy are almost exclusively about shopping. Such reports almost always feature images of sales clerks frantically stocking shelves and long lines of consumers swiping their credit cards. In contrast, reports about the economy of Japan or China typically include footage of smoke stacks billowing, production lines moving, robots assembling, and people actually making things. Doesn’t it ever occur to anyone producing these segments just how ridiculous this is?

Despite the implications that Americans and Asians are simply relying on different types of fuel to fire their respective economic engines, production and consumption are by no means interchangeable. Production is the means, consumption is the end. A society can no more consume its way to prosperity than an individual can. However, just as an individual can consume himself into bankruptcy, so too can a nation.

Americans are not producing wealth, but merely consuming the wealth produced by others. When Americans go shopping this Christmas season (primarily spending borrowed money on imported goods), classic economic theory holds that the principal benefit goes not to the U.S. but to those who supply the goods. In exchange for their production, they receive interest and dividend paying assets (dollars, bonds, stocks, etc), which should provide future wealth. Americans in return accumulate depreciating consumer goods and piles of external liabilities that must be serviced and repaid. So Americans squander the wealth of their parents while their vendors amass it for their children.

However, the classic economic theory may not actually be in play as the liabilities our “trading” partners are now accumulating will likely be repaid in currency with severely diminished purchasing power. Trade normally involves the exchange of real stuff for real stuff. As illustrated by our yawning trade deficits, we now have a system where real stuff is simply exchanged for currency, which in effect represent IOU’s for future stuff. However, rather than being a source for future spending, the currency must be horded indefinitely. As the Chinese and Japanese clearly understand, any attempt to use their vast amount of dollar reserves would cause their theoretical value to collapse. Therefore they continue to accumulate more rather than to admit the extent of their prior folly.

There are many in economic circles who subscribe to the “it’s our currency but it’s your problem” philosophy. They maintain that China and Japan are compelled by mutually assured destruction to perpetuate the current system. However, they are only half right. There will be destruction for sure, but it will hardly be mutual. While the American economy will surely suffer, foreign economies, perhaps with a few initial hiccups, will actually prosper. Americans will soon learn that they can keep shopping only as long as foreigners continue to support the dollar. When that stops, these sanguine economists are in for a rude awakening. Think about it this way. Imagine an America where we could only consume those goods we produced domestically, and where individuals, corporations and governments could only borrow from domestic pools of savings. Then imagine the rest of the world flooded with all those extra consumer goods and savings that were formerly showered on Americans. Rather than it being “our currency their problem,” it’s more like “their factories, their savings, their goods,” and one huge problem for us when we have to make do without them.

The sad reality is that it is foreign producers that will eventually have the last laugh. Sure we will screw them by repudiating our debts through inflation, but in the end they will enjoy all of the abundance of their productive capacity and we will suffer the wide-spread shortages that result from our lack of it. Their standards of living will soar just as ours plunge.

#94787 von darcon 09.12.06 11:39:33    Beitrag Nr.: 26.046.334
Dangers in a Dollar on the Edge By Robert J. Samuelson Friday, December 8, 2006 http://www.washingtonpost.com Let\'s face it. Foreign exchange markets are not mass entertainment. They\'re not the NFL, MTV or MySpace. So you might have missed the latest excitement of the sliding dollar. Who cares if the euro is now worth $1.33 instead of the $1.28 it was worth on Nov. 20 -- a 4 percent loss for the dollar? Well, we all should. The dollar\'s mysterious movements pose one of the thorniest economic questions of our time: Can the world economy thrive without the massive stimulus of ever-increasing U.S. trade deficits? It\'s no secret that Asia, Europe and Latin America have feasted on the U.S. trade gap. In 2006 the deficit will reach about $800 billion -- bringing the cumulative total since 1996 to $4.4 trillion. But as the U.S. economy slows, so will Americans\' ravenous appetite for imports. Likewise, the dropping dollar (down 11 percent against the euro this year) will make U.S. exports more competitive on global markets. Big exporting countries may suffer. They need stronger domestic economic growth -- or their economies may languish. We refer awkwardly to "global imbalances": Some countries have big trade surpluses, others (mainly the United States) have big deficits. By and large the phenomenon has baffled economists, who didn\'t anticipate it. But the basic explanation is simple: The dollar\'s role as the main global currency. It\'s the currency most used to set prices for raw materials: oil, wheat, copper. It\'s the currency most used to conduct trade. Japan invoices 52 percent of its exports in dollars, South Korea 85 percent and Australia 68 percent. Even France and Germany, which trade mainly in euros, use the dollar for about a third of their exports. Dollars also represent about two-thirds of the official foreign exchange reserves of governments worldwide. China and Japan have the largest reserves, at $1 trillion and nearly $900 billion. The dollar\'s global role reflects America\'s political stability, its large and wealthy economy, its low inflation and its deep financial markets (there\'s plenty to buy, and it\'s easy to sell). Not surprisingly, the dollar dominates international bank loans and bonds. It\'s the favored way global investors hold their wealth in stocks and bonds or bank deposits outside their own countries. Likewise, many non-Americans use dollars as cash. The International Monetary Fund counts 13 countries that have adopted the dollar as their domestic currency; Ecuador is the largest. The Federal Reserve estimates that about $350 billion in cash -- roughly half of all circulating dollar notes -- is held abroad. Global imbalances emerge because the U.S. trade deficits aren\'t automatically self-correcting. The surplus dollars that foreigners receive from their exports aren\'t necessarily dumped onto foreign exchange markets; that would normally lead to a cheaper dollar, more U.S. exports and fewer U.S. imports. Instead, foreigners keep many of the dollars. In recent years two trends have predominated: huge investments by foreigners in U.S. stocks, bonds, real estate and companies; and big additions to governments\' foreign exchange reserves, usually by purchases of U.S. Treasury securities. Governments -- notably China -- often want to keep their own currencies artificially depressed, thereby aiding their exports. In effect, the United States provides a service to the rest of the world -- a global currency -- and is repaid with imports. American consumers benefit; American producers don\'t. But the system may now be shaky. The U.S. economic advantages may be narrowing as other countries grow richer and develop better financial markets. Or, at some point, the big trade deficits may spill more dollars abroad than foreigners want to hold. The tensions play out on the foreign exchange markets. The recent dollar sell-off, says Kathy Lien of FXCM, a brokerage service, was triggered by two events: speculation that the Federal Reserve might cut interest rates in early 2007 (that would make holding dollars less profitable) and signs that China might diversify its currency holdings. A gradual dollar drop would be desirable, especially if China relaxed its tight control over its own currency. Bloated U.S. trade deficits don\'t inspire confidence. They could provoke a panicky flight from the dollar, or protectionism. But even this begs the harder questions. The dollar-based global economy has been kind to countries such as Japan, China and Germany, whose prosperity rests heavily on their export industries. Economists talk glibly about "rebalancing" the world economy. That means that export-dependent nations would rely more on domestic growth, and deficit countries -- mainly the United States -- would shift to more exports. It sounds easy, but, especially for major exporters, the needed changes go well beyond twisting a few simple economic dials. They involve altering government policies, industrial structures and even popular attitudes. It\'s unclear whether these changes can be made. If not, a weak dollar might herald a weak global economy -- which would be bad for everyone. ..except for Goldbugs darcon

Sunday, December 10, 2006

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U.S. dollar facing imminent collapse?
Fed in bind as Paulsen, Bernanke head to China

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Jerome R. Corsi

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Even as the stock market is hitting new record highs almost every day, the Federal Reserve and Treasury Department are quietly coordinating a devaluation of the dollar that the Bush administration hopes will be a slow decline rather than a dollar collapse.

This week, in an unusual move, the Bush administration is sending virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Dec. 14 and 15.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

The Bush administration wants to get China's cooperation in preventing a dollar collapse. That's the conclusion of John Williams, an experienced professional econometrician, who writes the "Shadow Government Statistics" blog.

(Story continues below)

Williams has re-created M3, a money-supply measure whose data the Federal Reserve simply stopped publishing after issuing a technically worded March 2006 announcement.

Williams reports M3 is currently growing at close to a 9.6 percent rate and trending higher, compared with an 8 percent rate early this year, when the Fed quit reporting the measure.

"The Fed is pumping liquidity into the U.S. economy," Williams told WND, "and the Fed evidently did not want the markets to follow too closely what the Fed was doing with the money supply."

China today now is holding a historically unprecedented $1 trillion in foreign exchange reserves. During the Thanksgiving holiday, an announcement by China that their central bank planned to diversify foreign-exchange holding away from the dollar caused the dollar to drop in value on international currency markets. Since then, the dollar has hit a 20-month low against the euro.

"This was almost an orchestrated announcement," Williams claimed. "Around Thanksgiving the markets were thinly traded. I'm not sure who was playing games there, but the signal was clearly heard."

"You're dealing with mass psychology here," Williams argued. "The central bankers around the world know they are going to take a hit on their dollar holdings. None of the central bankers want to start a dollar panic, but none of the central bankers want to be the last out of the dollar, either."

Williams explained that the Federal Reserve is in a bind.

"Raising rates would kill any chance of avoiding a recession, but in terms of the dollar, we can't raise the rates fast enough when the dollar starts to slip quickly."

Are we experiencing a dollar collapse?

"Not yet," Williams answered. "I believe we're going to have a dollar collapse, but the Fed is going to do its best to slow play the dollar's decline in value, so that it takes a year or two for the dollar value to reach its low point."

Williams explained the risk of collapse the dollar faces:

"There will be a central bank, most probably in Asia, who will start the move away from the dollar and when it happens, you're going to see other central bankers covertly trying to follow. The move will magnify very quickly and it could become a full-fledged panic and a dollar collapse."

The Fed is struggling right now to contain inflation and stimulate economic growth. All the Fed is doing right now with all their grand policy shifts is using a lot of propaganda and market massaging to try to prevent a financial panic."

Recent reports have shown that U.S. gross domestic product growth slowed to 1.6% in the third quarter, the lowest in more than 3 years.

Will a declining dollar help narrow the U.S. trade deficit with China?

"You could take a 30 percent decline in the value of the dollar," Williams argued, "and it wouldn't make much of a dent in our trade deficit with China, not as long as Bush administration trade policy continues to be one-sided in favor of China."

"The Fed is faced with an impossible circumstance with the trade and budget deficits being run by the Bush administration," Williams told WND, "and they are just playing games with the markets and the public by not publishing M3, the broadest measure of money supply and the best indicator we have of long-term activity."

M3 is the broadest measure of the total money in the economy, including checking and savings accounts, cash, time deposits, and money-market funds. Economist Milton Friedman, one of the key economists contributing to the conservative theories that led to the development of "Reaganomics," argued that money supply is a key measure correlated both with economic growth and inflation.

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Die Erdöl produzierenden Länder haben ihre Dollar-Position auf den niedrigsten Stand seit zwei Jahren zurückgefahren.

Aus dem am Montag veröffentlichten Quartalsbericht der Bank für Internationalen Zahlungsausgleich (BIZ) geht hervor, dass für Öleinnahmen zunehmend Euro, Yen und Pfund als Währungen gewählt werden.

Die Zahlen bestätigen Spekulationen über eine Abkehr großer Investoren vom Dollar und könnten den jüngsten Druck auf die US-Währung verstärken. Im Dezember ist die Marktliquidität traditionell niedrig, weil viele Händler kurz vor Jahresende kaum noch Risikopositionen eingehen. Dadurch ist der Markt schwankungsanfälliger als sonst.

Im zweiten Quartal dieses Jahres haben Russland und die Opec-Staaten ihre Dollar-Bestände gegenüber dem Vorquartal um zwei Prozentpunkte auf 65 Prozent gesenkt, so die BIZ. Gleichzeitig erhöhten sie ihre Euro-Bestände von 20 auf 22 Prozent.

Allein Katar und der Iran haben dem Bericht zufolge ihre Dollar-Position um 2,4 Mrd. $ und 4 Mrd. $ reduziert. Über die Devisenpolitik dieser Länder war am Markt viel spekuliert worden.

Auch Ecuador und Indonesien bauten ihre Position um jeweils etwa 2 Mrd. $ ab, Saudi-Arabien verringerte den Posten allein um 3 Mrd. $ bei den Einlagen, die Riad in Großbritannien hat, und erhöhte seine Yen-Position um diese Summe.

Im Vergleich zur Gesamtanlagesumme von Ausländern in Dollar sind die Summen gering, doch sie lassen Rückschlüsse auf künftige Entwicklungen am Devisenmarkt zu. Zuletzt hatten die Erdöl produzierenden Länder ihre Dollar-Bestände Ende 2003 verringert. Der Euro hatte daraufhin einen neuen Höchststand gegenüber dem Dollar erreicht. Vor anderthalb Jahren hielten die Erdöl produzierenden Länder noch mehr als 70 Prozent ihrer Währungsreserven in Dollar.

Five Profit Bonanzas from a Dollar Decline
by Martin D. Weiss, Ph.D.
Editor, Safe Money Report & MoneyandMarkets.com
December 11, 2006

You’ve seen the dollar falling against the euro, the pound, the yen and the yuan. You’ve read our alerts. You know what’s happening. But do you realize how serious this really is? Have you sat down to contemplate the potentially far-reaching impacts on your money, your income, and your entire financial future? My recommendation: Don’t be persuaded by the theory that the dollar’s decline is mild ... that its plunge is ending ... or that its demise doesn’t matter. Don’t let anyone tell you it’s all for the better. Above all don’t let anyone talk you out of protective investments. Quite to the contrary, the same investments that help shield you from a dollar decline also have the potential to deliver some of the greatest profit bonanzas as the decline accelerates. This morning, I’ll give you five prime examples. But first, join me on a tour through time — to experience the consequences of currency collapses ... and to see the fortunes that can be lost, or made, as a result. The Unimaginable Is Not Impossible Imagine a currency that falls to one billionth of its value — in just two and a half decades. Imagine another that plunges five times further in the same time frame. Or worse, imagine a currency that’s so thoroughly smashed and decimated that its left with just one hundredth of a billion of its original value ... after just 23 years. No. I’m not talking about the hyperinflation that swept Germany after World War II. Nor is this example taken from a fledgling economy in pre-modern times. Rather, the examples I just gave you are from modern economies of our time, the last of which is the eighth largest in the world — Argentina. Just to match the buying power of a single peso today, you’d need 100 billion pre-1983 pesos (called the peso ley). If you stacked those old 1-peso bills on top of each other, you’d have a pile that’s 6,896 miles high. And if you laid them end to end, they’d go around the earth at the equator, loop from pole to pole, and reach all the way from our planet to the sun. The cost of the paper alone was thousands of times more than the money’s current value. Even the speck of ink used to engrave the letter “B” in “Banco Central de la República Argentina” cost more than that peso is worth today. And with that destruction of the money, came the demise of the country as well — not only the structure of its economy ... but also the fabric of its society ... the ethos of its culture ... the core of its psyche. Just five years ago, during the climax of that once-proud nation’s collapse, it went through three presidents in 11 days. Its National Congress was ransacked by rioters. In Buenos Aires and other major industrial centers, professional, middle-class citizens — plus their children — could be found at rat-infested dumps, collecting bottles, cans, paper, and cardboard. So many trash pickers, or cartoneros — including young adults still dressed in work clothes, children, and old folks — were sitting on the sidewalks throughout Buenos Aires that tourists said they had to be careful not to step on them when walking down the street. The tren blanco, also called the “Ghost Train,” was used so frequently by catoneros that the seats were removed to accommodate their large carts. As the crisis spread, street riots resulted in hundreds of deaths. The suicide rate soared. Banks closed. The economy collapsed. Unlike Iraq today, there was no civil war. But for many long months, Argentina virtually ceased to exist as a cohesive nation. The Impact Of Currency Collapses on the Wealthy Can Also Be Equally Severe Let’s say you were a well-to-do Argentinean industrialist. Your family grew its assets over many generations. You built factories and office buildings. But about two decades ago, you sold your vast empire and retired, netting $50 billion Argentine pesos. Do you know how big your fortune would be worth today if you kept it in cash? Not even enough to buy a cheap cup of coffee! I Personally Witnessed the Devastating Impact Of Currency Collapses Growing up in Brazil ... One day stands out in particular — November 6, 1964. While in the middle of biology 104, my high school classmates and I heard a loud, thundering sound from downtown. We rushed to the window just in time to see the city’s largest building, under construction for two years, crumbling to earth. Several died. Our Portuguese teacher’s wife, who lived behind the building, was crushed and barely survived. The apparent cause: To cope with rampant inflation, the contractor skimped on the cement; and government officials, struggling with devalued salaries, accepted a piece of the action to look the other way. In other Brazilian cities, similar projects collapsed for similar reasons, with even more casualties. Directly or indirectly, highways, bridges, dams and railroads were equally gutted by the falling currency. The education system, once robust, went to hell in a hand basket. Crime and corruption swept the nation. Other Examples of Currency Chaos Abound: The currency collapse in Germany in the 1920s is the textbook example. When people went to buy food, it doubled in price every 49 hours. When thieves encountered a wheelbarrow of cash, they took the wheelbarrow and left the cash behind. When the collapse finally climaxed in 1923, a loaf of bread that had cost one mark was going for 726 billion marks. The currency collapse in Russia after the fall of the Soviet Union provides a much more recent illustration. In 1992, when post-Soviet Russia abandoned price controls, the inflation rate hit 2,520%. The value of the currency plunged from 100 rubles to the U.S. dollar in 1994 to 30,000 rubles to the dollar in 1999. The currencies of other East European republics got slammed even more severely. In the Ukraine, if someone had robbed a bank and stashed 2 million of their currency in 1992, today they’d be lucky to buy a candy bar with the loot. In Belarus, Yugoslavia, Romania, and other countries, the collapse was similar — or worse. We’ve recently seen currency collapses in Turkey and Zimbabwe. Earlier, we saw disastrous collapses in Thailand, Malaysia, the Philippines and Indonesia. In each and every case, when the currency falls, international capital flees. The value of local debt instruments is obliterated. Stock markets get clobbered. People’s lives, whether rich or poor, are shattered. Some People Seem to Think This Is Strictly the Fate of Developing Nations. Not So. France suffered a series of currency devaluations in the years following World War II. Then, in 1981, it happened again. The French government began implementing nationalizations and economic reforms. But international investors didn’t like that. So they dumped the franc and took their money elsewhere. At first, the French made some futile attempts to support their currency. But soon they were forced to devalue — three consecutive times between October 1981 to March 1983. Nearly all of Western Europe was swept up in a sweeping currency crisis in 1992; nearly all of East Asia, in 1997. Mexico’s “Tequila” currency crisis in 1985 trashed their stock market and nearly sunk their economy. In short ... This is No Game. Nor Is the U.S. Immune. President Nixon’s moves to devalue the U.S. dollar in 1971 set off a decade of rampant inflation. President Carter’s neglect of the dollar in the late 1970s culminated in surging interest rates and the collapse of the U.S. bond market. Not to be outdone, President Reagan let the dollar fall in early 1987, which set the stage for the worst single-day stock market crash in American history. Back to the Present Right now, some of the most worrisome signs I see for the dollar are among the least discussed by others. Worrisome sign #1. While the dollar has been sinking toward its low against the euro, it has plunged toward a new 14-year low against the British pound. In its worst year, in 1992, the dollar was worth an average of 52 cents on the pound. This year, it’s averaging 54 cents and this month it’s down to 50.5 cents. Worrisome sign #2. Adding to its woes, the dollar is now beginning to fall more rapidly against the Chinese yuan, putting growing pressure on the Chinese to unload a lot of their dollars. That’s why, one year ago, the chief economist at the Bank of China called for East Asian central banks to come up with a plan to slow the rate of accumulation of U.S. dollars and eventually cut their holdings. That’s why this past August, Fan Gang, a member of People’s Bank of China’s policy committee, commented “The U.S. dollar is no longer a stable anchor in the global financial system, nor is it likely to become one, therefore it is time to look for alternatives.” That’s also why, this past October, he said “China risks an erosion of its holdings because the U.S. dollar will probably decline.” But it didn’t end there: One month ago, on November 9, Chinese central bank chief Zhou Xiaochuan said they had a clear plan to diversify into other currencies. And just two weeks ago, Chinese deputy central banker Wu Xialong warned other Asian central bankers of the future risk of a U.S. dollar devaluation, jolting the foreign currency markets. Now here comes the clincher: On Thursday and Friday of this week, U.S. Treasury chief Henry Paulson and Federal Reserve chief Ben Bernanke will meet with Chinese officials in Beijing. The inevitable outcome: More pressure on the Chinese to jack up the value of the yuan and more big declines in the U.S. dollar — not only in China but in all of East Asia. Will the dollar suffer a collapse of the same devastating magnitude as the currencies of Argentina, Brazil and others? Not likely. But it doesn’t have to. Even a less severe dollar decline — similar to the early 1990s West European crisis or late 1990s East Asian crisis — would be earth-shaking. I hope it doesn’t happen. But I expect it will. When it does, it will be both convulsive and pervasive. It will be enough to turn investment portfolios upside down and inside out. And it could drive our favorite investment vehicles through the roof. Five Profit Bonanzas During a Dollar Decline There are at least six vehicles I think you should consider: First, this gold bullion ETF (GLD) signaled higher prices last month when it broke free from a seven-month downtrend. And last week, it paused temporarily, giving you what looks like a good entry point. Second, consider oil-related investments. Crude oil has just begun to rise, but oil stocks have surged and should continue to do so. Third, we like ETFs tied to fast-growing countries like China. This China ETF, for example, has greatly outperformed the Dow and should continue to do so. Fourth, consider targeting individual Asian stocks that have the potential to even outperform the booming Asian indexes. Tony is issuing a trading alert on his #1 and #2 favorites today, while giving his subscribers a heads up on three others. Fifth, if you’re looking for a nice, direct play against the dollar, investing in foreign currencies is now more accessible than ever. There are now ETFs that track foreign currencies, including the Australian dollar, British pound, Canadian dollar, euro, Mexican peso, Swedish krona and Swiss franc. Each of these vehicles gives you the potential for a profit bonanza as the dollar falls. But don’t go overboard. It’s never prudent to invest all your money in contra-dollar assets. And it’s always a good idea to keep a good chunk of your funds in the safest investments you can find, including those denominated in U.S. dollars. Good luck and God bless! Martin

Greenspan sees more declines in dollar

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Sharon Wrobel, THE JERUSALEM POST

Dec. 12, 2006

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Former Federal Reserve chairman Alan Greenspan said the dollar will continue to drift downwards on growing signs that OPEC nations are shifting their assets out of the US dollar towards the euro and yen.

"OPEC nations are switching their assets out of the dollar into the euro and the yen," Greenspan said Monday in a video conference interview with Likud Leader Binyamin Netanyahu at the Globes Israel Business Conference. "I suspect those pressures will continue and the dollar will be moving lower until there is a change in the US current account balance."

However, Greenspan added that giving an answer to Netanyahu's question of how low the dollar will go was like the "probability of tossing a coin."

Netanyahu pointed out that Israel had certain technology advantages, representing a niche competitor on the global market and raised the question whether the country should implement government subsidies to identify this competitive advantage or let the free market function.

"This is the dilemma of central planning or free market," said Greenspan. "Government interference has failed again and again in history and thus Israel should resist pressures to subsidize industry and let the free market do the work."

Greenspan added that Israel had a chance of making fairly significant advances in the future if it sticks to and expands its private markets.

Discussing how the US and other countries like Israel can compete in a world of low labor costs with countries like China and India posing dramatic competition to the Western world, Greenspan said the US had already lost many jobs in the past years mainly to China.

"But at the same time the standard of living is continuing to grow. Why? It comes from education and the fact that people continue to seek financial sources to raise their cash liquidity and the US is a large provider of financial services," he said.

Das Imperium geht nach China betteln?

U.S. dollar facing imminent collapse?

Offenbar ist die Situation so ernst, dass sowohl Hank Paulson als auch Ben "Helicopter" Bernanke gemeinsam um eine Gnadenfrist für den Dollar betteln müssen. Geldabwurf aus dem Helikopter funktioniert offenbar nicht so gut.

Risiko eines Dollar-Crashs bleibt gering [12:00, 13.12.06]

Von BÖRSE ONLINE Redaktion

Die jeden Monat vom Anlegermagazin Börse Online (Ausgabe 51/2006, erscheint am 14. Dezember) befragten Chefvolkswirte erwarten keinen Einbruch des Dollars im Vergleich zum Euro. „Die negativen Folgen wären so groß, dass alle Anstrengungen unternommen werden dürften, einen Crash zu verhindern“, meint Jörg Krämer von der Commerzbank. Wie die Umfrage ergab, sind sich die 31 befragten Ökonomen nahezu einig, dass das Risiko eines Dollar-Crashs gering ist.

Mehrere der Experten sehen die Ursache der Greenback-Schwäche in Ängsten um die US-Konjunktur. Ulrich Kater von der DekaBank hält diese aber für übertrieben: „Die Immobilienkrise wird nicht stattfinden, das Wachstum im kommenden Jahr wieder anziehen.“

Einig sind sich die Volkswirte darin, dass die Abwertung der US-Valuta die preisliche Wettbewerbsfähigkeit deutscher Exporteure mindert. Eine „Schmerzgrenze“ sei jedoch schwer zu beziffern. So sehen einige Fachleute die kritische Marke bei 1,40 Dollar je Euro erreicht, die meisten wollen sich jedoch auf keinen bestimmten Wert festlegen – schon weil sie davon abhängt, in welchem Umfang die Exportunternehmen sich gegen Wechselkursschwankungen abgesichert hätten. Jürgen Pfister von der BayernLB hält die konjunkturelle Entwicklung in den Exportzielländern für wichtiger als den Wechselkurs: „Schwächeres Wachstum in den USA ist problematischer als eine Dollarabwertung.“

Neues von den BÜSO-Freunden (13.12.2006):

Wenn der Dollar plötzlich um 20% - also auf ein Niveau von etwa 80% des gegenwärtigen Wertes - kollabiert, wird der Kollaps des Dollars einen Zusammenbruch sämtlicher Währungsreserven bedeuten, die in Dollar ausgewiesen sind. Dies würde nicht bei -20% haltmachen, und der Kollaps würde eine globale Panik auslösen. Unter diesen Umständen wird das gesamte System des Welthandels, wenn nicht die spezifischen Reformen durchgeführt werden, die ich dargelegt habe, in einem kettenreaktionsartigen Kollaps auf einen geringen Prozentwert des heutigen Niveaus stürzen."
.....................
Ein anderer Grund für Beunruhigung ist die Blase der Private-Equity- und Hedgefonds. Nach mehreren Warnungen der Bank von England schlägt nun auch die Deutsche Bundesbank Alarm. In ihrem neuen Finanzstabilitätsbericht 2006 nimmt die zunehmende Verquickung der großen Banken mit solchen Fonds breiten Raum ein. Bei der Vorstellung des Berichts am 28. November in Frankfurt warnte Edgar Meister vom Vorstand der Deutschen Bundesbank: "Banken treffen bekanntlich immer mehr auf nichtregulierte Finanzmarktteilnehmer. Von Hedgefonds könnte ein systemisches Störpotential ausgehen. Das gilt vor allem für die Hedgefonds als Gruppe. Ein gewisser Gleichlauf der Renditen deutet z.B. auf ähnliche Strategien und Positionen. Störungen könnten aber auch von einzelnen Hedgefonds ausgehen. So haben in jüngster Zeit bekannt gewordene Fehlspekulationen Schwächen im Risikomanagement einzelner Hedgefonds aufgedeckt."
.....................

Ein weiteres Anzeichen für den sehr weit fortgeschrittenen Stand der Systemkrise ist die ungewöhnliche Offenheit, mit der das Wall Street Journal am 5. Dezember seine Berichterstattung auf der Titelseite begann: "Die Zunahme der nicht bedienten Hypotheken in den letzten Monaten bringt Kreditgeber in eine Zwangslage und beunruhigt weltweit Investoren im 10 Bio. $ starken US-Hypothekenmarkt. Die Nöte sind besonders stark im Bereich der Hypotheken an fragwürdige Schuldner [sub-prime mortgages], obwohl es auch Anzeichen dafür gibt, daß sie sich auf andere Teile des Hypothekenmarkts ausweiten." Nach Angaben der Federal Deposit Insurance Corporation ist die Hälfte aller Anlagen im US-Bankenwesen - 11,75 Bio. $ - im US-Immobilienmarkt investiert.

Die "sub-prime-Hypotheken" sind tatsächlich ein besonders anfälliger Teil des US-Immobilienmarkts. Der Anteil der faulen Kredite unter solchen Hypotheken - entweder mindestens 90 Tage im Zahlungsverzug, Zwangsvollstreckung oder Zwangsrückgabe - sprang im Oktober auf 2,52% aller dieser 2006 ausgegeben "nicht erstklassigen" Hypotheken. Solche Hypotheken vergeben Banken oder Finanzinstitute an Kreditnehmer mit "schlechter oder beeinträchtigter Kreditwürdigkeit" - häufig sind es Afro- oder Hispano-Amerikaner mit niedrigen Einkommen und/oder von Arbeitsplatzverlust Bedrohte. Die Hypotheken haben harte Bedingungen: hohe Zinsen, harsche Strafen bei Nichtbedienung usw. Ende der 90er Jahre gab es weniger als 100 Mrd. $ an Sub-prime-Hypotheken, heute schätzt man den Umfang zwischen 650 und 980 Mrd. $ - letzteres entspricht einem Zehntel des Hypothekenmarktes für Wohnhäuser.

Vor zehn Jahren wurden solche Kredite praktisch nur von "Kredithaien" vergeben. Aber inzwischen haben die großen Handelsbanken, nachdem sie die Haushalte mit hohen und mittleren Einkommen abgedeckt haben, viele "Kredithai"-Firmen aufgekauft und beherrschen diesen Markt. 2005 verlangten die Banken für etwa die Hälfte der "nicht erstklassigen" Hypothekenkredite keinen zuverlässigen Einkommensnachweis. Inzwischen ist dieser Markt so groß, daß nach Angaben des US-Hypothekenbankenverbands im 1. Halbjahr 2006 jeder fünfte neu vergebene Hypothekenkredit in den USA "sub prime" war. Am 4. bzw. 6. Dezember mußten Sebring Capital Partners aus Texas und Ownit Mortgage Solutions aus Kalifornien schließen. Beide waren im Markt der "nicht erstklassigen" Hypotheken aktiv, Ownit Mortgage war der elftgrößte Großhändler solcher Hypotheken. Es kam zu Unruhe auf dem Derivatmarkt: Die Kosten für Kreditausfall-Swaps (CDS) zum Schutz bei einer Zahlungsunfähigkeit von 10 Mio. $ stiegen plötzlich von 310 000 auf 389 000 Dollar. Gleichzeitig erlitten auf Sub-prime-Hypotheken gestützte Anleihen den größten Wochenverlust des Jahres.

Warnungen, Warnungen, Warnungen.

Ja, die Subprime-Kredite an den "betrunkenen Onkel", der nicht bezahlen kann, implodieren inzwischen. Und die Firmen, die diese vergeben haben auch. Dumm nur, dass es am oberen Ende auch genügend "betrunkene Onkels" gibt, diejenigen Leute, die massenhaft Geld für sinnlose Mega-Mergers borgen. Der ganze Komplex kommt jetzt bald herunter.

McMansions auf Kredit:

Der BÜSO Artikel nennt übrigens die US-Spezialität Mc-Mansion: "teure Villen billiger Bauqualität", die für ab 1 Million Dollar verkauft wurden. Gehen jetzt auch nicht mehr weg.

So sehen diese Dinge aussen und innen aus:

Bei durchschnittlich 600 m2 Wohnfläche müssen die Betriebs- und Energiekosten enorm sein.

Zeit bei Jim Puplava nachzusehen: Part 5: Rogue Wave - Rogue Trader

There will come a day unlike any other day,
an event unlike any other event and a crisis unlike any other crisis.
It will emerge out of nowhere at a time no one expects.
It will be an event that no one anticipates, a crisis that experts didn’t foresee.
It will be an exogenous event, a rogue wave.

Jim Puplava, meint heute, dass dieser Tag sehr nah ist, und aus dem Kredit-Bereich kommen wird.

Wenn man die obigen Meldungen liest, dürfte es stimmen.
Ich empfehle übrigens, seine ganzen Storm-Watch Artikel zu lesen.

Noch einige andere "Unwetter-Warnungen":

Nouriel Roubini: Die Unwetterwarnung

Eberhard Hamer: Der Crash muß kommen!

SPIEGEL ONLINE - December 12, 2006, 04:45 PM
URL: http://www.spiegel.de/international/spiegel/0,1518,453906,00.html

A CURRENCY IN DECLINE

How Dangerous is the Dollar Drop?

By Christian Reiermann

Is an end of an era looming in the foreign exchange markets? The dollar has been depreciating against the euro for weeks. Currency experts and the German government don't yet see this as cause for alarm. The US currency's role as a lead currency isn't as important as it used to be, they say.

Like most central bankers, Jean-Claude Trichet, the president of the European Central Bank (ECB), has a penchant for cryptic comments. Injecting a certain degree of incomprehensibility is a signal to the professionals that he's competent. And when it comes to laymen, industry jargon has the desired effect of generating the necessary respect.

Last Thursday the public was treated to yet another example of Trichet's convoluted speaking style. A number of risks, the ECB president said, could jeopardize a generally favorable economic outlook in the euro zone. They included, according to Trichet, "concerns regarding possible uncontrolled developments triggered by global economic imbalances."

What Europe's most powerful protector of the currency was actually saying was this: The gradual decline of the dollar in the foreign currency markets in recent weeks could pose a threat to the economy. What Trichet was also trying to broadcast is that the ECB has recognized and is aware of the threat.

Nevertheless, the European Central Bank in Frankfurt again increased its key interest rate on Thursday by a quarter percentage point to 3.5 percent, which makes the euro more attractive to international investors. The central bankers had no choice but to take the step, having already announced their intentions weeks ago.

Experts have been predicting for some time that the dollar would eventually go into a nosedive, and now that time seems to have come. The US currency has lost five percent of its value against the euro since late October, and 13 percent since the beginning of the year. The euro is currently fluctuating around a value of $1.33, which is only 3 cents away from its all-time high in 2004. And yet Trichet's counterpart Ben Bernanke, the chairman of the US Federal Reserve, has done nothing but look on as the dollar plunges.

A sea change appears to be taking place on the international financial markets. For years, global capital flowed in only one direction, with $2 billion going into the United States every day. Investors viewed the world's largest economy not only as a bastion of stability, but also as a place that promised the best deals, the most lucrative returns and the highest growth rates.

The Americans, for their part, welcomed foreign investment. For them, it was almost a tradition to save very little and spend more than they earned -- essentially achieving affluence on credit. Foreigners financed the Americans' almost obsessive consumer spending, which spurred worldwide economic growth for years.

Because the US government was unable to fall back on the savings of its citizens, it too was forced to finance its budget deficit with foreign capital. Both consumer spending and the federal deficit kept the dollar high, because the rest of the world was practically scrambling to invest in the United States.

This phase seems to have come to an end, at least for the time being. "There are fundamental weaknesses in the American economy. This could not continue in the long term," says Alfred Steinherr, chief economist at the German Institute for Economic Research (DIW).

Investors pulling out

Investors worldwide are becoming sceptical and starting to pull their money out of the United States. They have realized that a people and a country cannot live beyond their means in the long term. The US dollar's exchange rate is starting to crumble as a result of this withdrawal.

The depreciation is causing growing concern about what will happen to the global economy if the United States loses its role as an engine of growth. If German cars, machinery and services become more expensive, will the German economic recovery end before it has really started?

The German government isn't worried yet, at least not officially. Nevertheless, experts in the finance and economics ministries have been keeping a close eye on developments. Although they continue to believe that the changes still fall within the scope of long-term averages, they don't rule out that the situation could worsen.

They believe that a first critical threshold for the competitiveness of the German economy will be reached at an exchange rate of about $1.36 per euro, and that Germany could see major difficulties at rates in the neighborhood of $1.50. If there is turbulence in the foreign currency markets, the government in Berlin will find itself in an especially challenging position. In early 2007, Germany will assume the chairmanship of the so-called G8 group of seven major industrialized nations plus Russia.

The G8 has repeatedly engaged in crisis management to deal with problems in the international financial system. It did so in the 1980s, when the combined forces of the G8 were needed to put a stop to the soaring dollar. It stepped in with equal verve a few years to forestall a decline in the American currency with the so-called Louvre Accord.

There are two principal causes behind the most recent development. Both have to do with the fact that Europe is becoming more attractive for international investors compared to the United States. On the one hand, interest rates in Europe and the United States are moving in opposite directions. "The ECB will continue to raise its key rates next year, whereas interest rates appear to have peaked in the USA," says Joachim Scheide, an expert on the economy at the Global Economic Institute (IFW) in the northern German city of Kiel. This means that financial investments denominated in euros are yielding higher interest and are in greater demand internationally, which in turn leads to a rise in the euro.

The prospects for growth are also shifting. The US economy is cooling off. The government recently lowered its 3.3 percent growth forecast for 2007. If Americans consume less as a result of a decline in foreign capital investment, the United States could even face a prolonged period of more modest growth.

Germany has shed 'sick man' image

By contrast the euro zone economy is robust. Germany, in particular, has surprised many with a stream of good economic news. Unemployment dropped below the psychologically critical threshold of four million in November. The Ifo business climate index, which measures the expectations of businesses, is at its highest point in 15 years, while consumer confidence has reached a five-year high.

In the last quarter of this year Germany, long considered the sick man of Europe, will have transformed itself into an engine of economic growth. According to analysts at Postbank, Germany's annual growth, projected at 3.4 percent, will even exceed that of the United States this year.

This is the kind of news that fuels the expectations of investors who now prefer to invest their money in the euro zone. The result is an increase in the exchange rate for the European Union's common currency. But how will the decline in the dollar's value affect future economic development? Could it cause a major imbalance in the global economy, or will the global economy, and Germany, get off lightly?

Pessimists are quick to come out of the woodwork whenever a major shift in the financial markets approaches. Many economists and bank analysts, especially in the United States, believe that the correction will happen very suddenly, with the dollar depreciating by 10 to 30 percent within a short period of time.

This would inevitably cause an adjustment crisis. Growth rates would plunge worldwide and a global recession, coupled with a drastic jump in unemployment, could follow.

This doomsday scenario is by no means the majority view. Some experts, especially in Germany, are more optimistic. "The US trade deficit has grown in the course of a few years," says IFW expert Scheide. "It will also gradually decline over a period of several years."

Scheide expects the dollar to lose another 10 percent in value against the euro in the next five years, a scenario that would be much easier to handle for the German and European economies. Companies would have sufficient time to adjust to changes in exchange rates. "In that case even an exchange rate of 1.40 wouldn't be disastrous," said DIW analyst Steinherr.

Germany is a good example of how effectively this can work. Despite the fact that the dollar has lost half of its value against the euro since 2002, exports have not been adversely affected. Indeed, they even increased from €651 billion ($861 billion) to €786 billion ($1.04 triilion). The Germany economy exported more than ever before in October.

Another reason is that the dollar zone is no longer as important for German exports as it was only a few decades ago. Leaving aside exceptions such as the auto industry, other regions of the world have long since become more important to the German economy than the United States, where Germany now sells less than one-tenth of its exports. Germany exports more than 40 percent of its goods and services to other countries within the euro zone, 13 percent to eastern Europe and nine percent to Asia. The turbulence surrounding the dollar has had virtually no effect on German exports to neighboring European countries. Most of the EU's new members have tied their currencies to the euro, and exchange rate risks evaporated for western Europe with the introduction of the euro.

The euro even prevents the kinds of major upheavals in Europe that occurred in the past whenever the dollar fell. When that happened, German businesses and consumers were routinely forced to bear a greater burden of adjustment than the economies of neighboring countries. In the past, if the German mark gained 10 percent in value against the dollar, the French franc or the Italian lira would only gain six or seven percent. As a result, the German mark was overvalued relative to other European currencies, which translated into economic disadvantages for the German economy.

This mechanism was eliminated when the euro was introduced. Now all member states carry the same burden.

The consequences of a declining dollar for the German and European economy will be determined in large part by the way other currencies develop relative to the dollar. "It would be fatal if only the euro were to rise," says DIW analyst Steinherr. "Then it would only be the euro zone that would have to bear the burden of adjustment." But the foreign currency markets suggest a different development, as the dollar is also losing value in relation to other important currencies.

The British pound, for example, rose to new highs last week. Even more importantly, the currencies of east Asian growth regions are also appreciating against the dollar. The Thai Baht, for example, gained about 15 percent against the dollar in 2006, while the South Korean Won gained 10 percent. Even the Chinese Yuan, which slavishly followed the dollar in the past, gained more than three percent. Virtually every economy is bearing part of the burden of adjustment.

The decline in the dollar also has its advantages. For Germany, the greatest advantage is that Germans pay less for oil. The oil price is mainly set in dollars worldwide. If the dollar declines, the same amount of oil costs Europe fewer euros, and the money the Europeans save can be spent on other goods.

A similar dynamic applies to exports from the dollar zone. If the decline in the dollar continues, computers, software licenses and machinery from the United States will become less expensive. Both developments would represent a windfall for companies and people in the euro zone, because the same amount of money would buy more goods.

The perils of a currency crash are not nearly as great as they were in the days of the dollar's absolute dominance 30 or 40 years ago. Globalization has led to the development of a number of growth centers in the world economy which share the burden of turbulence. Gone are the days when an American finance minister could boast: "The dollar is our currency, but it's your problem."

Translated from the German by Christopher Sultan

Wednesday, December 13, 2006

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THE NEW WORLD DISORDER
Analysts: Dollar collapse
would result in 'amero'
Think deep recession likely
regardless of Fed's actions

---

Posted: December 13, 2006
1:00 a.m. Eastern

By Jerome R. Corsi

---

© 2006 WorldNetDaily.com

Two analysts who have reconstructed money supply data after the Fed stopped publishing it argue a coming dollar collapse will set the stage for creating the amero as a North American currency to replace the dollar.

The reconstructed M3 data – the broadest measure of money – published on econometrician Gary Kuever's website, NowAndFutures.com, shows M3 increased at a rate of 11 percent in May, compared to 9 percent when the Federal Reserve quit publishing M3 data earlier this year.

Asked why the Fed decided to stop publishing M3 data, Kuever told WND, "The Fed probably wants to hide how much liquidity is being pumped into the market, and I expect the trend to keep pumping liquidity into the market will continue, especially since the economy is slowing down."

(Story continues below)

Why is this important?

"The trend line in my M3-plus-debt chart is staggering," Kuever said. "There has been a straight, long-term trend line of M3-plus-credit increasing since 2000. Long-term, we are creating inflation and the dollar has lost almost 98 percent of its value in the past 100 years."

Kuever, a retired investor, is concerned that with growing budget and trade deficits "the dollar could collapse."

"Especially if the Fed cannot increase rates, because we have already entered a recession," he said.

Analyst Gary Kuever's chart shows M3-plus-credit, short term, from May 2000 to September 2006

Bob Chapman, who issued a reconstructed M3 estimate to the 100,000 subscribers to his newsletter, "The International Forecaster", agrees.

"The world is awash in money and credit," Chapman told WND. "My numbers show M3 increasing at about a 10-percent rate right now."

Chapman believes the U.S. economy entered a recession in February. In his newsletter of Dec. 9 he predicted the Fed would hold interest rates at 5.25 percent.

"The Fed is in a very tough spot here," Chapman wrote, "If they raise rates, the real estate market will collapse, and if they lower rates, the dollar will collapse."

Meeting yesterday, the Federal Reserve Open Market Committee voted, as Chapman had predicted, to hold the overnight lending rates between banks steady at 5.25 percent. This was the fourth straight meeting the Fed had voted not to change rates. In its rate announcement, the Fed affirmed the economy had slowed.

Almost immediately after the announcement of the Fed's decision, the dollar weakened to a new 20-month low against the euro, with currency markets reportedly pricing in the expectation the Fed will be forced to lower rates next year to bolster the economy. Following the announcement by the Fed, the U.S. Dollar Index, or USDX, also dropped, with the dollar going below 83.

A dollar collapse is imminent, Chapman declared.

"Technicians studying the USDX think there is a support level for the dollar at 75, but I don't think so."

How low could the dollar go?

"If the dollar breaks through 78.33 on the USDX," Chapman answered, "my guess is the dollar will go through a 35-percent correction, which would put it at 55."

"The key in how low the dollar goes is the interest rates," Chapman told WND. "In January, the Fed is going to have to make a decision which way to go. If Fed rates go up, the dollar will hold in the 78.33 range, but the stock market and the economy will tank. If next year the Fed lowers rates to keep the economy from crashing, the bottom will fall out of the dollar, and I see it going as low as 55. Once the dollar hits bottom, it will take the stock market and the economy right with it anyway. The Fed is in a box they can't get out of."

As WND reported earlier this week, in an unusual move, the Bush administration is sending virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Thursday and Friday. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are leading the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation will be Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

But Chapman doubts the trip will help the Fed to engineer a slow dollar slide.

"The Chinese are going to do what the Chinese want to do, not what we want them to do," he said. "I believe the Chinese are going to send Treasury Secretary Paulson and Fed Chairman Bernanke home packing, with little or nothing to show for the trip."

How severe will the coming dollar collapse be?

"People in the U.S. are going to be hit hard," Chapman warned. "In the severe recession we are entering now, Bush will argue that we have to form a North American Union to compete with the Euro."

"Creating the amero," Chapman explained, "will be presented to the American public as the administration's solution for dollar recovery. In the process of creating the amero, the Bush administration just abandons the dollar."

---

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OPEC Worries Over Dollar's Plunge

Monday, Dec. 4, 2006 9:21 a.m. EST

OPEC is worried by a fall in the dollar that is eroding member states' oil revenue and ministers will take up the issue when they meet next week to discuss new output curbs.

On Monday the dollar hit a 20-month low against the euro - a bonus for non-dollar oil consumers but a threat to producers.

Most OPEC ministers are leaning towards cutting production beyond the 1.2 million barrels per day (bpd) they agreed in October to reduce high inventories. A weak dollar provides another argument for trimming supply and supporting prices.

"The dollar is not helping (matters). It affects revenue. If there is a significant drop, it is of concern to us," United Arab Emirates' Oil Minister Mohammed al-Hamli told Reuters.

"But as producing countries we look at market fundamentals."

The Organization of the Petroleum Exporting Countries meets on Dec. 14 in Nigeria.

Many in the group still view the market as imbalanced and support a further cut of 500,000 bpd to one million bpd. Influential Saudi Oil Minister Ali al-Naimi says an excess 100 million barrels must be removed.

Kuwait and Libya are alone in saying existing curbs are sufficient, especially with U.S. crude near $63 a barrel.

Oil has rallied $6 since OPEC agreed its reduction, the first in two years, at an emergency meeting in October. It was oil's rapid decline from a record $78.40 in mid-July that forced ministers then to wield the knife.

But the exporters' club is mindful that a further round of cuts may be needed to counter an anticipated surge in supply from rival non-OPEC producers and slowing economic growth in top consumer the United States.

"OPEC is in the process of taking up the challenge of a market that is clearly and steadily getting out of balance, after almost three years of a very strong bull run," said OPEC's acting Secretary-General Mohammed Barkindo in Vienna.

"At the moment our preoccupation is to ensure that this market is re-balanced and therefore our eyes are more on the level of stocks and its future prospect rather than on price."

The group that pumps more than a third of the world's oil is not defending a specific price target, Barkindo said.

"However, the value of the dollar is of significant importance," he said.

DOLLAR IMPACT

In the past, OPEC has said it needed higher oil prices to offset the impact of a falling dollar, but that was in late 2003 and early 2004 when U.S. crude was trading in the $30s.

Since Aug. 1, when U.S. crude was trading at $74.91, close to its peak, dollar-denominated oil prices have fallen 15.3 percent, while in euro terms they have fallen by 18.5 percent. For a factbox, please click on [ID:nL0449492].

"We cannot ignore the extremely soft dollar amongst other factors; stocks are very high," OPEC President Edmund Daukoru of Nigeria said.

"When people say prices are high, I say against what currency? It is a natural question."

Qatari Oil Minister Abdullah al-Attiyah is also concerned by the dollar's dive, but said it would not dominate talks at OPEC.

"The main thing is supply and demand - not the weak dollar," he said.

Analysts say OPEC may be more worried by forecasts of U.S. economic weakness that have contributed to the dollar's slide.

But Daukoru downplayed concerns over the health of the world's biggest energy consumer.

"We have the impression that there is some recovery around the corner," he said. "Overall the global economy has done well in spite of the peak (in oil prices) we hit recently," he said.

Copyright Reuters 2006.

Thursday, Dec. 14, 2006

BEIJING -- The United States's failure to fully understand China was harming relations, Chinese Vice Premier Wu Yi told an economic dialogue between the two countries on Thursday, pushing back against U.S. criticisms.

"We have had the genuine feeling that some American friends are not only having limited knowledge of, but harbouring much misunderstanding about the reality in China," Wu told U.S. Treasury Secretary Henry Paulson and other senior Washington policy-makers at the start of their two-day meeting in Beijing.

"This is not conducive to the sound development of our bilateral relations."

Wu said China was committed to continued market reforms and achieving a "rough balance" between imports and exports -- a key complaint of Washington, with the U.S. trade deficit with China this year set to break last year's record $202 billion.

The high-powered economic talks with the United States starting are of critical importance, Wu said.

Wu's opening speech focused on the reforms China was pursuing to expand market forces in the country, with the aim of shifting the impetus of economic growth from exports to domestic demand.

She also said China would improve its legal system and protection of intellectual property - another frequent U.S. complaint, as pirated films, music and other protected goods flood the Chinese market.

Copyright Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.

China pushes back against Paulson

The U.S. is trying to press free-market goals on the world's most populous country. But Chinese leaders have their own ideas, as Fortune's Nina Easton reports.

By Nina Easton, Fortune Washington bureau chief

December 14 2006: 10:24 AM EST

Beijing (FORTUNE) -- Senior U.S. officials, led by Treasury Secretary Hank Paulson, arrived inside the Stalinist-style Great Hall of the People Thursday morning, briefed and breakfasted and eager to offer guidance to Chinese leaders on how to become a "responsible stakeholder" in the global economy.

But Vice Premier Wu Yi had other ideas. Like an impatient schoolmistress, she opened this historic gathering with a lecture. Her talk was one part history lesson (China has 5,000 years experience as a global citizen) and one part 21st century civics lesson (the goal is a "socialist harmonious society"), with no sign that her regime sees any need for major economic reform.

Playing with a weak hand in China

"We have had the genuine feeling that some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China," she began, striking a less-than-diplomatic note. "This is not conducive to the sound development of our bilateral relations."

It was a telling start to the first day of the Strategic Economic Dialogue, a forum that Paulson bills as a long-term conversation aimed at prodding Beijing to adopt more Western-style economic reforms. The U.S. priorities include policies to encourage consumer buying, piracy policing, a more flexible currency and a reduction in the trade surplus. Pollution, growing energy needs and stubborn poverty - all plaguing China's booming economy - are also high on the agenda.

Yawning divide

The two-day meeting - an unprecedented gathering in Beijing of U.S. cabinet secretaries, agency chiefs and the Federal Reserve Board chair - opened with a public relations flurry of goodwill gestures. U.S. Commerce Secretary Carlos Gutierrez announced that Home Depot (Charts) will buy a chain of 12 local hardware stores; that GE (Charts) Aviation had signed a $550 million deal with Shanghai Airlines; and that Oshkosh Truck Corp (Charts). will supply rescue equipment to a regional airport. Even China's currency - whose low value has prompted Capitol Hill Democrats to threaten to impose tariffs - gave a healthy tick upward on the opening day.

But the yawning divide in worldviews between the two nations was on vivid display, even in its visuals. Inside the Golden Hall, a high-level government meeting room with all the intimacy of a high school gym, 72 Chinese officials sat on one side and 48 American officials on the other. At the center, more than a dozen principals from each country sat across from each other, divided by banks of video screens and pots of poinsettias.

Trade trouble with China?

Shortly after both delegations took their seats, the media was barred from the room and had to rely on speech texts from Wu and Paulson, and interviews with U.S. delegates, to describe the proceedings. In delivering her 20-page presentation, which included slides to illustrate points on Chinese history, Ms. Wu made clear that the Chinese regime believes it has carved its own responsible global economic path, and isn't especially eager for the Americans' free-market advice.

According to the English translation of her remarks, she repeated six times that China was "sticking to" its "new path of industrialization," and three times that China was "continuing to improve" on reforms already in place. Substantial free-market change wasn't part of the equation. "By following a path of building socialism with Chinese characteristics in an independent and self-reliant manner," she said, "we have scored glorious achievements that attracted worldwide attention."

Nor does the leadership intend to slow a GDP growth rate that has averaged nearly 10 percent since 1979. "China has the potential and conditions to maintain fast economic growth for a fairly long period," she noted. American officials insisted they welcomed the candor.

And Labor Secretary Elaine Chao said the tone of the remarks, dwelling on Chinese history, reflected cultural differences. "They were trying to set the context," she told reporters later. "That's a very Eastern way of communicating." Still, the Vice Premier's speech starkly demonstrated that the two governments continue to operate in parallel universes on economic policy.

Later in the morning, after a presentation by Ma Kai, chairman of the National Development and Reform Commission, celebrating China's industrial planning, U.S. Trade Representative Susan Schwab gave a spirited rebuttal, arguing that, historically, government intervention in markets has led to "less stability, not more; less development, not more." "I put on my old academic cap and talked about different development paths," said Schwab, a former university dean who once negotiated with China on behalf of Motorola (Charts).

Veiled barbs

The Chinese, on the other hand, were eager to point out their own concerns about American policy. Ms. Wu's remarks included veiled barbs at the U.S., noting that China had ratified the Kyoto Protocol on global warming and was "fully harnessing world peace" in its global economic development. The United States did not ratify Kyoto, and remains bogged down in an unpopular war in Iraq.

The Chinese also complained about U.S. national security policies that limit sensitive high-tech trade and acquisitions of American firms, according to Gutierrez. The American delegation, he said, was forced to "clarify" a perception that U.S. policy was moving toward protectionism.

Gutierrez praised the first day of the session for being "an honest, solid dialogue." But, like other U.S. officials, he wanted reform to move forward faster than the Chinese appeared willing to go. "We've got to move as quickly as possible," he said. "You're talking about a lot of business, and a lot of jobs, on both sides."

December 15, 2006 Ben and Hank's Not So Excellent Adventure by Peter Schiff
This week, in what I believe to be an unprecedented diplomatic pilgrimage, the sitting U.S. Secretary of the Treasury and the Chairman of the Federal Reserve were dispatched to China. Ostensibly they were sent to pressure the Chinese into allowing their currency to appreciate against the dollar. In reality, they were more likely sent there to do just the opposite. Despite the hawkish public tone coming from Washington, the private dialogue was likely to have been far meeker. My guess is that Bernanke and Paulson kowtowed to America's biggest supplier and largest lender, and pleaded for them to keep the goods and credit flowing. Although it didn't take place in Macy's window, the affair may qualify as the "mother of all butt kissings." The last thing that Paulson and Bernanke want is for the world to recognize the financial precipice upon which the U.S. economy now teeters, and China's unique ability to push it over the edge. It is absurd to imagine that they would actually demand that China revalue its currency. Think about what such a request actually implies. It means that Americans would pay higher prices for the goods they buy and higher interest rates on the money they borrow. Does anyone really believe that American politicians are in China to demand higher prices and higher interest rates for American consumers? Since such a combination would surely produce a sever case of stagflation, does anyone really believe that Greenspan and Bernanke went to China to demand that they push the U.S. economy into recession? It is far more likely that they are there to persuade the Chinese to maintain the current currency peg so that Americans can continue to enjoy the artificially high standard of living that the massive subsidy provides. No doubt they will likely try to convince the Chinese that doing so is in their interest as well, though I am not sure just how much longer that dog will continue to hunt. Once Chinese officials grasp the concept that the only thing standing between their citizens and much higher standards of living is the currency peg, they will abandon it completely. The result will be abundance in China and scarcity in the U.S. China will then be awash in credit and consumer goods while America will be devoid of both and awash in paper dollars. Think about today's unchanged reading on November CPI, or Wednesday's 1% gain in November retail sales. What would happen to the CPI and retail sales if both prices and interest rates surged? The biggest factor boosting retail sales was the 6.5% gain in consumer electronics. Does anyone want to guess where most of that stuff was made, or how it was paid for? How many big screen TVs could Americans "afford" to buy on credit if both prices and interest rates went up by 25% or more? As usual, the media interpreted the recent retail sales figures as evidence of a strengthening U.S. economy. Nothing could be further from the truth. Such sales merely reflect the strength of the economies that produced the goods in the first place, not the economy of the nation that went deeper into debt to consume them. Ironically, during the very week that Paulson and Bernanke were trying to convince the Chinese to keep buying dollars, Alan Greenspan was making a good case why the rest of us should sell. The former Fed chairman, adding his voice to that of his predecessor Paul Volcker, predicted that the dollar's recent slide would continue for years to come and cautioned that it would be foolish for anyone to keep all of their money in just one currency. From my perspective it would be foolish for anyone to keep any money in U.S. dollars. If the Chinese come to their senses and pull all that American wool out of their eyes, then look out below. Before they do protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp.
Peter Schiff C.E.O. and Chief Global Strategist Euro Pacific Capital, Inc.

Published December 15, 2006 7:27 PM EST

*** BREAKING NEWS ***

CHINA TO DUMP ONE TRILLION IN U.S. RESERVES!!!!

Tells visiting Bush administration officials they will not sit back and lose their shirts as U.S. Dollar collapses; they are getting out fast and large!!!!!!

BEIJING, CHINA -- Sources with a U.S. Delegation in Beijing have told The Hal Turner Show  the Chinese government  has informed visiting Bush Administration officials they intend to dump One TRILLION U.S. Dollars from China's Currency Reserves and convert those funds into Euros, gold and silver!
 
China was allegedly asked to withhold the announcement until Bullion Markets closed for the weekend to prevent an instant spike in gold and silver prices.  This delay will give the world the weekend to consider appropriate actions rather than have a knee-jerk reaction which could see the U.S. Dollar totally collapse in value Monday.

According to this Senior source, China told the U.S. delegation they no longer have faith in U.S. Currency for several reasons:

1) The Federal Reserve Bank ceased publishing "M3" data in March, making it nearly impossible for anyone to know how much cash is being printed.  China said this act made it impossible to tell how much a Dollar is worth.

2) The U.S. Dollar has lost upwards of thirty percent (30%) of its value against other foreign currencies in the recent past, meaning China has lost almost $300 Billion simply by holding U.S. Dollars in its reserves.

3)  The U.S. has no plans whatsoever to reduce deficit spending or ability pay down any of its existing debt without printing money to pay it off.

For these reasons China has decided to implement an aggressive sell-off of U.S. Dollars before the rest of the world does so.  China reportedly told the US delegation; "we are the largest holder of U.S. Currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts."

Early this week, in an unusual move, the Bush administration sent virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Dec. 14 and 15.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke lead the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation is Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

The Bush administration wanted to get China's cooperation in preventing a dollar collapse.  The Hal Turner Show has been told the effort failed.

According to the source, Fed Chairman Bernanke left the meeting "pale and in a cold sweat" as the implications of China's decision seemed to sink in.

The implications are enormous:  The U.S. Dollar is likely to collapse in value against all other major currencies as early as Monday, December 18.

This would cause a worldwide sell-off of dollars, create almost immediate "hyper-inflation" in the US and also impact world markets at a level "worse than the Great Depression of 1929."

Arabs to the rescue?

In a strange twist of fate, Arabs and OPEC may come to the rescue of the U.S.!

Senior officials in OPEC made clear that they too would be severely harmed if the U.S. Dollar collapsed, and hinted they "would not be inclined to sell oil to any particular nation that intentionally caused such a collapse."

This was a thinly veiled threat to China, which depends heavily on OPEC oil for its rapidly developing energy needs.

The OPEC officials even went so far as to say "Since China lacks the ability to project their military power, OPEC nations need not worry about any Chinese military response to an oil cut-off."

Such brutally candid remarks will not sit well with China; and signal ominous things for the U.S. .

Arabs and OPEC will want something in return for saving the U.S. from economic collapse and it is already widely speculated what they want will be a complete change in U.S. backing of Israel in the Middle East.

If such demands are made by the oil-rich Arabs, the U.S. would be left with little choice but to virtually abandon the jewish state to preserve itself.

-------------------------------------

UPDATE 10:18 PM:
 The Washington Post confirms. . . .
"U.S., China Clash On Currency" Click Here
-- ---------------------------------

UPDATE 12:07 AM EST, Saturday, December 16, 2006:

Additional sources, one in the U.S. Commerce Department  and another in the US Treasury have confirmed the initial report above and referred me to another, Third, source in the Pentagon.

Both the Commerce and Treasury Sources report that while China will not be able to simply trade their Dollars for other paper currencies, they will spend their U.S. Cash on commodities such as gold, silver and Rhodoium as well as military hardware; ships and planes, placing large orders and paying for those orders with the one point one trillion in cash dollars they possess.

Extreme Military Concern

In speaking with the contact at the Pentagon, I am able to now report the Pentagon views this currency-killing as a cunning military aspect to Chinese plans:

The Pentagon says that while China has a 2 Million man army, they lack the logistics and heavy lift capability to move that army and supply it.  They can, however, get that military to South Korea and to Japan.

The Chinese see that the U.S. Military is over-stretched  and almost exhausted by its globe trotting Commander-In-Chief.  They feel that by intentionally destabilizing the dollar, the U.S. economy will fail, putting tens of millions of Americans on the unemployment line and putting unbearable pressure on the US Government.

Then, with the U.S. economy in shambles and its manufacturing base eroded by a steady stream of manufacturing plants moving out of the US., the American government will be too occupied with troubles at home to do much internationally.  America will be in no position to challenge China, allowing the Chinese to act militarily elsewhere in the world;

Further, if the U.S. attempted to intervene against any Chinese military action,  the only plant in the world which can manufacture the specialized gyros needed for U.S. Cruise Missile guidance systems, is now located in. . . . .China.

China could prevent that plant from shipping to the U.S., and once our arsenal of cruise missiles was depleted, it would take a long time to re-tool a plant to make more gyros and resupply cruise missiles for battle.  The Chinese feel they could accomplish certain military goals before the U.S. could  re-tool.

They are also confident the U.S. will never "go nuclear" as long as the U.S. itself is not attacked.

The Pentagon source went so far as to say "Even if China was to lose the entire one trillion in cash to a collapse of the Dollar as a currency, they will have succeeded in taking the U.S. off the world stage as any type of effective military or economic power -- without firing a shot!"  A 'classic' Sun Tzu paradigm of victory - the art of fighting, without fighting.

The crippling of the US is a highly desirable military benefit for China at a relatively cheap price since it will leave their human capital and infrastructure assets in place; assets they know they would lose if a hot war erupted with the U.S..

-------------------------------------------------

UPDATE 10:31 AM EST  Saturday, December 16, 2006
Washington Post:
CONGRESS THREATENS TO DECLARE CHINA "CURRENCY MANIPULATOR"
Impose severe sanctions over intent to sell-off One Trillion in U.S. Dollar cash reserves.    Click Here

-------------------------------------------------


More details will be reported here as they become available.

U.S., China Clash on Currency
Both Countries Assertive as Economic Talks Open in Beijing

By Ariana Eunjung Cha
Washington Post Foreign Service
Friday, December 15, 2006; D01

BEIJING, Dec. 14 -- U.S. and Chinese leaders clashed publicly on the opening day of strategic economic talks, with Treasury Secretary Henry M. Paulson Jr. pushing China to revalue its currency and Chinese Vice Premier Wu Yi saying Americans do not have a full understanding of the situation.

After standing by as U.S. officials criticized her country's economic policies in the media during the past week, Wu set the tone for the meeting with assertive introductory remarks that spanned 20 typed pages and 5,000 years of Chinese history.

"Some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China," Wu said, according to a copy of her remarks provided by the Ministry of Foreign Affairs. For example, Wu noted that China needed to create enough jobs to absorb an estimated 300 million rural workers -- equal to the entire population of the United States -- into its urban economy in the next two decades.

Paulson was equally aggressive in his follow-up speech, saying that the U.S. government's "strong view" is that China should allow its currency, the yuan, to be more flexible. Most countries allow the value of their currencies to be set in global markets, but China intervenes to keep its currency pegged to the dollar at an exchange rate that many Western economists regard as skewed in China's favor.

The Chinese economy "would be more effective under a regime where currency values are determined in a competitive, open marketplace based upon economic fundamentals," Paulson said. A revaluation of the yuan upward would make U.S. goods cheaper in China and Chinese goods more expensive in the United States.

Throughout the day, U.S. officials pushed on issues such as trying to resolve the huge trade imbalance between the two countries and making sure that China lives up to commitments it made five years ago when it joined the World Trade Organization. By the afternoon, they said they were optimistic.

"They were very much in a receiving mode," Labor Secretary Elaine L. Chao said in an interview with reporters. "They were listening very carefully."

Commerce Secretary Carlos M. Gutierrez said that the meeting "exceeded expectations" and that "it was a very candid . . . honest, solid dialogue."

High-level U.S. officials, interviewed after the close of meetings for the day, said the two sides agreed on many things in principle, such as the need to keep their economies open to other countries. But specific measures and a timetable were less clear, with the United States pushing for rapid change and China seeking to move cautiously.

Skepticism toward foreign trade, particularly with China, played a major role in the recent U.S. elections, and proposals for punitive tariffs or other protectionist measures could gain support in Congress next year.

"I sense that they have an understanding of the stakes," Gutierrez said. "And the stakes are very large. You are talking about a lot of business, a lot of jobs on both sides. We are their No. 1 customer."

While most of the day was focused on U.S. requests of Beijing, China also listed some priorities: fewer obstacles to the export of U.S. technology and to Chinese investment in the United States. The complaint about U.S. export controls, in particular, led to some tense exchanges, U.S. delegates said,

"They would like no restrictions, and we have restrictions, so there are certain things that they would like that we can't give on," Guttierez said.

U.S. Trade Representative Susan C. Schwab said in an interview that she told the Chinese that their country was "slowing if not backsliding" on economic reforms.

Paulson is a former Wall Street executive who has made dozens of trips to China. He has taken command of the Bush administration's economic discussions with that country and took a high-level delegation of Cabinet members and others with him on this trip as he seeks to make progress toward resolving thorny disputes.

The format of the meeting included formal presentations and broad debate on issues such as China's transport problems and the U.S. culture of easy credit.

Perhaps the meeting's most anticipated and sensitive talks -- about whether China should allow the yuan to rise in value -- were anchored by a statement from Federal Reserve Chairman Ben S. Bernanke, who accompanied Paulson on the trip.

Bernanke said an increase in the currency's value would benefit China, according to U.S. officials present at the talk.

"Other people piped in to say the U.S. has a very interested stake in China's economic well-being," Chao said.

U.S. lawmakers urge action after China meeting

By Doug Palmer
Reuters
Friday, December 15, 2006; 5:22 PM

WASHINGTON (Reuters) - Lawmakers on Friday urged the U.S. and Chinese governments to follow two days of high-level talks on trade and economic concerns with concrete action.

"Dialogue and action must go hand-in-hand. For example, greater flexibility for China's currency is overdue. Postponing further reform not only endangers our bilateral economic relationship, but also put's China's prosperity at risk," incoming Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in a statement.

The U.S. trade deficit with China could reach a record $240 billion this year, fueling the belief in Congress that Beijing is deliberately undervaluing its currency by 15 to 40 percent to give Chinese exporters an advantage in world trade.

U.S. Treasury Secretary Henry Paulson told reporters the two countries had agreed during the meetings in Beijing to bring more balance to the U.S.-China trade relationship.

U.S. officials also told their Chinese counterparts "in the clearest possible terms" that China needs to move toward a more flexible currency exchange rate policy, Paulson said.

But Sen. Charles Schumer, a New York Democrat who is one of China's harshest critics in Congress, said he expected Beijing to continue dragging its feet on much-needed reform.

"Every few years, with a lot of fanfare, the Chinese say they will begin a new round of serious discussions and drag the process out for a long time. At best, we end up with crumbs. The Chinese economy is advanced and sophisticated enough that they could start playing by the rules right away if they really wanted to," Schumer said.

While Baucus and Schumer focused their remarks on the need for China to act on U.S. trade concerns, Rep. Sander Levin, a Michigan Democrat, said Congress and the Bush administration need to take several steps.

Democrats will again ask the U.S. Trade Representative's office to formally challenge China's currency practices at the World Trade Organization even though USTR has rejected that request a number times in the past, Levin said.

Lawmakers will also reintroduce legislation requiring the Commerce Department to consider China's "currency manipulation" as a subsidy under U.S. trade laws so companies can apply for countervailing duties to offset it, Levin said.

Levin also urged the Treasury Department to formally label China as a currency manipulator in a semiannual report that is now two months overdue.

Many U.S. financial services group applauded this week's talks as an important step forward to Chinese reform, but some other industry associations were less impressed.

Kevin Kearns, president of the U.S. Industry and Business Council, said Paulson and a U.S. delegation that included Federal Reserve Chairman Ben Bernanke and U.S. Trade Representative Susan Schwab were "content to engage in idle diplomatic chitchat" when stronger action was needed.

"Since the Bush administration won't respond effectively to China's currency manipulation, illegal subsidies, intellectual property theft and other transgressions, Congress needs to seize control over China's trade policy," Kearns said.

December 17, 2006 Paulson, Bernanke Strike Out by Mike Shedlock
At the trade summit opening in China on December 14th Paulson Called for More Flexible Yuan. U.S. Treasury Henry Paulson, facing pressure from Congress for trade sanctions against China, urged the nation to relax currency controls and better protect property rights to help close a record trade gap. Talks in Beijing must produce "tangible results" to prevent protectionist elements in both nations damaging their trade partnership, Paulson, leading one of the biggest U.S. economic delegations to China, said in the Chinese capital today. China should move toward a regime where "currency values are determined in a competitive open marketplace based upon economic fundamentals," Paulson said at the inaugural meeting of the so- called Strategic Economic Dialogue between China and the U.S. "In the meantime more currency flexibility is necessary." China did not take too kindly to Paulson's remarks. Fortune Magazine reported China pushes back against Paulson. Vice Premier Wu Yi had other ideas. Like an impatient schoolmistress, she opened this historic gathering with a lecture. Her talk was one part history lesson (China has 5,000 years experience as a global citizen) and one part 21st century civics lesson (the goal is a "socialist harmonious society"), with no sign that her regime sees any need for major economic reform. "We have had the genuine feeling that some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China," she began, striking a less-than-diplomatic note. "This is not conducive to the sound development of our bilateral relations." In delivering her 20-page presentation, which included slides to illustrate points on Chinese history, Ms. Wu made clear that the Chinese regime believes it has carved its own responsible global economic path, and isn't especially eager for the Americans' free-market advice. According to the English translation of her remarks, she repeated six times that China was "sticking to" its "new path of industrialization," and three times that China was "continuing to improve" on reforms already in place. Substantial free-market change wasn't part of the equation. "By following a path of building socialism with Chinese characteristics in an independent and self-reliant manner," she said, "we have scored glorious achievements that attracted worldwide attention." Ms. Wu's remarks included veiled barbs at the U.S., noting that China had ratified the Kyoto Protocol on global warming and was "fully harnessing world peace" in its global economic development. The United States did not ratify Kyoto, and remains bogged down in an unpopular war in Iraq. The Chinese also complained about U.S. national security policies that limit sensitive high-tech trade and acquisitions of American firms, according to Gutierrez. The American delegation, he said, was forced to "clarify" a perception that U.S. policy was moving toward protectionism. One would think that by now the US would get the picture. China does not want or need our advice. How many times does China have to tell the US to butt out? But that did not stop Bernanke from taking a swing the following day. The Financial Times reported Bernanke calls for renminbi revaluation. Ben Bernanke stepped into a political minefield on Friday [December 15th] when he released remarks branding China's undervalued currency an "effective subsidy" for its exporters that was distorting patterns of production and trade. Although the Federal Reserve chairman dropped the phrase in a speech in Beijing, using instead the less inflammatory term "distortion", the Fed was standing by the language of the original text. His comments were welcomed by US manufacturers. Frank Vargo, of the National Association of Manufacturers, said: "This is a very important message. The administration has been talking simply about currency flexibility. But Bernanke has come out and called the currency undervalued and told Beijing it is distorting the Chinese economy. That is significant." Hank Paulson, the Treasury secretary who led the delegation and faced pressure to harden his rhetoric, said: "All I can say is that the chairman of the Fed is entitled to his independent comments." The incoming Congress took the speech as a cue to launch anti-dumping legislation - which has been looming since Democrats won the midterm elections on a wave of economic populism. Sander Levin, head of the House committee on trade, on Friday night unveiled a controversial bill to permit the use of anti-subsidy laws in response to "currency manipulation" by Beijing. Bernanke's remarks should once and for all put to bed the idea that the Fed would be forced to raise interest rates to support the dollar. Previously it was the Treasury Department calling for China to act, now the Fed is in the game too. The notion that a weaker dollar will help exports and help balance trade deficits is complete silliness. The way to fix the balance of trade is simple. The US needs to stop borrowing money from foreigners to fight a completely stupid war in Iraq, and US consumers need to stop buying junk they do not need and can not afford. With 20-1 wage differentials it is simply impossible to balance the trade deficit on the back of currency devaluations. The National Association of Manufacturers called Bernanke's speech "significant". The only way it can be significant is if China acts (extremely doubtful as China does not react to pressure) or if Bernanke somehow manages to goad Congress into doing something totally stupid in response such as pass a modern day version of the infamous Smoot Hawley Tariff Act. With a Democratic Congress now in control, protectionist nonsense probably has a greater chance than before, especially with a weakening economy. What is distorting the world economy is US spending is simply out of control, Japan's interest rates are too low, and carry trades and speculation are running rampant, not just in the US but worldwide. The Greenspan Fed cutting the Fed Fund rate to 1% was certainly a contributing factor leading up to the latest mess. Vice Premier Wu Yi in no uncertain terms told Paulson exactly where to go, yet Bernanke repeated the same message the following day. So what game is Bernanke playing anyway? Is he that dumb to think he can pressure China? It's not like he is an elected official up for reelection and sending a message the folks back home want to hear. For unknown reasons Bernanke risked firing up protectionist fears in Congress for close to a zero percent chance China will listen to him and not Paulson. Speaking of Paulson wasn't he supposed to be the great diplomat that Snow wasn't? My friend Harmy on the Motley FOOL summed up the situation perfectly. For as long as I can remember any number of small countries have pleaded with the US to modify it's trade policies which caused huge damage to those countries economies. Through it all the US simply adopted a policy of indifference and did exactly as it pleased. Now we have the US trying to force China into doing what the US wants simply because the US cannot control its own economy. The problem the US has is a US one not a Chinese one and I am quite sure that behind the inscrutable Chinese smiles they will do exactly as they please just as the US has done over the years. When your opponent starts bleating about unfair tactics you know you've got him on the ropes. This much is clear: The US can no longer call the shots in the global trade arena, the US economy is on the ropes, and whatever game Bernanke is playing smacks of pure desperation.

Good Bye Dollar, Hello Gold

Neu 2006-12-17:

Es scheint das Klima beim US-China Meeting sehr frostig gewesen zu sein:

Peter Schiff: BEN AND HANK'S NOT SO EXCELLENT ADVENTURE
Mike Shedlock: Paulson, Bernanke Strike Out
Fortune: China pushes back against Paulson

In "normalen" Zeiten sollte das schon zu einem massiven Dollar-Abverkauf durch andere Dollar-Halter führen.
Aber sind die Zeiten normal? Vielleicht können die Briten dem Dollar hier weiterhin helfen?

Es soll sich niemand etwas vormachen, wer zuerst verkauft, bekommt in einer Panik auf den Finanzmärkten noch am meisten. Dass Ben Bernanke irgendwann seine Helikopter zum Geldabwurf einsetzen würde, ist klar. Dann würden die Auslands-Dollars automatisch entwertet. Die Alternative ist also verkaufen/umtauschen oder abschreiben.

Iede Lieferantenfinanzierung ist einmal zu Ende gegangen, besonders, wenn der Schuldner intern und aussen praktisch bankrott ist. Warum nicht jetzt verkaufen?

PS:
Die Links auf die Hal Turner Show mit der chinesischen Dollar-Aberverkaufs-Erklärung mussten leider wieder entfernt werden, das dies eine rassistische Website ist. Danke an den Leser, der sie analysiert hat.

#95893 von valueinvestor 18.12.06 21:03:27    Beitrag Nr.: 26.285.442
Folgende Antwort bezieht sich auf Beitrag Nr.: 26284909 von derschweizer am 18.12.06 20:33:13 Interessant. China droht mit Selbstmord. Als könnte China so einfach aussteigen. China ist der Dollar Markt - die können ihre Dollars höchstens abschreiben, verkaufen bringt nichts. Die Frage ist eher, wieviel gutes Geld sie dem schlechten nachwerfen. Die Konsequenz daraus bleibt aber die Gleiche.

#95912 von Gania 18.12.06 21:45:13    Beitrag Nr.: 26.286.381  Dieses Posting:   versenden  |  melden  |  drucken  |  Antwort schreiben	CARDERO RES CORP.
Europäische Währung für Außenhandel Der Iran will Dollar durch Euro ersetzen Der Iran will im Außenhandel und bei seinen Auslandsguthaben den US-Dollar durch den Euro ersetzen. Insbesondere die Einnahmen durch den Ölhandel sollten in der europäischen Einheitswährung kalkuliert werden, sagte der iranische Regierungssprecher Gholam Hossein Elham. Damit solle die Abhängigkeit von der US-Währung beendet werden. Auch die Grundlage für die Berechnung des Staatshaushaltes wird nach den Worten Elhams zur Zeit geändert. Der Erdölexport macht etwa 80 Prozent der iranischen Deviseneinnahmen aus. Dem Druck der USA entkommen "Die Regierung hat die Zentralbank angewiesen, den Dollar durch den Euro zu ersetzen, um die Probleme der Regierungsorgane im internationalen Handel und bei Warenkreditbriefen zu begrenzen", fügte Elham hinzu. Damit bezog sich der Regierungssprecher implizit auf wachsende Schwierigkeiten des Iran, Verträge im Ausland zu schließen. Die Vereinigten Staaten üben zunehmend Druck auf Banken aus, nicht mehr mit iranischen Kunden zu handeln. Das war zu erwarten Gani

December 18, 2006 The 'Strong' Yuan by Steve Saville
Below is an extract from a commentary originally posted at www.speculative-investor.com on 14th December 2006. After being pegged at a constant rate against the US$ for many years China's currency (the Yuan) has, over the past year or so, moved relentlessly higher against its US counterpart. This strength has gone a long way towards quieting the US politicians who were previously pointing to the US's large and growing trade deficit with China as evidence that China was achieving an unfair trade advantage by holding its currency at an unreasonably low level. The US trade deficit with China has continued to expand, but now the Chinese are doing something to fix the problem. At least, that's the way it seems. But as is often the case when politics and economics become intertwined, things are not what they seem. For starters, the following long-term monthly chart of the US$/Yuan exchange rate shows that the gains made by the Yuan over the past year have been trivial compared to the losses it incurred over the preceding 20 years (a downward move on the chart indicates a lower number of Yuan per US$ and, therefore, a strengthening Yuan). The satisfaction -- if that's what it is -- that China is finally doing something to address the worrisome US trade deficit can be likened to the satisfaction felt by an American tourist after he/she has negotiated a 50% discount on the asking price of a trinket at an Asian marketplace, blissfully unaware that the local vendor tripled his asking price in anticipation of the negotiation. As far as the Yuan is concerned, an 80% loss of value relative to the US$ between 1981 and 2005 has been followed by a one-year gain of around 4%. If a stock lost 80% of its value and then bounced by 4% nobody would be talking about how strong the stock was; and yet we keep reading about the "strong Yuan". In any case, the main reason that things aren't what they seem is that the entire debate over US-China trade relations and currency exchange rates is based on a false premise. The false premise is that in a trade relationship between Country A and Country B, if Country A cheapens its exports by fixing its currency at an artificially low exchange rate then it will benefit at the expense of Country B. The fact is that the US economy is a net BENEFICARY of the low Yuan; and the lower the Yuan becomes relative to its true value (the value at which it would trade in the absence of the Chinese Government's exchange rate manipulation) the greater the benefit to the US economy. Thanks to the under-valued Yuan, US consumers spend less of their hard-earned dollars in order to obtain the goods they want; and the difference between what they would spend in the absence of the subsidy -- an artificially low exchange rate is equivalent to a subsidy -- and what they actually spend becomes available for spending elsewhere or for investment. The US companies whose products are in direct competition with the subsidised Chinese imports are hurt, but the US economy as a whole gets a boost. By the same token, China's economy gets hurt by an artificially low Yuan. Exporting companies will benefit, by everyone else will be stuck paying higher prices as a result of the cheapened currency. All of which begs the question: why does China do it and why do some US politicians complain about it? The general answer is: it's futile to look for economic logic in the interventionist decisions of governments. If most politicians were economically literate and strove to do what made the most sense from an economic perspective then when it came to the workings of the economy the government would do absolutely nothing. The fact is, however, that most politicians are neither economically literate nor motivated to do what makes the most sense from a purely economic perspective. They are, instead, primarily motivated by desires to serve special interests and to increase their own popularity amongst the voting public. So even though subsidies and tariffs are guaranteed to hurt the economy as a whole, they are periodically advocated by politicians because the adverse effects on the overall economy of any single subsidy/tariff will potentially be small compared to the short-term positive effects -- the short-term being the only term that matters if your overriding goal is to win the next election -- on the targeted industry (group of voters). For example, a few years ago George Bush slapped hefty tariffs on steel imports in order to help US steel producers. It's likely that almost everyone in the US was hurt by this action because almost everyone buys things that contain some steel, but the amount by which the average consumer was 'out of pocket' due to higher steel prices was probably quite small relative to his/her total expenditure. And in any case, at any given time there will be a myriad of factors affecting prices so it will generally be impossible to prove a direct link between the imposition of any tariff -- Bush's steel tariff included -- and specific price rises elsewhere in the economy. The average steel-worker, on the other hand, might have perceived a huge benefit from the tariff. Therefore, the political logic behind the economically-indefensible tariff probably went something like: we won't lose any votes amongst the general population, but we'll pick up some votes amongst the steel-workers. Getting to the specifics of the US-China trade/currency situation, the motives of the US politicians who have called for China to allow its currency to rise substantially or suffer the draconian consequences (a 27% tariff on Chinese imports) are easy to understand: they have advocated a 'solution' that would have the effect of pushing prices materially higher throughout the US economy in order to curry favour with a small section of the voting public. They might not understand the adverse effects of their recommended solution on the overall economy, but even if they did their approach would probably be the same. In contrast, the US Treasury Secretary seems to be reasonably comfortable with the Yuan's ultra-slow appreciation and the current China-US trade situation. He undoubtedly understands the benefits to the US economy of China's exchange rate policy: not just the benefits conferred by lower goods prices but also the benefits conferred by the process through which China keeps its currency at an artificially low level (China's central bank 'soaks up' the excess trade-related dollars and uses them to purchase US bonds, thus putting downward pressure on long-term interest rates in the US). The motives of China's leaders are more difficult to fathom because they don't have to stay popular in order to stay in power. One possibility is that China's export-oriented businesses exert a disproportionately-large influence on the decision-making process. Another possibility is that the subsidy being provided to US consumers by the Yuan's under-valuation is perceived by China's leadership to be necessary, for now, in order to foster the rapid development of the country's manufacturing industry. A third possibility is that the enormous rises in the prices of natural resources over the past few years have made China's leaders aware that a fairly valued Yuan would be in their own best interest, but they are afraid to make a big move in that direction due to the unpredictable effects it might have. In this case, the Yuan's miniscule appreciation over the past year would be the first step in a long journey.

The U.S. Government's Momentous Misunderstanding

By Stephen Clayson
17 Dec 2006 at 12:14 PM EST

LONDON (ResourceInvestor.com) -- Last week saw U.S. Secretary of the Treasury Henry Paulson visit China for high level economic talks. The main topic of conversation was the U.S. trade deficit with China and as a corollary, the relative values of the yuan and the dollar. 

The two sides’ opinions on the current pattern of U.S.-China trade clearly differed. Paulson stated publicly, in what the Chinese will have perceived as a most un-diplomatic fashion, that “the rest of the world is going to be impatient, particularly the U.S., and so they (meaning the Chinese government) need to accelerate reform”.

Meanwhile, China’s Vice-Premier Wu Yi dismissed Paulson’s attitude as “not conducive to the sound development of our bilateral relations”, and chastised the U.S. government as “not only having limited knowledge of, but harbouring much misunderstanding about the reality in China”.

From the tone of these public comments we can glean that the behind closed doors exchanges must have been pretty barbed at times.

Paulson and the rest of the Bush administration are grouchy because data published on Tuesday showed that the U.S. trade deficit with China grew 6.1% to a record $24.4 billion in October, and that the deficit with China represented 41% of the total U.S. deficit for the month of $58.9 billion. But their anger is inappropriate.

Trade numbers like these more an indication of Americans’ demand for the goods that China makes than of an undervaluation of the yuan, the latter being Paulson and the U.S. government’s primary bugbear when it comes to China.

But let’s assume for a moment that the yuan is maybe 50% undervalued, and that tomorrow, its value was to suddenly be adjusted upwards by that dramatic proportion. China would still be the cheapest place for U.S. firms to source virtually all the goods they currently import from the country.

It is likely that the yuan is somewhat undervalued, and it is also likely that when the Chinese are ready, they will allow it to appreciate. But in doing so, they will be making the way of life that Americans have become accustomed to more expensive to enjoy, without necessarily prompting any major change in the pattern of trade between the two countries.

Of course, the story might be different if the yuan’s undervaluation were to be of the magnitude implied by the World Bank’s 2005 judgement of its value based on purchasing power parity (PPP) estimates for the year 2003, which has the dollar equivalent to 1.8 yuan. However, PPP-based exchange rate estimates can be very misleading, and no reasonable observer would expect the dollar to yuan exchange rate to shoot towards that level if the controls were removed tomorrow.

An exchange rate such as that implied by the World Bank’s estimate might well shift some of the manufacturing currently done in China for the U.S. market back across the Pacific. But it is also unrealistic and isn’t likely to come to pass any time soon, even if the yuan were to become a free floating currency. It shouldn’t be forgotten that since July 2005, the yuan has been free to appreciate by a maximum of 0.3% each day, but market pressure for it to do so has been limited, suggesting that the market has a different view on the currency to the U.S. government.

No discussion of this issue is complete without the point being made that while the yuan may be undervalued, the dollar is overvalued. But you don’t hear the Secretary of the Treasury complaining that the dollar isn’t declining fast enough because the Chinese are manipulating it, although they are.

China’s ongoing purchases of U.S. dollar assets with the proceeds of its trade surplus keep the dollar’s parity with other currencies reasonably secure at present levels.

The abandonment by China of this policy would lead to a substantial devaluation of the dollar. My point is that both currencies need to move.

So what’s the solution? A cautiously timed policy shift by the Chinese to allow the yuan to appreciate while allowing the dollar to fall would benefit both countries in the long run. While change is necessary, excessively rapid change, which could potentially hit growth in China and push the U.S. into recession, won’t do anyone any favours.

To avoid this, the two governments should cooperate and try to come up with a timetable, but with the low level of tact being employed last week by Paulson, that may be difficult.

SPIEGEL ONLINE - 20. Dezember 2006, 12:02
URL: http://www.spiegel.de/wirtschaft/0,1518,455592,00.html

DOLLAR

Schwarze Zeiten für den Greenback

Von Arne Gottschalck

Der Dollar ist so schwach wie seit Jahren nicht mehr. Und auch die erdölproduzierenden Länder besitzen so wenig Dollar wie seit zwei Jahren nicht. Ist die Leitwährung der Welt am Ende?

Hamburg - Bei 1,40 wird es ernst. So oder so ähnlich klingt die Meinung der meisten Volkswirte und Analysten, befragt man sie nach der Entwicklung des Dollars im Vergleich zum Euro. Von ungefähr kommt das nicht. Immerhin ist der Dollar aktuell so schwach wie schon seit drei Jahren nicht mehr, ein Euro kostet kostet inzwischen 1,32 Dollar. Unwahrscheinlich ist es daher nicht, dass der Kurs Richtung 1,40 geht.

Die Amerikaner selbst haben kein Interesse daran, den Kurs ihrer Hauswährung zu stützen. Sie können sich so über gute Exportchancen freuen. Zum Ärger der Europäer - der starke Euro macht Exporte in die USA schwieriger. Denn die Amerikaner müssen proportional mehr Geld für Produkte aus der alten Welt ausgeben als für jene made in America. Chancen auf ein deutliches Eingreifen der US-Administration gibt es also nicht. Mit einer Ausnahme.

"Wenn das Tempo des Dollarverfalls aber zu abrupt wird und mit negativen Effekten auf die Realwirtschaft zu rechnen ist, etwa aufgrund steigender Langfristzinsen, weil internationale Investoren eine höhere Risikoprämie verlangen, könnte dies der Fall sein", erklärt Carsten Fritsch, Währungsexperte der Commerzbank. Bis dahin werden Europäer aber weiter über den schwierigen US-Markt schimpfen.

Das gleiche gilt übrigens auch für die Geldanlage. So manch US-Aktienfonds fährt seinen Anlegern hohe Gewinne ein - doch eben nur in Dollar gerechnet. Rechnet man die Währungsschwankungen heraus, bleibt in Euro aktuell nicht viel übrig. Kein Wunder also, wenn deutsche Unternehmen wie Porsche aktives Währungsmanagement betreiben.

Zu 100 Prozent sichert das schwäbische Unternehmen seine Währungsrisiken ab, keine Selbstverständlichkeit. Konkurrenten machen das nicht immer so, ist man bei Porsche ein wenig stolz. Immerhin auf drei Jahre hinaus hat sich das Unternehmen zum Beispiel gegen Dollarschwächen abgesichert. Eine Menge Zeit, die der Dollar aber vielleicht auch braucht.

Doch nicht alle Unternehmen widmen sich dem Währungsmanagement so intensiv, sagt Andreas König, der bei Pioneer Investements das Währungsmanagement verantwortet und einen Währungsfonds verwaltet: "Da machen einige noch zu wenig. Allerdings ist das auch verständlich. Das Euro-Dollar-Verhältnis hielt sich lange in einer engen Spanne - und die, die gehedgt hatten, zahlten bisher drauf. Denn der Hedge ist ja nicht kostenlos. Entsprechend hatten jene Unternehmen lange Recht, die wenig abgesichert haben. Doch hat sich das geändert. Wenn die Euro-US-Dollar-Bewegung weitergeht, wird manch einer noch auf den fahrenden Zug aufspringen müssen."

Asiatische Nonchalance

Immerhin, die Einstellung scheint sich tatsächlich zu wandeln. Während 2004 das Thema Währungen die Menschen nur abstrakt zu interessieren schien, ist es nun bei den Fondsgesellschaften angekommen, beobachtet Eugen Keller, Währungsexperte von Metzler. "Die Fondsgesellschaften beginnen nach entsprechenden Fachleuten zu suchen und spezialisierte Produkte aufzulegen."

Die Gründe für das Siechtum des Dollars sind schnell ausgemacht: Vor allem die Zinsen sorgen für die Schieflage. "Es gibt Anzeichen einer Wachstumsverlangsamung in den USA, was zu Fed-Zinssenkungserwartungen geführt hat, wohingegen die Europäische Zentralbank aufgrund der robusten Konjunktur die Zinsen noch einmal anheben dürfte", sagt Fritsch.

Dazu kommt, dass auch der ehemalige Chef der amerikanischen Notenbank, Alan Greenspan, dem Dollar eine Schwächeperiode vorhersagte, wenn nicht das US-Leistungsbilanzdefizit reduziert werde.

Kein Wunder also, wenn der Greenback gegenüber dem Euro an Boden verliert. So ganz typisch ist das allerdings nicht für die Entwicklung von Währungen zueinander. Unter Aktienprofis gilt es als ausgemacht, dass sich langfristig Währungsgewinne und -verluste gegenseitig aufheben. Nur ab und zu kommt es zu starken Ausschlägen wie auch 2001 und 2002, als der Dollar sehr stark wurde und kaum mehr als 90 US-Cent nötig waren, um einen Euro zu kaufen.

Den aufstrebenden asiatischen Wirtschaftsnationen ist der schwache Dollar egal. Sie verfolgen "in erster Linie nationale Interessen und dies heißt die relative Wettbewerbsfähigkeit ihrer Exportwirtschaften untereinander. Sie könnten daher einen schwächeren Dollar akzeptieren, solange alle asiatischen Währungen gleichmäßig aufwerten und nicht nur einige", so Fritsch. Auch viele ölproduzierende Länder wenden sich inzwischen - wenn auch nur behutsam - vom US-Dollar ab.

Was nun also? "Für 2007 sehen wir keinen Dollar-Crash, denn durch rückläufige US-Importe und eine möglicherweise geringere Ölrechnung wird die USA ihre Leistungsbilanz verbessern können", rechnet Keller von Metzler vor. "Allerdings wird sich das Verhältnis wohl nicht beim vom uns errechneten fairen Durchschnittswert von 1,20 einpendeln." Die gleiche Diagnose stellt Fondsmanager König. "Der Dollar wird weiter zur Schwäche neigen, aber nicht kollabieren." Es kann aber alles auch ganz anders kommen. Denn "Garantien für die Richtigkeit der Prognosen gibt es nicht", so noch einmal Fritsch.

Der Tenor der Geldexperten lautet aber dennoch: Finger weg von den USA. "Man fährt am besten mit Anlagen am europäischen Kapitalmarkt. Der feste Euro dürfte die europäischen Zinsen niedrig halten, was gut ist für europäische Renten und Aktien", sagt Fritsch. "Die unterbewerteten Währungen wie der Yen und der Schweizer Franken, das sind aktuell durchaus attraktive Währungen", ergänzt Keller. Raus aus Amerika - dem Dollar zumindest dürfte die Abneigungen nicht auf die Beine helfen.

USD - '07 A FINAL YEAR?
by Christopher Laird
PrudentSquirrel.com
December 20, 2006

This article is going to discuss the growing world discontent with the USD. Previously, although the US fiscal and trade deficits were in danger territory, the US trade partners were willing to continue to accumulate USD foreign reserves as they sold masses of everything under the Sun to the US.

They benefited from massive economic growth, and let the USD hot money circulate in their economies as washed hot money (hot money comes in as USD and then is changed into local currency or lent out in local currency – this causes lending and asset bubbles locally, creating a seeming endless prosperity bubble until that comes to the inevitable end and they have massive inflation or asset bubble collapses). Ultimately this hot money issue will decide the USD fate anyway, but there are sinister looking issues, particularly with China, that may cause a USD crisis in 07.

Effect of a serious USD drop on your savings

As far as the USD is concerned, there is a growing consensus that our trade partners are getting tired of accumulating the USD. If this becomes severe enough, the USD will experience a rapid fall in value on the order of over 30% in a year. The US stock and bond markets would collapse, and US interest rates rise into the teens at the least. The value of your 401k savings and other cash type accounts would drop 30% in USD terms based on the rising prices of everything, and another 30 to 50% in nominal USD value as well as the stock and bond markets collapsed. Net USD/real value of losses to your 401ks? Very possibly over 60% - in one year.

If the USD devalues heavily in 07, we could be talking losses on the order of 60% net real value of USD financial assets. I get the impression that most people only think their dollar accounts would devalue modestly – perhaps 10% if the USD were to devalue heavily in 07. They are mistaken. The value would drop more on the order of what I just calculated in real terms – in any case probably over 50%. The losses would be from a lower USD value combined with dropping stock and bond market values – things which every 401k and other retirement account is based on.

The US and every trade partner is hoping the USD could gradually devalue. They will work together for that end. That may happen. However, there is a serious level of risk the USD decline could get out of control. Central banks don’t have all the cards. Markets can panic and outrun central bank efforts to stabilize things.

That exact same calculus is understood by our trade partners and will affect their USD holdings in the same exact way. The only reason why the USD has held up so far is because our trade partners do indeed understand this calculus, and have been so far able to stem any serious USD mini crises. The problem is, at some point there will be one mini crisis that is not stemmed, then we look over the edge of the precipice. It would not all happen in one fell swoop, but, at the end of a year, we could easily see a net 50% loss of real value of any USD holding.

The present USD situation with China and the US arguing over revaluing the Yuan has the potential to be the crisis that finally is the USD’s undoing. Particularly since the US Congress is probably going to go ahead with US trade sanctions on China. China will threaten to retaliate by dumping the USD- a kind of economic doomsday weapon. Whether they actually do that, to their own great harm, is not clear. But the latest crisis is very revealing on the dynamics we are looking at going into 07. China appears absolutely determined to stay the course, and not move much in the direction the US wants – they need millions of new jobs a year to deal with about 800 million poor and angry Chinese who have yet not benefited from their economic miracle. China considers their economic growth as central to resolving this. China is having 70,000 public demonstrations a year now. That number is rising as well.

Latest rumored USD mini crisis

Last week, there were meetings between Treasury Secretary Paulson and Fed Chair Bernanke, and other ‘A’ team US trade and banking representatives with China. This meeting resulted in a number of internet rumors and some verifiable comments that China is not giving in to US demands for a revalued Yuan/RMB. That is causing the US congress to get very mad, there are trade sanctions coming in 07. The Chinese evidently threatened to dump the USD – they have about a $trillion. Then a very interesting development – the Mid East oil nations stated they will be severely harmed by a collapsing USD if China dumps it. They threatened to embargo oil to China should they dump the USD. All of this shows how high the stakes are going into 07 for the USD – and how serious this USD situation is now. I think we can say, the USD situation is now at a crisis stage.

Formerly, the gold and other financial community has been tracking the financial mess the US has found itself in, with huge trade and fiscal deficits combined well over $1trillion a year. There has been so much written about this that people probably are saying ‘you guys have been talking about this for years – and not much has happened!’

Well, I can say that, having tracked this issue closely now for years, we are at a definite turning point. The once ‘far off’ end of the USD is now at hand or at least very much at risk of happening. The recipe is now in place, irreconcilable differences between China and the US over their undervalued Yuan, and pending US trade sanctions with a bold Democratic US congress.

From what I have heard, when the Chinese floated their idea (threatened) to go ahead and actually dump the USD this last week, first the EU told them they would not sell them enough Euros. Then, the Mid East Oil nations said they will not sell China oil if they dump the USD. China, however is not the type of nation to like being dictated to. They won’t let the US dictate to them with trade sanction threats, and they won’t take any EU interference in this situation well either, nor will they take Arab oil hostility well either.

Also, the moderate Arabs are concerned that a paralyzed US would leave them wide open to a hostile domineering Iran.

The problem China has is it cannot give much ground on the Yuan (their view), or else something worse they fear will happen to them -an economic contraction and millions of rampaging peasants who already feel the economic largess has bypassed them.

These factors add up to a very good chance that China will retaliate against the USD anyway in 07. I don’t see them escaping from US trade sanctions this year, and the Chinese apparently believe they cannot do the things the US is demanding. SO, somehow, this year, the Chinese may pull the plug on the USD.

Who will blame whom?

I don’t see this happening in the first part of the year. First, it will take time for sanctions to be voted on, then Bush will probably consider vetoing them. Then congress needs enough votes to override a veto. And so on. But, then, after a lot of hyperbolae, and ranting in the press, by June or July, we could see an attack on the USD as the rest of the world with USD holdings gets scared. Then, even a minor move by China could tip the whole thing into chaos. Then who could blame whom? We might even see a speculator front run on the USD that tips the whole mess downward.

Some financial alternatives in this situation and some pros and cons

If I have already convinced you that the USD is in serious trouble in the coming year, then let us move to what-if scenarios about your savings.

Let us assume for the purpose of discussion that the USD devalued 30% in 07. What would happen?

First, I would like to point out that the EU has done financial war games relating to this. They did simulations involving derivatives, and found that if one or two huge hedge funds went insolvent, there would be financial panics in their respective stock markets due to forced liquidations. The same EU bankers have also stated that a precipitous drop in the USD would cause financial flight out of world stock and bond markets. There would be a huge financial panic and flight to safety. I am not going to go into all the many aspects of this but:

• Not only US stocks would crash, but likely most major stock markets due to financial flight and contagion. To see these as safe havens from a USD collapse is probably overblown.
• There would likely be derivatives panics as the value of the USD and other currencies fluctuated wildly and caused huge losses on these incredibly leveraged positions.
• There will be massive Foreign exchange volatility, chaos, and possibly restrictions.

Now, many of your USD accounts will have stocks, bonds and such. If the USD were to lose something on the order of 30% in a year, you will not only see prices of everything skyrocket but also see actual drops in the USD values of those stocks and bonds because investors will dump USD assets to escape the falling dollar. As I said, that will be a double hit on your USD accounts.

IF the USD were not to fall to zero, (I doubt it will in one year) then stock accounts for real type assets such as gold stocks and energy will have a two phase reaction.

First, many of these will initially drop due to forced liquidations of various investors. However, eventually a flight to financial safety will force these back up.

Possible foreign exchange controls

However, if the USD were to eventually completely collapse, many USD accounts will be frozen and there will be foreign exchange controls. Meaning you will be forced to ride whatever the outcome of the USD becomes. If the situation got really bad, I believe many mines will be nationalized world wide – that is already happening anyway. A gold stock is not as safe as a gold coin. Of course, these can be confiscated too, and they have been in the US once already in the Great Depression when US gold coin was recalled by the US government so they could run big deficits.

However, anything can be attached by the government in an emergency, so, in a way, this point is moot. It is not likely a paid off house would be so confiscated though, or apartment building or some other real thing. If you were to buy one now, just find one in a non bubble market. There are many areas in the US and Canada that would apply here.

Any protective movements of USD accounts will have to be done in advance of these coming USD drops. That means you would have to be willing to forego some of the coming stock gains that all the financial newsletters and media say are still coming for the US stock market, and not have as much in actual stock accounts and such, but be more in liquidated and protected mode.

Paid off real assets in your actual possession

Now, I have written before about how I prefer something like gold bullion or other paid off real assets, a non bubble house, apartment building or something like this. Paid off assets should survive a real USD devaluation. Some people like the idea of owing money on these things, to take advantage of a devalued USD, then to pay off these with depreciated dollars. The problem is, should you find your income reduced/frozen and unable to make the payments on the mortgages, then you are still subject to losing the asset until you actually pay the thing off. I think borrowing money hoping to pay off in devalued dollars is a dangerous way to have a real asset. Better to just have a smaller one paid off without a mortgage. You can always live in it if you have to.

One other consideration is that real estate will appreciate in value in a serious USD crisis and the taxes will go up, but, compare that to having some stock account collapse by over 50%, and paid in USD that are now worth 30% or more less. There are No perfect solutions that cover all aspects of a currency collapse. One has to make some trade offs.

Besides, even if the USD stabilizes, any capital gains will be taxed on financial accounts.

Euros

OF course, other alternatives would be buying Euros, or other currencies. This can be a stop gap alternative. Personally, I think most of these are still inferior to paid off assets in a currency crisis. The problem is, people still need some cash to pay bills during such a crisis, so one can’t put all of their cash into real assets necessarily. So, one needs to balance the idea of having all real assets- (gold or silver or other PMs , a house, or other real thing that you actually own and have possession of.) and having some necessary cash type assets.

Bonds

US bonds will do terribly if there is a serious USD crisis. Interest rates will skyrocket and bonds will tank. Also there will be the co debasement of the USD value of those bonds.

Other nation’s bonds will initially do well, but if they raise interest rates to compete with the weakening USD then their bonds will also drop considerably. IF their economies fall into recession, their bonds will ultimately suffer as well. They could be a stop gap for the initial USD situation however.

Foreign stocks

The same goes for foreign stocks. Most foreign stocks are very dependent on the present status quo of the US/West centric economy. IF the US stock market crashes, eventually that will spill over into foreign stocks as well. Most foreign nations are not well situated to do well economically should the USD system take a big hit. Their economies will slow badly and so will their stock markets. SO these are not automatic havens from a serious USD crisis either.

And, resource stocks will be hit (perhaps except for PM stocks) because of declining economic demand for resources should there be a big economic slowdown in the US and consequently in the rest of the US trade partner world.

These are just some thoughts about what could happen if there is a serious USD crisis in 07. I am not an investment advisor, but a gold commentator.

© 2006 Christopher Laird
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PrudentSquirrel.com
Los Angeles, CA USA
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Confidence in the U.S.$ is falling

Julian D.W. Phillips
Dec 21, 2006

Below is a snippet from the latest weekly issue from www.goldforecaster.com.

As the continued deficit continues to command somewhat myopic attention [it was less than expected but still around $60 billion a month], we do well to look at the impact on confidence in the unit as the Trade deficit rolls on month after month year after year.

In the United States the greenback is money and the only measuring rod of value and has been for hundreds of years. That it could become suspect is almost unpatriotic. But U.S. citizens can see the writing on the wall too. They are fully aware of the inherent and seemingly unreported inflation figures as they experience it in their own lives. They can do little about it, but as is the case in the whole world, accept it. After all if you don't use the $ what do you use? But as an investment in itself Americans show they are underwhelmed, as their savings levels stay at historic and globally low levels. Yes, the easy credit and a general 'live now, pay later' attitude has entrenched itself in American culture, but sagacious Investors know that the time for such attitudes is running out. So when the Trade deficit dropped below $60 billion for the first time in months the market's damp squid reaction came as no surprise. With last year's deficit reaching $720 billion and this year's heading for $750 billion, what's to be happy about?

The fact of the matter this week was that the U.S. trade deficit narrowed by 8.4% in October to $58.9 billion. The trade gap is at its lowest level since August 2005. The trade deficit was expected at $63.1 billion. The drop in oil prices is why the deficit fell. The average price for a barrel of imported crude dropped by a record $7.05 in October to $55.47 with the volume of petroleum shipments also falling. America's total foreign oil bill fell to $21.8 billion, 17.1% below the September level. The fall in the oil bill accounted for four-fifths of the total trade improvement in October.

As part of the draining of manufacturing from the States to emerging countries [not just China] Democrats believe that America has lost nearly 3 million manufacturing jobs in the last six years.

• The trade deficit with Canada fell by 4.8% to $5.4 billion.
• The deficit with Mexico dropped 11.3% to $5.2 billion, reflecting a record level of U.S. exports to Mexico.
• The deficit with the 25-nation European Union shot up 34.3% to $9.5 billion.

An inevitable and unstoppable trend is that all non-emerging nations are subject to a draining of wealth either to the oil producers or to the emerging East as it provides cheap, but often equal quality goods to West. The efforts to retain such wealth cannot succeed without protectionism or direct blocks on the imports of such goods. This is unlikely to happen until it has already reached crisis proportions. Such moves have to be preceded by Capital Controls which in turn will be preceded by a major U.S.$ fall. Gold will be above four figures by that time and probably have been there for a while.

Dollar Index:
Dead $ Bounce

Last few weeks I stated, "The US Dollar Index continued to penetrate supports plunging to 82.50 at the close of last week. Now entering a zone of major support, it should be expected that over the next few weeks, a sizeable bounce is quite favorable. Beware of the implications it may bring to gold, but we see such strength in the gold markets at this point that it is unlikely a bounce will do no more than put a small dent in the short-term picture, allowing gold to consolidate. It will likely take numerous attempts to technically break through the solid foundation around 78-80, but it is more of a question of when at this point."

This past week saw the bounce from the strong support area around 82.25-82.50 continue. With the index back to 84, above the first initial resistance, a we are now looking at 84.5-85 in play, likely where this bounce will find trouble, stall and reverse.

To read this week's entire issue, please visit www.goldforecaster.com.

Dec 20, 2006
-Julian D.W. Phillips
email: gold-authenticmoney@iafrica.com

2007-02-09:

War das die Generalprobe zum grossen Geldabwurf:

Die USA haben 2003 363 Tonnen Dollar-Banknoten in den Irak gebracht. Wo mögen die alle hingeflossen sein:

Welt: Tonnenweise Bargeld und ein Luxus-Swimmingpool

iTulip: Lawmaker: U.S. sent giant pallets of cash into Iraq

Interessant sind die Schlussfolgerungen von Eric Janszen:

What's the difference between the Federal Reserve air lifting 363 tons of cash to the bankrupt economy of Iraq in 2003 and the Fed air lifting thousands of tons of cash to bankrupt U.S. cities some day off in the future, should a debt deflation run to its logical conclusion? Answer: Distance.

War das eine Generalprobe für den Einsatz im eigenen Land? Dort sind die Distanzen kürzer. Daher kann man mehr Geld in bankrotte Städte, etc. bringen.

Der Tag dafür sollte nicht mehr allzu ferne sein.

Weil wir schon bei den Gelddruckern sind:

Legale und illegale Geldfälscher:

Mike Shedlock: Counterfeiting Money - Crime or Good Economics?

Er beschreibt hier was Alan Greenspan, Ben Bernanke und andere Zentralbanker machen aus einer anderen Sicht. Der Geldfälscher als Retter der Nation. Genauso hat es sich ab 2001 zugetragen. Unbedingt lesen.

Was unterscheidet Zentralbanker von gewöhnlichen Geldfälschern? Zwei Dinge, aber der Effekt ist gleich:
a) die Zentralbanker und Politiker haben das Gesetz auf ihrer Seite
b) die Zentralbanker machen es in viel grösserem Stil

Irak

Tonnenweise Bargeld und ein Luxus-Swimmingpool

Der US-Kongress prangert die Verschwendung riesiger Summen im Irak an. Unter anderem wurden mehrere Milliarden Dollar in bar in das Land geflogen – der genaue Verbleib ist unklar. Bei teuren Neubauten funktionieren weder das Abwassersystem noch die Stromversorgung. Der frühere Irak-Verwalter Bremer meint, eine „moderne Haushaltsführung“ sei im Irak nicht möglich gewesen.

Washington - Wenn Politiker in den USA von „Grillen“ sprechen, haben sie selten einen der landestypischen Barbecue-Abende im Sinn. Der Begriff bezeichnet die verschärfte Befragung eines Amtsträgers vor einem Kongressausschuss. Mit einer wahren Grill-Party haben die Demokraten am Dienstag im Kongress mit der Aufarbeitung der Pleiten und Pannen im Irak-Krieg begonnen. Im Mittelpunkt steht der Verbleib all jener Milliarden, mit denen der US-Steuerzahler den Krieg finanziert hat. Präsident George W. Bush drohen peinliche Bloßstellungen über Schlamperei und Missmanagement. Erstes Grill-Opfer: Paul Bremer, der ehemalige US-Verwalter im Irak.

Trotz der Mängel bei Planung und Durchführung des Krieges hatten Präsident Bush und seine Regierung bislang von den Volksvertretern im Kongress wenig zu befürchten. Bushs Republikaner blockten mit ihrer Mehrheit jeden Versuch der Demokraten ab, das Irak-Debakel in parlamentarischen Untersuchungsverfahren durchleuchten zu lassen. Seit Januar aber haben die Demokraten dank ihres Siegs bei den Kongresswahlen eine Mehrheit, und mit dieser wollen sie das Versagen der Regierung öffentlichkeitswirksam untersuchen. Im Irak habe es in großem Maßstab „Geldverschwendung durch Betrug, Missbrauch und schiere Inkompetenz“ gegeben, sagte Demokrat Henry Waxman.

Nach allen Regeln der parlamentarischen Kunst „grillten“ die Abgeordneten des Kongress-Ausschusses den früheren Irak-Verwalter Bremer. Dessen Verwaltung habe durch Intransparenz, Inkompetenz und Vetternwirtschaft „eine solide Grundlage für Betrug und Verschwendung“ gelegt, sagte der demokratische Abgeordnete Lacy Clay. Ausschuss-Chef Waxman berichtete von abenteuerlichen Finanzpraktiken: Während Bremers 13 Monaten im Irak habe die US-Regierung etwa zwölf Milliarden Dollar in Bargeld auf Holzpaletten gestapelt und in den Irak geflogen. Mehr als 280 Millionen Banknoten mit 360 Tonnen Gewicht seien in das Land geschafft worden, ohne dass ihr Verbleib klar dokumentiert worden sei.

Bremer räumte vor dem Ausschuss Fehler ein. „Ich bin der Ansicht, dass die Planung vor dem Krieg nicht angemessen war“, sagte der Diplomat. Unter den gegebenen Umständen im Irak sei eine „moderne Haushaltsführung aber nicht möglich gewesen“. Bremer blickte auf einen massiven Ansehensverlust in den vergangenen Monaten zurück: War er bei seiner Rückkehr aus dem Irak 2004 noch als Held gefeiert worden, nutzen ihn nun selbst Parteifreunde als Sündenbock für vieles, was im Irak falsch gemacht wurde. „Hätte Bremer bessere Entscheidungen getroffen, würden wir heute ganz anders dastehen“, sagte der republikanische Abgeordnete Christopher Shays der „Washington Post“.

Der unabhängige Sonderinspektor für den Wiederaufbau im Irak, Stuart Bowen, urteilte in einem Bericht, unter Bremers Verwaltung hätten „ernste Unzulänglichkeiten und schlechtes Management“ das Finanzgebaren gekennzeichnet. Massiv werde im Irak nach wie vor Geld verschwendet. In der vergangenen Woche berichtete Bowen von teuren Neubauten, bei denen Urin und Fäkalien von der Decke tropfen, von einer Stromversorgung, die trotz Investitionen von vier Milliarden Dollar nur wenige Stunden am Tag funktioniert, und von irakischen Sicherheitskräften, die sich in einer Kaserne einen Swimming-Pool in Olympia-Ausmaß bauen ließen.

Waxman kritisiert: „Wir haben viel Geld im Irak ausgegeben und wenig dafür vorzuweisen.“ In der Tat haben sich die Angeordneten kaum von dem Budget-Schock erholt, den ihnen Bush am Montag zugefügt hat: In seinem Kriegs-Etat für 2007 und 2008 summieren sich die geplanten Ausgaben auf mehr als 300 Milliarden Dollar. Das sind etwa 430 Millionen Dollar (333 Millionen Euro) pro Tag. Der Kongress muss dem Entwurf noch zustimmen. Waxman verspricht scharfe Kontrollen: „Wenn in einem Viertel keine Polizisten auf Streife gehen, werden Verbrecher zu Untaten ermuntert.“

WELT.de/afp

Artikel erschienen am 07.02.2007

Lawmaker: U.S. sent giant pallets of cash into Iraq
February 7, 2007 (Reuters)

The Federal Reserve sent record payouts of more than $4 billion in cash to Baghdad on giant pallets aboard military planes shortly before the United States gave control back to Iraqis, lawmakers said Tuesday.

The money, which had been held by the United States, came from Iraqi oil exports, surplus dollars from the U.N.-run oil-for-food program and frozen assets belonging to the ousted Saddam Hussein regime.

Bills weighing a total of 363 tons were loaded onto military aircraft in the largest cash shipments ever made by the Federal Reserve, said Rep. Henry Waxman, chairman of the House Committee on Oversight and Government Reform. (Watch Democrats put the former top U.S. official in Iraq on the spot Video)

"Who in their right mind would send 363 tons of cash into a war zone? But that's exactly what our government did," the California Democrat said during a hearing reviewing possible waste, fraud and abuse of funds in Iraq.

AntiSpin: Pop quiz: What's the difference between the Federal Reserve air lifting 363 tons of cash to the bankrupt economy of Iraq in 2003 and the Fed air lifting thousands of tons of cash to bankrupt U.S. cities some day off in the future, should a debt deflation run to its logical conclusion? Answer: Distance.

The picture is from a presentation by Evan F. Koenig, Vice President (pdf), Senior Economist, Federal Reserve Bank of Dallas, May 2003. I discuss the presentation at length in Ka-Poom is a Rhyme not a Repeat of History.

What's the likely outcome of the exponential credit inflation of the past 38 years? Some say deflation, others inflation. I say both, one after the other. Ludwig von Mises famously put it this way, "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."

When I read "The Great Reckoning" in 1989, I was introduced to the deflationist argument. When I read, "The Hyperinflation Survival Guide: Strategies for American Businesses" by Dr. Gerald Swanso a couple of years later, I was introduced the hyperinflation perspective. When I read "Deflation," by Gary Shilling in 1998, I read another argument for deflation. I’ve read a dozen books since then, including Peter Warburton's excellent "Debt and Delusion" and have argued the point with dozens of people over the years.

Not satisfied with any of these treatments of the cross-current of deflating leveraged assets (debt deflation) and inflating goods prices and, possibly, wages (due to currency depreciation), I developed my own theory in 1999, which I call Ka-Poom Theory, which describes a period of disinflation followed inevitably by a period of high inflation (not hyperinflation) as the Fed attempts to deal with the deflation and spurs, by lowering interest rates in the face of skittish foreign and domestic investors and in the condition of an already weakening dollar, a repatriation of dollars to the U.S., and an expatriation of domestic capital.

Some folks don't like this idea. They think it's too convenient a way out for careless borrowers, as if borrowers are getting away with something. But the idea that Joe and Jane with the flat panel TVs in the MacMansion they can't afford gets a get-out-of-jail-free card from a big inflation is false. Everyone with savings held in assets denominated in the local currency gets hammered in an inflation, as in Russia 1992 – 1993. Yes, debt gets wiped out, but so do savings, such as they are. The survivors are those with their savings sufficiently well shoveled off to foreign held assets–property, bonds, currency–and gold. That group is comprised largely by what Dr. Hudson refers to as the “creditor class,” which will have hedged the inflation long before it happens by moving their money out of the U.S., as occurred in Mexico, Peru, Germany, Hungary, Russia, and every other nation where a major inflation has ever happened. The smart money gets out before the event. (Note that Dr. Hudson never talks about gold.)

For a better understanding of how the bond markets, which are supplying the credit, behave as a major Ka-Poom style inflation approaches, I refer to Dr. Farrokh Langdana, Ph.D., Professor, Finance/Economics, Director, Rutgers Executive MBA Program (USA). In Macroeconomic Policy Demystifying Monetary and Fiscal Policy. Here's a brief excerpt of a chapter I will go into more detail on later (copyrighted material re-printed with permission):

Readers are aware that the yield curve has been inverted for a while. It is perhaps telling us that foreign lenders are getting harder for Paulson & Co. to come by, and that monetization of debt needed to pay for the wars in Afghanistan and Iraq, which are now being paid for by Asia, may be around the corner. As Dr. Hudson explains in his December 2006 presentation, Real Estate: Growth, Crash, or Soft Landing?, a collapsing housing bubble will only make matters worse, as foreign investors are presumably being sold stability, transparency, and growth, especially in the sales pitch on asset backed securities. It's not hard to conceive of a self-reinforcing cycle of economic contraction and rising interest rates, leading to a decrease in demand for and decling in the value of the dollar, leading to increases in domestic inflation, rising interest rates, further economic contraction, and so on. In other words, Ka-Poom.

---

Last edited by Fred : Yesterday at 02:29 PM

#101418 von darcon 20.02.07 22:49:55    Beitrag Nr.: 27.864.057
China\\'s Trade Surplus Almost Doubles as Reserve Diversification Rumblings Continue to Grow By Stephen Clayson 20 Feb 2007 at 02:59 PM EST LONDON (ResourceInvestor.com) -- Figures released earlier this month showed that China\'s trade surplus for January came in at $15.9 billion, up from $9.6 billion in January 2006. China\'s trade surplus for 2006 as a whole almost doubled to $177 billion, and it could well exceed $200 billion this year. This means that although China\'s foreign exchange pile already amounts to over $1 trillion, it continues to burgeon at a rapid rate, with bigger implications than many people realise. The larger China\'s foreign exchange reserves become, then the greater will be the pressure on its government to find the most profitable way of managing them. The problem with this is that the People\'s Bank of China\'s current policy of holding its reserves primarily in dollars is plainly not a sound investment strategy. Most observers now accept that the dollar must fall further; it is only a question of when and how far. Therefore the PBOC, by holding most of its reserves in dollars, is staring into the abyss of a huge loss when the dollar does fall. Like any holder of an overwhelmingly large position in a given market the PBOC has a problem in that it will have difficultly divesting itself of its holding without significantly undermining the value of that holding and therefore precipitating the very same loss that it may wish to avoid. So perhaps the only course of action for the PBOC, should it wish to minimise losses on its dollar holdings, is to attempt to gradually switch out of the greenback and into something else, and to do so before, or at least at the same time as, other major dollar holders. The ranks of the latter are primarily made up of the other East Asian central banks; those of South Korea, Taiwan and Japan. All three will also be thinking about to minimise their own dollar losses and make the most of their mountains of foreign exchange. The Bank of Korea recently said that it is looking in the direction of international blue chip stocks as a way of diversifying its sizable foreign exchange reserves, and it goes without saying that any sensibly composed Portfolio of such would be only partly dollar denominated. It is also being said that the PBOC is considering a similar initiative. Meanwhile, U.S. government officials and politicians of both stripes are mostly not even acknowledging that the dollar is overvalued. Of course, harsh economic realities may not be what the U.S. public wants to hear about, but it seems that the country\'s policymakers are as guilty of being misguided as being unwilling to be bearers of bad tidings. It is fair to say that the PBOC and the other East Asian central banks have not been sorry to see the dollar stay unnaturally strong over the past couple of years, as it has kept U.S. demand for the exports of their respective economies healthy. But as the proportion of East Asian exports accounted for by U.S. demand diminishes and overvalued dollars continue to accumulate in the hands of the region\'s central banks, attitudes are changing and a rush to alternatives could be in the offing. In November, I penned a piece highlighting the issue of Chinese reserve diversification for RI readers. Understandable secrecy on the parts of the PBOC and its equivalents elsewhere in East Asia mean that it is always hard to gauge the current state of play. But on the basis of the pronouncements that have been made and the whispers that can be picked up, it now seems that the speculation I wrote of in November is becoming fact. So when will the U.S. government get real and start thinking about how to help the country adapt to the dollar\'s inevitable fall from its rickety stool? darcon

More Central Banks diversify away from the $ - forex crises to follow

Julian D.W. Phillips March 02, 2007 www.goldforecaster.com www.SilverForecaster.com

For years now we have warned of tsunami like capital waves crossing the globe bringing financial drama with it.   We have pointed to the structural problems that could give rise to the damage these waves will cause.   We have warned of the Central Bank’s moves away from the U.S.$.   We have also warned of the damage the Trade deficit is doing to the U.S. We have also warned of global foreign exchange and rates crises.We coined the expression “Live now, Pay later” syndrome that has been all-pervasive in the U.S.A. Add this to the “so far, so good” attitude and what happened this week in global markets has been long overdue.It signals that globalization and the free flow of capital across this globe of managed foreign exchange rates, plus the interdependency of global economies will undermine all paper currencies to some extent. This week saw that begin. Probably a group of global funds thought the time was ripe in many markets to rattle some cages and down the markets went. That they should have this ability and power is the frightening thing and the situation can only worsen as other speculators and fund powerhouses get the scent of this action.

Many have touted a collapse in the $, but we say that this is not a necessity for a rise in the gold and silver prices to take place. A drop in the level of confidence in the U.S. unit is all that is necessary. Well we are seeing that in the globe’s foremost of financial institutions, the Central Banks as of now. Whither they go, go us.  

Central banks are, across a broad front, increasingly diversifying their reserves, including cutting holdings of the U.S. $. Italy, Russia, Sweden and Switzerland have made “major adjustments” in foreign-exchange holdings favoring the € and the Pound Sterling between September and December 2006. Central banks are open to saying they've been diversifying to improve returns and reduce exposure to any single currency, which means, selling the $.

And the U.S. is not helping itself either because last month saw the Capital account fail to support the Trade deficit in January. If this continues, that alone could drop the $ like a stone.   After all, the U.S. has become utterly dependent on the Capital account to fund the Trade deficit as it reaches new record levels every year.

The $ accounted for 65.6% of the world's currency reserves in the third quarter of 2006, down from a peak of 76%, according to the International Monetary Fund.

Two Central Bank surveys were done recently looking at the extent of $ diversification, here are the conclusions of one [very similar to the other]:
 
Central Banking Survey

- The respondents in this confidential survey don't include the People's Bank of China or the Bank of Japan, which together hold the world's largest foreign exchange reserves [they account for 30% of total reserves held worldwide, or $1.5 trillion].

- Of the 47 central banks that responded by December to the survey, 21 of them, managing reserves of $630 billion, said they had increased the share of their reserves held in the €, and 15 of those said they had done so at the expense of the $.

- The survey showed that seven central banks said they had cut the share of reserves held in the €.

- Nineteen central banks said they had cut the share of reserves held in the U.S.$, while only 10 had increased the share of reserves held in the $. Only five of the latter group, with reserves totaling $70 billion, said they had done so at the expense of the €.

- Nine central banks raised the pound's allocation, while four cut its share of reserves.

- Four central banks reported cutting their allocations of the Swiss franc, and none reported increasing its share.  

- Six central banks said they had raised their yen allocations, while four cut their allocations to the Japanese currency.

The shift into the € on the scale suggested by the survey would still leave the $ as the dominant reserve currency by a large margin. The International Monetary Fund has said that in the third quarter of 2006 the $ accounted for 66% of foreign currency reserves, while the €, accounted for 25%. In the second quarter, the $ accounted for 65% of reserves, and the € 25.5%. [This is a small change in terms of the risks to the $.]

- Central banks are still investing in riskier assets as they chase greater returns on yields. 69% said they were looking for more yield, having been forced to widen their asset range by a low-yielding environment.   More than half of the respondents said there is scope for central banks to diversify beyond traditional assets into equities, and around a third said banks should invest in commodities.

- After a long decline as a reserve asset, the survey indicated that gold may be about to make a comeback. Some 63% of central banks said gold had become more attractive following recent price rises and an increase in market liquidity. But gold's role as a safe haven in the wake of natural or man-made disasters is also part of its attraction for central bankers.

Please note that not one of these banks have stated they no longer want to hold the U.S.$, because of the risks to its value.   We do not believe this is their major consideration. Why, because all currencies are interdependent and one currency cannot divorce itself from another, so long as the pattern of international trade is as it is. They are fused together. Ideally they only have to target inflation to maintain price stability. Exchange rates are not an issue in the main global blocs, such as the U.S. in the eyes of the Central Banks. Ideally they would want fixed exchange rates to stabilize global trade.

Alas, the Central Banks have no option but to switch to other currencies to improve their reserves, because of the sheer volume of their holdings of the $. Gold or silver or other commodities just could not accommodate their demand, unless the metal prices had an additional nought at least, on the end of them. [Huge stockpiles of oil could be a way to go, but storage facilities have to be built to accommodate this.]  

But with such diversification added to the efforts of China in moving away from the $, the present levels of exchange rate values will just not hold in a $ crisis and it is naïve to think they will. But then again where else can they go?  It is only fair to say that Central Bankers ignore exchange rate moves in their decision-making regarding currency holdings. Yes, they differentiate between ‘soft’ and ‘hard’ currencies, but yield has to be the main criteria.  

So the vulnerability of the $ grows by the day.

The bottom line is this, there is no true haven from the $ in other currencies. In a crisis they will try to cling to each other, with some being forced to lower or raise their exchange rates with important trading partners. But essentially they are all in the same boat together.

But where a national economy’s health is dictated by exports, Central Bank will intervene to ensure trade competitiveness is ensured [e.g. Japan or India]. As we watch many Central Banks intervene in their exchange rates in this way in the future, we will see many currencies falling with the $ encouraging capital flows to grow even larger as they used to in the days of fixed rates in the foreign exchanges.   As we point out weekly, currencies relate to one of the main three trading blocs of the world and attempt to keep their exchange rate in line with that one. For instance South Africa’s main trading partner is Europe, Australia’s is China, hence the exchange rates moves we are seeing now.  So the world’s most important exchange rate is the $:€.

So Central Banks want stable exchange rates and do intervene. This is like a red rag to a bull to speculators.   With Central Banks holding together the foreign exchanges of the world, Capital flows will find little to prevent them from going where they want to. Another feature of global markets that we have been highlighting is the concept of, “He who sows the wind reaps the whirlwind.”  As Central Banks try to hold the system of exchange rates together with as little rupture as possible [as we have seen in the last few years], so they will fall foul of the Capital flows flooding across borders to greener pastures, pressing Central Banks as in the past, but with greater power than ever before.

We have heard it said that switching out of major currency holdings is easy, for Central Banks, they just enter the foreign exchange markets and sell what they receive.  To say that is naïve, because like any market, if supply is heavier than demand, prices will fall. With so many diversifying from the $, the growing overhang is finding nowhere to go, except home. The continuous outflow of the $ is gradually oversupplying an unwilling market. It takes little to understand the interest rates alongside the $ exchange rate has to go down, not in a controllable way, but in the face of a future tide of U.S. $’s coming home. We have in the past mentioned Capital Controls are a possibility at some stage in the States, to hold back this flood from damaging the internal economy through inflation, against a backdrop of deflation in many areas of the economy [but not all].

But a consequential collateral damage will be to the nations holding onto their exchange rates with the $. They will have to revalue, or let their exchange rates rise, if their economies are dependent on the U.S.This will weaken them internationally. Those dependent on the Eurozone or on Asia for their international trade will however, rise out the $ storm.  

But, ‘hot money’ now called the ‘carry trade’ will look, along with the hedge funds and the newly born George Soros’, will be there to push exchange rates the way they should go and maximize their impact and profit from any resistance in their way. The result will be to drive all types of solid Investors to safe havens, including gold silver and whatever else holds value in these days.  

The development of the Internet, the knowledge revolution, as well as other aspects of the information and communication revolutions will add “moments of force” [weight added to momentum] to the capital flows that will shake weakened economies, prompting protective action like exchange controls or Capital controls from wreaking havoc with these Central Banks. The memory of George Soros, breaking the Bank of England and making one billion pounds profit overnight, is well remembered amongst Central Banks.

At Gold & Silver Forecaster we expect the world’s currency system to move closer to a series of major crises, quicker than before and accelerating as it goes. We will continue to focus on the external developments that influence gold and silver prices as well as the simple gold and silver market factors.  We see investment demand growing as a price influence as we progress down this road. We are led to believe that we are the only such letter with this perspective and who cover the monetary aspect in this way. Therefore we have to emphasize that it is this influence on gold that will drive the gold and silver prices to new heights, as investment demand grows. Keep in touch with us closely, so we can help you really benefit from these markets. We are a “must have” newsletter alongside others.

Last week’s global markets pullback was merely a taste of what is to come. The flow of money was not just market driven, it was driven by funds large enough to rock global markets. And let’s be clear about one fact in these markets, it does not take a collapse of the $ or any other currency to make gold and silver an attractive investment, just the fear of one. This fear and uncertainty will grow in the months and years to come making the flow of investment funds into gold a steady feature until its price will inspire confidence and consequently the currency of the holders.

2007-03-31:

Helicopter-Ben hat massiv zu monetisieren (Geld drucken) begonnen:

Aus dem MIDAS vom 30. März:

I believe we are starting to see some real resistance to American domination of world economic and political issues (Saudi statement about "illegal" Iraq occupation, refusal by India, UAE, etc to allow use of airfields for Iran strikes, etc.). The long anticipated removal of the dollar as the "world currency" (dollar hegemony) is sure to follow and may occur very fast with an extremely rapid decline in the dollar in the near future. Without world cooperation in the manipulation, we may finally see the proper response of the markets to the pathetic condition of our economy - full of enormous debt and deficits, rampant inflation, diminished manufacturing base and corrupt government and corporate leadership.

Bill did you hear them ring the bell? Greenspan has been warning of recession. Last week the Fed announced that fighting inflation at the
expense of crashing the housing market is not a desirable policy. It looks like the new strong dollar policy of the past 9 months has ended. The Fed’s balance sheet is showing the most rapid build up of treasury and agency securities ever. Somebody has bought $46 Billion in securities in the past month. If it is the Fed buying securities to keep the banking system liquid then the great monetization of our debt has started. Last week in a major reversal of the past 6 weeks Total Commercial Paper rose $58 Billion, which again would suggest a liquidity infusion not a credit crunch. Today the Bush administration announced a reversal in 20 year old trade policies basically asking the world to crash the US $. It appears the new policy is weak $ and monetization of the stock and bond markets. The march down the Weimar Republic path has begun; as a reminder in the Weimar Republic Gold went to infinity. Coincidentally, the major drop in open interest during April-June Gold rollover combined with the highest monthly option expiration of the entire move could be foreshadowing a major move in Gold. Be long or wrong.

Wurde er dazu von Bush eingesetzt? Wenn alles nicht mehr hilft, die Aktien und Anleihen zu monetisieren?
Offenbar will er damit die Banken retten (vorerst). Die Immobilienbubble ist ohnehin verloren. Weiters gibt es bereits Bestrebungen (etwa in Ohio), den (selbst-verschuldet) untergehenden Hausbesitzern zu "helfen" - mit Staatsgeld.
Kein Wunder, dass die Welt nervös wird.
Der Marsch in die "Weimarer Republik" (Hyperinflation) hat begonnen - in den USA.

Höchste Zeit für den grossen Dollar-Abverkauf und einen massiven Goldpreis-Anstieg!

2007-04-02:

Das Helikopter-Geld wirkt schon - auf den Dollar:

Jim Sinclair (http://www.jsmineset.com):

The dollar (as measured by the USDX) came within $0.05 cents of a key point whereby a close would ensure its demise.

The Exchange Stabilization Fund, only an account at COT, run by the President or Secretary of the US Treasury or whomever they may appoint, came riding over the hill just in the nick of time.

How many nicks do you think they have in their jeans? Not many if economic reports continue tilting down.

You talk about sub-prime mortgages, well this is sure to create a sub prime currency - the US Dollar!

Das war am Freitag offenbar knapp. Jim Sinclair fragt, wie oft es die ESF-Kavallerie es noch rechtzeitig schafft.
Es gibt jetzt offenbar auch eine "Subprime-Währung" - den US-Dollar!

2007-04-10:

Institutionelle Investoren fliehen aus dem US-Dollar:

Von einem Leser in Deutschland:

Die unten stehende Analyse von State Street Global Markets zur US-Wirtschaft und vor allem zum Abwärtstrend des US-Dollar würde -abgesehen von den interessanten aktuellen Zahlen- für informierte Leser einen nur kleinen Erkenntniswert bringen. Wenn man aber bedenkt, dass die unterstrichenen Feststellungen nun schon von einem völlig staatstragenden Institut (State Street ist der größte Vermögensverwahrer der Welt und zugleich auch ein sehr großer Vermögensverwalter) getroffen werden, kommt der Report einer kleinen verbalen Palastrevolution gleich. Das State Street Team schreibt auch nicht nur über die Misere, sondern handelt auch danach ("they put their money where their mouth is"): State Street hält derzeit die höchste Dollar-Short-Position seit Jahren.

Institutionelle Anlager fliehen derzeit in Scharen aus dem Dollar. Einzig die asiatischen Zentralbanken halten den Dollar mit noch immer (!!) rekordverdächtigen Treasurykäufen unter größten Anstrengungen halbwegs stabil. Wenn State Street recht behält, dürfte der Euro bald auf ATH zum Dollar und die Edelmetalle auf neuen 27-Jahres-Hochs stehen.

US nay [aus "State Street, Research Notes", 4-2007]

Rather like Europeans unaccustomed to hearing to chanting at golf (of all things), cross-border institutional investors have tired of things American. The message is the same across asset classes. In equity markets sixty-day flows into the US are now in the 1st percentile. Flows have been higher on 99 percent of previous three-month periods in the decade long history of the Cross-border Equity Flow Indicator, within a hair’s breadth of a record low............

In foreign exchange markets, after three weeks of tentative buying back of an entrenched dollar short position, investors have started aggressively selling the greenback again. Six-month dollar flows as measured by the Foreign Exchange Flow Indicator have fallen into the 18th percentile (flows higher on 82 percent of all previous six-month periods), the lowest level since late January. In the week beginning March 19th dollar positioning threatened briefly to ascend into neutral territory, but there has been a dramatic volte-face..........

US treasuries are also being sold by foreign institutional investors (see Chart 1). The Sovereign Bond Flow Indicator has recorded persistent selling by institutional investors. Even during the market wobble in late February and early March there was little let up in selling pressure, despite the safe-haven status of US government bonds........

That relationship is as strong as ever. Asian central bank reserves grew by $128 billion in the first three months of the year, an even faster rate than the last 12-months, which saw reserves grow by $360 million to $2.3 trillion. The US needs this central bank sponsorship of its bonds, dubbed by Harvard economist Ken Rogoff, “the biggest foreign aid programme in world history”, more than ever. Institutional investors are selling US assets and are showing no signs of stopping anytime soon.

Hier noch ein Artikel aus der FAZ: Institutionelle Anleger meiden „Amerika“

Und China warnt die USA - FTD: China warnt USA

Wie ist also die Situation:
Institutionelle Investoren flüchten aus dem Dollar. Die asisiatischen Zentrabanken stützen ihn noch.
China steht offenbar selbst kurz vor dem Dollar-Abverkauf.
Sehen Sie auch, wie der Dollar-Index stetig sinkt und der Goldpreis steigt. Die wirklich grosse Abverkaufs-Welle kann jetzt jederzeit losbrechen.

Also: Good Bye, Dollar, das Blatt wendet sich gerade zu deinen Ungunsten.

2007-04-14:

Aus Bill Bucklers Gold This Week:

Nearly There
As you undoubtedly know, spot future Gold shot up $US 10.30 on April 13 (Friday the 13th, no less) to close at $US 685.40. That's only $US 1.80 below the $US 687.20 spot future close of February 27 which is Gold's high for the year so far. Even more intriguing, Bloomberg reported that this sudden jump in Gold was being caused by "demand for a dollar alternative." Bloomberg went on to point out that the US Dollar was at a two-year low against six major currencies and that Gold (and Silver) has now risen for six weeks in a row.....

Another week of $US Gold price rises next week will see new 2007 highs set in the metal. From the $US 687.20 2007 high to the $US 721.50 bull market high (set in May 2006) is not a big leap. It's only $US 34.30 or 5.0 percent. For the US Dollar, a drop to the CRUCIAL 80 level on the USDX would require a fall of only 2.35 percent from its present level. The pressure is rising daily, and the "cushion" enjoyed by the global financial system is getting very small indeed, as the above numbers show.

Yep, as stated in our headline this week, we're "nearly there". Here are the numbers to watch out for:
- 80.60 - the USDX post 2002 bear market low set at the end of 2004
- 80.00 - the USDX "floor" ever since the beginning of the fiat currency era in 1973
- $US 687.20 - the 2007 spot future closing high for Gold
- $US 721.50 - the post 2002 bull market spot future closing high for Gold set in May 2006

Also nach seiner Meinung sind wir fast "da":
Selbst Bloomberg berichtet schon von Gold als einer Dollar-Alternative.
Es fehlen nur 5% beim Goldpreis, bis dieser das 2006-Hoch erreicht. Und es fehlen nur mehr 2.35% bis der Dollar in das "Nirvana" unter 80 fällt.