[Boiler Plate]

I thought this was a looooonnnggg way off.

[JmyBryan]

China blinks. Another victory for the Bush Admin.

[GeekDejure]

I thought this was a looooonnnggg way off.

=======

You need to learn how to do Remote Viewing !!!

[bill1952]

The move could nonetheless help Chinese exporters' profits by cutting costs for imported oil, iron ore and other raw materials whose prices have been surging in dollar terms, Gong said.

Carefully buried in a sea of PC garbage, there is the reason.

[FlatLandBeer]

Something is about to happen.

[Lazamataz]

This is HUGE.

[Happy2BMe]

Why don't our bankers think like Chicoms?

======================================

China dropped its politically volatile policy of linking its currency to the U.S. dollar on Thursday, adopting a more flexible system based on a basket of foreign currencies that could push up the price of Chinese exports to the United States and Europe.

[RandDisciple]

The Democratic Party is celebrating. Promoting devaluing the dollar helps their constituency and hurts the savers of this country; Republicans. Union factory workers benefit marginally at the cost of all U.S. consumers having to pay higher for imported goods. Republicans whose savings are in the U.S. dollar, have just lost world purchasing power. It drives me crazy that a Republican administration is promoting devaluation of our national currency and that many conservatives on this forum are cheering this news.

[RandDisciple]

A stronger yuan helps America's greatest economic and military competitor. China will be able to buy the raw materials for their factories cheaper now. That is a much bigger cost component than their cheap labor. They will remain more competitive than us and they will be able to procure global assets at a cheaper cost. The American consumer will pay a higher price for their everyday items and thus have a relatively lower standard of living.

The biggest promoters of devaluing the dollar has been the Democrats. History has never shown an instance where devaluing a countries currency has made them stronger. The reverse has always been true.

[connectthedots]

This is much ado about nothing. A significantly undervalued yuan does nothing but hurt China in the long run. china is subsidizing the lifestyle of much of the rest of the world. In the end, it will lead to the implosion of communism in China.

I've been saying for years that companies like Wal-Mart will eventually bring China to its knees.

[jb6]

Wow, never thought this would happen.

[kidd]

The real reason:

Chinese leaders, unaccustomed to capitalism, frequently asked Washington why the value of the dollar kept changing.

Officials in Washington answered, "Fluctuations".

Chinese leaders responded, "Oh, yeah? Well fluc you white guys! No more link to dollah."

[Marie Antoinette]

Hmmm, didn't we talk about this in the last month or so?

[Vision Thing]

One potential problem about this: With a cheaper dollar relative to the yuan, Chinese companies may be in better position to takeover American companies.

China may have unpegged the yuan in response to their two failed bids for Unocal and Maytag yesterday.

[snowsislander]

"It will help balance Chinese trade flows. Export volumes will come down. Import volumes will pick up. It will help reduce trade tensions."

I don't believe that from what I have seen of the yen / dollar exchange rate fluctuations that there is any real correspondence between a stronger yen and a lower volume of imports by the U.S. of Japanese goods.

I will be surprised if a 2% change in the yuan would be any more likely to have any lessening effect on our rapidly growing import of Chinese goods.

[ex 98C MI Dude]

This means the Chinese will buy fewer US T-Bonds, meaning we will have to find someone else to prop up the dollar. In March and April the Federal Reserve landed up buying up T-Bonds that weren't sold at the bond auction. That has never happened before. The Fed had to create US debt to buy the US debt that was up for sale. The dollar is in trouble, but there are no viable fiat currencies to take its place as the reserve currency.

Life is going to get economically interesting in a couple years...

[headsonpikes]

Comments from Dennis Gartman....

THE CHINESE REVALUATION: OUR QUICK PERSPECTIVE

China has finally announced a revaluation of the Renminbi and no one
should be terribly surprised.

Our first responses to the news:

1. This is a very small change... only 2% and that is far, far too
little to have any major effect upon the imbalance of trade.

2. We are confused as to the "basket" that shall be used, and we wonder
why it is that China is revaluing its currency against the dollar and
then tossing the dollar out, only to replace it with a basket whose
value has not yet been set.

3. This is very bearish of US debt, for even though the change is only
2% this will eliminate a good portion of the intervention efforts the
PBOC has been undertaking to hold the Renminbi steady and thus reduces
demand, at the margin, for that debt.

4. This is modestly bullish of most US equities for it will increase
(slightly) the demand for US produced goods, but this is very bearish
for Wal-Mart and others who buy low end goods from China.

5. This is bullish for commodities generally for they have suddenly has
become 3% cheaper for Chinese buyers, and it is likely especially so for
crude oil.

[A. Pole]

China dropped its politically volatile policy of linking its currency to the U.S. dollar on Thursday, adopting a more flexible system based on a basket of foreign currencies that could push up the price of Chinese exports to the United States and Europe.

Bump!

[King Prout]

chicom ping

[carl in alaska]

By "STEPHANIE HOO"

Hey wasn't she one of the characters in the Dr. Seuss book entitled "The Grinch Who Stole Christmas."? I guesss she grew up to be a journalist...lol.

[Always Right]

In other news, the 'Dollar Store' changed its name to the 'Buck 25' Store....