Posted on 10/20/2009 6:22:29 PM PDT by blam
Niall Ferguson: The Dollar Is Finished And The Chinese Are Dumping It
Joe Weisenthal
Oct. 20, 2009, 2:50 PM
Economic historian Niall Ferguson warns that China's love affair with the dollar is fading faster than anyone realizes.
TechTicker: "The idea they don't have anywhere else to go or would shoot themselves in the foot if there were a steep decline in the dollar or appreciation of their currency reassures many people in Washington ‘we can relax'," he says. "An appreciation of the renminbi may reduce value of their international reserves but increases the value of every other asset the Chinese own," most notably the commodity assets they have been buying all over the world.
China's "current strategy is to diversify out of dollars and into commodities," Ferguson says. Furthermore, China's recent pact with Brazil to conduct trade in their local currencies is a "sign of the times."
Perhaps most importantly, China's massive stimulus program is helping to generate internal consumption in the People's Republic, meaning local manufacturers are less dependent on exports. Because of the "rapid growth" of Chinese domestic consumption, Ferguson predicts China's international trade surplus could be gone by next year.
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(Excerpt) Read more at businessinsider.com ...
They sill dump the dollar and then nationalize all the US built factories there. Obama will do nothing because that is what he wants to happen.
And America back in to dependence instead of Independence..
The scary thing is, most people have no clue that they’re riding the back seat of Thelma and Louise’s car.
Vince Veneziani
Oct. 20, 2009, 2:13 PM
With the U.S. dollar at a 14-month low against the Euro, the pressure is on for the European Union to join Brazil and certain Asian economies in helping prop up the dollar.
Concerns were voiced today as the Euro continues its climb:
European Central Bank President Trichet said “excessive volatility” in currency rates is “bad for economic development.” His comment was seconded by Jean-Claude Juncker who said “It’s a problem that worries us."
What you're seeing now is a sharp reversal from the tone from just a few weeks ago, when central bankers were stoking rumors about a new reserve currency to replace the dollar. The European Central Bank is considering taking steps to ensure that the dollar doesn't drop any further against the Pound and the Euro.
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Lets all devalue our currency for our exports!! Lets have a race to see how can devalue their currency quicker!! Why are the economists around the world so dumb. There are consequences of such a stupid policy
mark
Bad, as you point out.
But everyone is missing something important.
The Chinese are now doing what the US did for most of our best years: They are selling to each other and buying from each other. The very thing that made us great.
While we are buying from everyone but ourselves.
Say what you want about free trade: The best years of my life, and I am 81, were the years that I bought from my fellow Americans and sold to my fellow Americans.
I long for the return of those days.
When no one wants our money, those days will return.
I want your money. All I can get.
And we can blame the idiots who voted for Obama.
What they are doing with the dollar is bad. But what keeps it going is all the other currencies are worse.
Quite an image.
It is not entirely clear where they are going to be able to go. This will take time to work out for all involved. This must be why the Marxist/fascists are in such a hurry. Their attempt to destroy America could explode in their faces if they dom’t get it done soon.
“Their attempt to destroy America could explode in their faces if they dom’t get it done soon.”
It is about to explode in their faces. The fuse is lit and 1/2 way burned.
Going just by the name, shall I guess...Limey Poofter?
Cheers!
Is there a contradiction to those who support capitalism yet against free trade? Ppl support free trade in their own borders but support protectionism aka socialism when trading with countries overseas
The reason why we’re losing against China in free trade is because US is no longer competitive. Too much taxes and regulations. How is it, that China can make a widget hundreds of miles away from the US market, cheaper than someone who just lives a few blocks from the market itself, who can save alot without transporting goods hundreds of miles away
OK - so we are living thru another Carter era, we’ve been here before in the early 70s even before Carter.
I don’t know where he will come from but there will be another Reagan - Americans will correct the Obama mistake -count on it!
http://www.youtube.com/watch?v=hGJynE37Npg
“I don’t know where he will come from but there will be another Reagan”
Or should I say - where SHE will come from?
To reply to both of your posts to me:
I am 81 years old. Wages in China were lower than wages in the US long before I was born. Yet, they did not make our furniture and textiles.
They are manufacturing most of what we use today not because of their low wages but because our geniuses in congress have run major elements of manufacturing out of this country.
Free trade assumes that the countries involved have a monetary system and a system of government that is somewhat similar. When the monetary and governmental systems are dramatically different, then it is no longer free trade. Trade is pushed or pulled in various directions according to governmental forces that have every bit as much influence as import/export duties.
In our case with China, it is over regulation on our part and currency manipulation and government support on the part of the Chinese government.
That combination forces manufacturing out of the US in the same way as tariffs.
Thats an interesting point. I never looked at it from that point of view. Basically, we’re for free trade, but if company A in China gets help and company B in USA do not, which result in them going bankrupt. Its unfair
So whats the solution? Do we copy them and help company B or recognize that we can’t have free trade with China when they manipulate currency to benefit company B
China when they manipulate currency to benefit company A, I mean
The market charges what the market will bear.
People in Vomitstan can afford 10 cents for a loaf a bread. No more. So bread is 10 cents.
The same loaf of bread is $1.00 here, or more.
The only way to compete with chinese wages is to impoverish our own country, cratering the wage and price pyramid so that a loaf of bread only costs 10 cents here, too.
... Because we only make $1/day, too. We all live in 10 to a hut, too. Etc.
BRING BACK THE TARIFF SYSTEM!
I’ve been thinking, if its a free market system, then we should buy it from China if they could sell it cheaply.
1hour of human work in china is the same as 1hr of human work in America. Both buy at the same flour at the same world market, both use the same equipment to make the bread. why is 1hr of human work valued as 10c in china yet $1 in USA? It shouldn’t be like this. The only difference is the currency, but both hour work should have the same purchasing power value
The only way USA can compete is either to increase productivity by investing in better machines e.g a tractor is more productive than a person with a shovel OR to devalue the currency to a point where the salary match the chinese currency OR acknowledge that china manipulate their currency and is anti-competitive and against world trade rules and tax the product coming in
My preference is your plan B.
Not your company B.
Trade is not free now. We just need to admit it.
Also, whatever debt is held by the Chinese (A trillion or two) pales in comparison to all the debt held by all the developed countries (maybe as high as $30 trillion or more). Most of the government debt in the developed countries are held by their own citizens including the US.
China's divesting of dollars will be taken up by other investors. So, the biggest driver of the declining dollar isn't China divesting herself of them, but the US government debt that is about $12 Trillion today and could top $20 Trillion by 2020. Not to mention growing debt in Japan and the European countries. This massive massive debt is unsustainable. And any consequences as a result of it will not have China's foot print on it.
Try, hairy Scot with a rood like Kong's and cods like mighty stanes, and he doesn't wear any knickers under his manly tartan kilt. Try that.
0bamas real “Change” or THE “Transformation” will be to see the onset of the New Declaration of Dependence rendering its replacement no longer valid.
All the more reason to quit buying crap from China. Buy stuff from elsewhere, make your own, or do without.
For all of those that think O has a “STASH” that he can give you money.
ARE YOU IN FOR A BIG SHOCK!!!!!!!!!!!!!!!!!!!!!!!
I’m no economist, but if China dumps the dollar, does this lead to their cheap goods no longer being cheap? Does this mean manufacturing could come back to the U.S.?
Obomanomics. How's that hope and change working out for America now?
Shrub is the one who started it all. Obama just continued Bush's economic policies.
Actually, no. I just finished his book "The Ascent of Money." Very good book and thoroughly researched.
LOL! I enjoy reading Mr. Ferguson’s work.
And throw in the idiots that voted for Clinton and Bush too. This decline started with the Clinton/GOP granting permeate MFN status to China and to a lessor extent with NAFTA. Both supported by the GOP. The simple fact is BOTH parties have been selling out the American worker and Main Street for the interests of Wall street for a long long time. Just look at TARP and the instimulas package of Bush and Obama, who got help? Main Street? No. American Workers? No. Wall Street and Big Business? Yes.
Actually the best years of the US economy were when we were selling to everyone else, exporting steel, cars, food, machine tools etc etc etc. Buying and selling to each other doesn’t generate nearly as much wealth.
Actually the best years of the US economy were when we were selling to everyone else, exporting steel, cars, food, machine tools etc etc etc. Buying and selling to each other doesn’t generate nearly as much wealth.
it will cause USD dollar to drop dramatically. A drop of USD will mean all the imports become too expensive. It may lead to manufacturing coming back but it also may not esp when theres so much government regulations and taxes in the US. Companies probably still build overseas but will sell less units to the US. US will end up with fewer variety of goods on the shelves.
A drop in USD is not a good thing, thats like every dollar in your pocket losing value. Instead of buying 1L of milk at $1USD, now it requires $2USD to buy 1L of milk. Instead of needing $1k to buy an air conditioner now it requires $2k to buy it. Its a huge decrease in your living standard
Yikes. The stock market’s no good and looks like savings is no good either. House isn’t worth the mortgage on it. What are people who are trying to save for a rainy day supposed to do? I always thought “survivalists” were a little out there, but I think I may start stocking canned food and water soon!
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