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alstry (35.36)

Timberrrrrrrrrrr..........MOAP......

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June 08, 2009 – Comments (7)

Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), also said he is exploring the possibility of issuing loans to trading companies in yuan, allowing Chinese and foreign companies to settle their bills in yuan rather than in dollars.

Mr Guo said the issuing of yuan bonds in Hong Kong and Shanghai would help to develop the debt markets in China and promote the yuan as a major international currency.

It was the first time the head of a major Chinese bank has called for the wider use of the yuan, although a chorus of senior government officials have already voiced their concerns about the stability of the dollar and have said the yuan should be used more widely.

"I think the US government and the World Bank can consider the issuing of renminbi bonds," he said, asking for a "mutual cooperation" between the US and China to promote Chinese financial services.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5473491/Top-Chinese-banker-Guo-Shuqing-calls-for-wider-use-of-yuan.html

With a $2 Trillion Dollar (likely to be revised upwards) Deficit.....if our obligations to China, a nation with a surplus, gets denominated in yuan.....we are setting ourselves up for an obligation we can NEVER pay back as the dollar devalues against the yuan.....anybody ever heard of Argentina???

Interest rates will explode and the dollar will implode..... Americans will not be able to afford to fill up their cars with gas.......maybe this helps clarify why the Chinese laughed at Timmy last week...

Prepare!!!!!!

7 Comments – Post Your Own

#1) On June 08, 2009 at 10:29 PM, alstry (35.36) wrote:

What would happen to the Dollar if this becomes perception???

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#2) On June 08, 2009 at 10:39 PM, awallejr (83.77) wrote:

Yeah yeah yeah, heard this threat from China before.  The only reason why they even have a surplus is we gave them all their manufacturing jobs because they pay their workers virtually nothing.  Every month I kept hearing about a downward revision of their GDP.  They wanted 11%, now they are hoping for 6%.  While there is a pickup in their country as a result of their "real" infrastructure stimulus, it remains to be seen where their economy eventually goes without relying on selling their crap to the US.  And right now we still aren't buying.

They are a communist country.  Don't try to analyze them as if they weren't.  Without a real "middle class" (which is antithesis to communism), don't expect any real "decoupling." 

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#3) On June 08, 2009 at 11:03 PM, russiangambit (29.29) wrote:

> They are a communist country.  Don't try to analyze them as if they weren't. 

Funny you should say that, Lately I think Chinese make more sense than the US government.

Chinese do have a middle class. It is just their definition of middle class is different. They are a totalitarian state, not a communist state.

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#4) On June 08, 2009 at 11:43 PM, Jimmy2008 (< 20) wrote:

Chinese do have a middle class. It is just their definition of middle class is different. They are a totalitarian state, not a communist state.

Fully agree. US is becoming a socialist country now while China is becoming state capitalism.

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#5) On June 09, 2009 at 12:04 AM, awallejr (83.77) wrote:

Well I might not dispute the totalitarian part, tho I suppose according to the book "Animal Rights", under communism all people are equal, except some are more equal than others. 

You, however, can keep their political system.  I like my chances better when I can't be summarily removed from my home and executed by the government.

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#6) On June 09, 2009 at 12:06 AM, Harold71 (21.80) wrote:

>Interest rates will explode and the dollar will implode

Welcome alstry...for some time I thought you were going to stay a dollar bull forever, despite massive evidence to the contrary.  Apparently Mish and the Elliot Wavers still think the dollar will hold into the next stage of the crisis, I give it <1 year before magnificent fireworks.  There is a celebration scheduled in China, as they exit the USD Prison (which yes, they did construct themselves...silly Chinese).

What Mish and EWI appear to miss is that, while yes credit is being cut to businesses and consumers (and this is their apparent basis for long-term "deflation*"), the next bigger stage, which is now coming rapidly, is cutting credit off to the US Gov't.  From what I can see, they don't account or care about this ridiculously large elephant in the room. 

*I also think price deflation and financial asset deflation should also be separated in any economic analysis.  Consumer prices can rise dramatically while stocks and bonds fall.  This is precisely what happened in the 1970s.

The long-term inflationary depression camp is just starting to get set up here. 

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#7) On June 09, 2009 at 12:27 AM, alstry (35.36) wrote:

Harold,

I am still hoping for a double reverse.......

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