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FRED
12-08-06, 12:46 AM
China central bank sees risk of US dollar slide on asset sell-off (http://www.forbes.com/business/feeds/afx/2006/12/07/afx3235275.html)
December 7, 2006 (Forbes)

China's central bank said it is concerned over a possible slide in the US dollar if there is a widespread move to sell off dollar assets.

The People's Bank (nasdaq: PBCT - news - people ) of China said in its 2006 Financial Stability Report that Asian oil exporting countries also may need to adjust their foreign exchange holdings to reduce risk.

"If the US current account deficit growth continues to be higher than GDP growth, the investment value of US assets will be questioned by global investors, and the willingness of investors to continue holding and buying US financial products may weaken," the central bank said.

China has been cautious in its statements about the dollar. It now has over 1 trln usd in foreign exchange reserves and some 70 pct of that is believed to be held in dollar-denominated assets.

Officials have talked of diversifying the nation's foreign exchange holdings but they do not want to trigger a sharp sell-off that will reduce the value of the assets China now holds.

AntiSpin: That's like a pension fund with 12.5% ownership of pets.com shares in early 2000 declaring they'd like to sell but don't want to start a run on the stock. The parallels between the U.S. dollar now and dot com shares in 2000 is starting to get eerie.

The comparison of the U.S. dollar now to the Argentine peso in 1980 is as inaccurate as it is invidious. A closer analogue is between USA, Inc. today to pets.com in 1999.

When the dollar tanked in light trading after Thanksgiving, Ben Bernanke was out Monday first thing yapping about inflation, meaning to send the message to U.S. creditors that the Fed was ready to raise interest rates to defend the dollar, even if that meant throwing the post-housing bubble U.S. economy into recession sooner than later.


http://www.itulip.com/images/bernankepet.gif


USA, Inc.'s employees (citizens) can't buy cars made by major shareholders (countries that own shares in USA, Inc.–dollars–such as China and Japan) unless he or she is given the money with which to buy them. If interest is due and the incentives, to which employees have become accustomed, are no longer available, such as zero money down, and interest free loans, well...

Consumer Borrowing Falls in October (http://www.breitbart.com/news/2006/12/07/D8LS78KG1.html)
December 7, 2006 (AP)

Consumer borrowing fell in October by the largest amount in 14 years, reflecting a big drop in auto loans.

The Federal Reserve reported Thursday that borrowing declined at an annual rate of 0.6 percent in October following a revised 2 percent increase in September. It was the biggest drop since a 1 percent plunge in October 1992.

The weakness last month came from a huge falloff in demand for auto loans and other types of non-revolving credit, which declined at a rate of 3.3 percent in October, following a small 0.4 percent gain in September.
USA, Inc. revenue is dropping off. Do China et al double down or restructure the debt? Stay tuned.

sparki
12-08-06, 05:29 AM
That's like a pension fund with 12.5% ownership of pets.com shares in early 2000 declaring they'd like to sell but don't want to start a run on the stock. The parallels between the U.S. dollar now and dot com shares in 2000 is starting to get eerie.

:-) lol!!!!! from germany!

what a comment to start the day!

blazespinnaker
12-08-06, 12:16 PM
Great article. Love the cartoon!!

Chris Coles
12-08-06, 12:30 PM
The thing is only held together by everyone deciding not to startle anyone else by suddenly jumping into selling their holdings. As long as everyone holds still.......... This is something like the ending of the film "The Italian Job" where the bullion is about to fall off the back of the bus and the bus in turn is about to fall off the cliff. But can they all hold still?

More importantly though, will someone "spook" everyone into a stampeed.

The slightest break in ranks will bring the whole lot down, and the first to move "may" survive, but everyone else will certainly not. All we need now is someone to decide to start to trade in Euros where their existing trading in US Dollars has not produced an extreme holding of US debt notes.

Did I hear Iran mentioned?

Jeff
12-08-06, 04:53 PM
I passed 3 seperate ads on various web pages tempting me to see how low my mortgage payment could go if I went to a new 1% (teaser) ARM and the like.

Sometimes it feels like the brontasaurus has been hit in the tail with a rock and we're just waiting for the nerves to finally transmit it all the way to the brain.

So EJ, is it 1929 or 1999? And when will the sheeple get it?

0tr
12-08-06, 08:34 PM
I was thinking it looks like one of those guess the ice melt deals, some one drives an old jalopy out onto a frozen lake, and people place bets on date/time when the old dinosaur falls through.

akrowne
12-08-06, 11:13 PM
Sometimes it feels like the brontasaurus has been hit in the tail with a rock and we're just waiting for the nerves to finally transmit it all the way to the brain.

Apropros considering the subprime lenders are <a href="http://www.autodogmatic.com/index.php/sst/2006/12/08/housing_finance_breakdown_begins">starting to turn over</a>.

EJ
12-08-06, 11:24 PM
I passed 3 seperate ads on various web pages tempting me to see how low my mortgage payment could go if I went to a new 1% (teaser) ARM and the like.

Sometimes it feels like the brontasaurus has been hit in the tail with a rock and we're just waiting for the nerves to finally transmit it all the way to the brain.

So EJ, is it 1929 or 1999? And when will the sheeple get it?

I am hopeful that the bankers selling these loans are merely self deluded, but the possibility that they are derranged cannot be completely discounted.

It's more 1937 than 1929 (http://www.itulip.com/forums/showthread.php?p=3679#poststop).

spunky
12-10-06, 04:34 AM
Yes, I love the cartoon also. It is not a graph. :D

Rajiv
12-12-06, 12:28 AM
Did you see this article in the Financial Times Oil producers shun dollar (http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html)


Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.

The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.

Market liquidity is traditionally low in December, and many traders have locked in profits, potentially reinforcing volatility.

Russia and the members of the Organisation of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.

Meanwhile, they increased their holdings of euros from 20 to 22 per cent, the BIS said. The speed of the shift may help to explain the weakness of the dollar, which recently fell to a 20-month low against the euro and a 14-year low against sterling.

BK
12-12-06, 05:17 AM
I am hopeful that the bankers selling these loans are merely self deluded, but the possibility that they are derranged cannot be completely discounted.

It's more 1937 than 1929 (http://www.itulip.com/forums/showthread.php?p=3679#poststop).
Bankers lend money as long as they can make money with Transaction fees....no worries of were their work leaves the borrower.
Heard a mortgage broker make the bullish case for Buying a home in Portsmouth-NH because there is lots of Commercial construction going on...

Does anyone know of a Town in USA where there isn't lots of Commercial Construction in Progress???

Commercial R/E build and Bankers lend until the economy hits the RESET button. Then the Taxpayers will be left with the Bill.

spunky
12-12-06, 05:34 AM
Did you see this article in the Financial Times Oil producers shun dollar (http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html)


Yes, look at Gold and Silver also. Silver is now following Gold. Gold stayed strong and did not follow oils retreat in the fall , nor now is it linked to the bonar.


Please see Kitco for charts. I sure hope Finster appreciates my not using the word decouple. :D