Is China Making It’s Move?

Tuesday, April 3rd, 2012

Author Allen Currie

“China offers other Brics renminbi loans
By Henny Sender in Hong Kong and Joe Leahy in São Paulo
March 7, 2012 8:06 pm

China intends to extend renminbi loans to other Brics nations, in another step towards the internationalisation of its currency.

The China Development Bank will sign a memorandum of understanding in New Delhi with its Brazilian, Russian, Indian and South African counterparts on March 29, say people familiar with their talks. Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other Brics nations’ development banks will also extend loans denominated in their respective currencies.”
Why do I find this important? For many years the Chinese have been buying commodities (such as copper) mines and other commodity based assets as fast as they could. Makes good business sense. Invest your profits to secure against price and supply disruption. And they did have a lot of profits resting on an increasingly shaky US dollar base. Commodities in hand were far better.

Last week I noticed a couple of separate news items. One specifically dealt with a new announcement that China was prepared to ”do business” with their trade partners in Yuan. (read we are pressuring them) The second was a chart showing that their percentage reserves in USD have dropped from 65% to 54% in two years!!! That is IN ADDITION to the trade surpluses that the China is running with the US. Money that the US sends more or less directly to China. Last year alone the US ran a $272 billion trade deficit with China. Given the absolute size of their reserves, their announcement of a year or two ago that they would “diversify out of the US dollar,” they are doing so at a mind bo ggling pace. Almost impossible to move those quantities in the foreign exchange markets without major disruption. My antennae went straight up.

This announcement is especially significant to me. In my mind there cannot be any good for the USD in these moves and their subsequent reactions. This has to be a sneak nuclear attack where the Chinese assume that they will get hurt but not nearly as much as the current entities in the world financial system. In fact that is probably true, especially since the US has depleted its financial nuclear stockpile. As well, The US has its hands tied via the amount of bonds the Chinese hold. Those inscrutable Orientals are really good at surprise attacks, an objective that most warriors lust after. Waking up on Dec 8 with half your fleet gone by surprise attack is not fun. Right now I am suggesting I can see financial Kamakasi planes on the horizon. Better the US should take its eyes off Europe again to glance west for just a moment or two.

Mind you, I don’t think it is going to be much of a surprise to the powers that be. Recently the US has been passing all sorts of legislation designed to control its own home turf. I don’t think they really have any choice being bankrupt and all. March 16, Friday night, Obama signed the National Defense Resources Preparedness Executive Order. The Federal Government’s plans for 100% control of private resources, labor, and assets in the event of an emergency.

For example section 502; to employ persons of outstanding experience and ability without compensation and to employ experts, consultants, or organizations. – Get high or numb, using your method of choice before reading the document.

Is the hair on the back of your neck rising yet? Just like under Hitler, this control will last as long as the president decides that a state of emergency exists.

Related posts:

  1. China Banking 2.0 “Crash of the Titans”
  2. Western Energy Capitol–Making the Most of What We’ve Got
  3. China’s Golden Dragon Vs. US Paper Tiger
  4. Operation Phoenix Chapter 4
  5. Prestidigitation

8 comments on “Is China Making It’s Move?”

  1. I can work at least as hard as a Russian intellectual, when drafted without compensation into some totalitarian socialist machine; at least, until I escape or join the Resistance.
    These people really don’t have a clue; Americans are ungovernable for a reason!

  2. Well James I just find it despicable that ALL of the touted American freedoms have now been taken away. And I don’t see Americans as ungovernable. Where are the citizens with pitchforks on the steps of the Whitehouse today? Citizens now have less freedoms than indentured slaves. You can’t even put by a bit of food. You are now labeled and may be variously punished as hoarders, not the least of which is the ability of authorities to take away your food and let you starve to death. Of course these same authorities get to oversee the hoarding that they in their self designated role of officialdom engages in.

    In the last week I got into a debate at another site. A lady who wore her PhD as absolute proof of her superiority was touting a series of new laws against bullying, complete with petition to be signed. Now I am not pro bullying. What I am against is the millions of laws to enforce their vision of the ten commandments, and especially their improvements on those simple rules. They all know better than God what is right and proper. I suggested that excessive bullying and massacres and other insane actions COULD be the result of the stresses of being tied hand and foot by the myriad of laws, such as the bullying laws proposed, and which had pushed these same gun wielding mass murders over the edge. Of course she won that argument because she had a PhD and her arguments did not require any justification whereas my silly points of logic were just that, silly thoughts of an inferiorly educated cretin, and not worthy of any consideration. Bullying was wrong and if it didn’t stop she would see to it that the authorities, of which she was definitely one, had the wherewithal to bully what she defined as the offenders.

    The world has (past tense) gone to hell in a handbasket. May God bless us all, each and every one. We’re gonna need divine intervention.


  3. The greek officially recognized debt per capita is/was $38,937
    The US officially recognized debt per capita is, well the figures have grown, but $44,215. However the government auditors are refusing to sign the books becauise they are totally misleading. Nuff said.

    I see this as a harbringer of things to come

    Elderly Greek Kills Himself in Main Athens Square
    A Greek retiree shot himself dead in the busiest public square in Athens during morning rush hour Wednesday, leaving a note police said linked his suicide with the country’s acute financial woes.

    Daily Proto Thema exclusively published the shattering hand-note of D. Ch.:

    “The occupation government of Tsolakoglou* literally annihilated any possibility for my survival that was depended on a decent pension which only I personally paid for 35 years (without any state support).

    Because my age does not give me the possibility for a dynamic reaction (without meaning that if a Greek would grab the kalashnikov, I wouldn’t be the second one [to grab one], I see no other solution than the decent end before I start searching in the garbage for food.

    I believe that one day the youth without future will take the arms and hang upside down at Syntagma Square the national traitors as the Italians did with Mussolini in 1945 Piazza Poreto in Milan)”

  4. First the above re Athens suicide. In and of itself internationally, this is not significant. More it is like the canary in a mine. So many don’t understand the magnitude of the suffering Greeks are going through, nor what a financial failure will mean to themselves perrsonally.

    Then we come to something that maskes my hair stand on end with its magnitude. The US treasury auctions are failing massively and consistantly

    The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday…mo_code=E92C-1


  5. Desertrat says:

    As the US has become more of a mix of socialism and fascism, it has declined in many categories, particularly in the fiscal/monetary realm. China has always had an authoritarian regime, and since it has gotten past Mao and returned to its historic capitalistic ways, it has become financially successful.

    Since the value of the US dollar is in continual decline, and US debt is losing value, it is quite logical for the Chinese to convert poorly-performing assets into useful assets. Ergo, fewer dollars and more stockpiles of commodities.

    Direct exchange of the more-stable currencies is part of the overall logic. At some point, the loss of status as world reserve currency means that the US will be less of a foreign-affairs meddler in the world’s business. Hard to meddle when you’re broke and nobody wants your fiat paper…

  6. Desertrat says:

    I just read today that the purchasing power of US debt held by China has, in these last ten years, lost darned near a half-trillion bucks. Looks to me from that little tidbit that China damned well *oughta* be making a move.

  7. Rat
    Oh the US will squeek a lot on its way down, just as England did, but much of the world does not see the US as benevolant policeman to the world, but rather an empire building tyrant. While there is probably truth on both sides in that argument, that squeeking will undoubtedly, as it did for England, drive the contempt even further.

  8. Providing interest rates don’t increase the interest on the US debt will surpass the defense budget in 2019. Will the fed (above) be able to buy enough treasuries to keep interest rates down. I doubt it. From 2% to the more normal 8%, or even 6% would send that red line nearly straight up. Now I wonder why Obama just signed a peacetime martial law edict. Of course China is oblivious to all this…or not.

Leave a comment


    April 2012
    M T W T F S S
    « Mar   May »