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XMFSinchiruna (27.56)

China Prefers Greece over the United States

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October 06, 2010 – Comments (9) | RELATED TICKERS: ABX , NEM , DSX

The cat is out of the bag, Fools. China is actively jumpting the U.S. dollar ship, and cozying up to the Eurozone in its stead.

I can't think of a more poignant moment during the past ten years that underscores the enormity of the shifting balance of economic power underway as a consequence of the financial crisis. China is the victor, and the era of the United States' economic supremacy is hurtling to a close. China has played its cards masterfully, playing along with the dollar devaluation ruse just long enough to position itself for greater readiness for the dollar's big and inevitable slide. They have bought and are continuing to buy as much of those things that will rise in price as they possibly can, and they have moved to secure future supplies of strategic resources the way a nation does when preparing for a worst case scenario. At the same time, we have squandered trillions propping up bankrupt corporations and prolonging the inevitable delevering of our financial system.

Gold is trying to tell the world what is transpiring. Sadly, I feel few Americans are even aware of the nature of our predicament.

Please do what you can to share this article with your family, friends, and online communities. People need to be informed of what is coming. It is highly unpleasant, which keeps most looking in another direction out of a cultural habit for unconditional optimism, but this a time for sober realism.

China Prefers Greece over the United States

http://www.fool.com/investing/international/2010/10/05/china-prefers-greece-over-the-united-states.aspx

Excerpts:

While the United States continues to pump unseemly levels of deficit spending into piecemeal attempts to stave off stagnation, China has consistently funneled its crisis-era spending into strategic initiatives that serve to support the nation's breakneck pace of industrialization. I offered that very dichotomy of spending strategies as the most overlooked story of 2009, and I believe its significance to the global balance of economic power continues to go largely unnoticed.

China's investment in Greek shippers is but one cog in a string of strategic moves that Fools must consider in their totality in order to draw the correct interpretations. The sum of China's crisis-era strategic actions can be deemed dollar-defensive. The nation's official policy directive -- announced in August -- to support "large-scale gold producers in their development and overseas expansion plans," provides a golden example. The crystal-clear message to leading producers like Barrick Gold (NYSE: ABX) and Newmont Mining (NYSE: NEM)Coeur d'Alene Mines' (NYSE: CDE) Kensington mine highlights China's eagerness to secure future gold supply. is that tight bank credit will not block the world's development pipeline for gold from achieving production. In fact, a supply agreement for one-half the gold production from

This weekend, mere days after the U.S. House of Representative passed a bill designed to penalize China for failing to permit the yuan to appreciate fast enough for Washington's liking, China has made a strongly symbolic move to cozy-up to the European Union and the euro currency. Through both actions and rhetoric, China is casting a vote of no confidence in the U.S. dollar, simultaneously with a vote of confidence in the euro. Premier Wen Jiabao explicitly stated this weekend that China "will not reduce the holdings of European bonds in our foreign exchange portfolio". I encourage Fools to consider investing where China invests.

 

 

9 Comments – Post Your Own

#1) On October 06, 2010 at 9:10 AM, skypilot2005 (< 20) wrote:

Chris,

I am writing here because I am not sure how to access your e-mail address.

I have successfully invested in stocks having started 23 years ago putting the change in my pocket in an old coffee can each day to pay for my daughter's college education.   I opened an account with a discount broker as soon as I had enough money saved for the minimum required to open the account.

I do my own research and I have doubled the value of my 401k in the last 2 years.  Going from all cash to all stocks and now a mix of stocks and cash.  Approximately 80% stocks 20% cash, currently.  I am currently in a sell mode locking in my gains.

The only exception are some mining stocks you have recommended in the last year.  I am keeping those and buying more becasue, I feel it is a win - win situation.  A hedge against inflation and a way to benefit from an economic upturn.

 That being said, my question is do you participate in any of the Fool premium services / news letters as a writer or contributor?    I've never paid for one but if you do, I'd like to show my appreciation to you, by signing up for one.

 

thanks, again

 

skypilot2005

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#2) On October 06, 2010 at 9:48 AM, XMFSinchiruna (27.56) wrote:

skypilot2005

Thank you so much for the very kind words, your readership, and your thoughtful gesture expressing interest in a TMF premium service.

Congratulations on the swift doubling of your portfolio during a very tumultuous period for stocks. That's a feat to be proud of.

I do not contribute to any of the newsletter services, though it was my own subscription to TMF's Inside Value service that brought me into the Foolish fold and ultimately led to my present role covering precious metals and various bellwether industrial sectors.

It is, in my view, unfortunate that precious metals have not been taken seriously as a whole within this and most other retail financial services companies. That being said, it's hard to argue with a record like the Motley Fool Stock Advisor's 70% outperformance of the S&P 500 since 2002.

You can try any of the services free for 30 days, which helps investors locate the advisors and styles they feel most confortable with. If you link to a premium service from within the text below any of my articles, then the Fool will know it was my content that generated your interest. Alternatively, one could always support TMF's worthwhile cause for this year's Foolanthropy campaign. You'll find I played an active role in raising funds for a school that's doing exciting things in our nation's capital:

http://www.fool.com/foolanthropy/2009/12/08/what-1000-points-of-light-really-look-like.aspx

Let me know what you decide after poking around the various services, and please feel free to hit me up personally for guidance at any time.

My e-mail address is sinchiruna@cox.net

Please be sure to bookmark my article feed to catch all my pieces as they are published:

http://www.fool.com/feeds/authorheadlines.aspx?author=1632&k=w5ptLfHroNOBubtLSj6MLg&p=FoolAuthor&s=ihesitrf0000001

Thanks again for getting in touch, and here's hoping you'll stay in touch. :)

TMFSinchiruna

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#3) On October 06, 2010 at 10:30 AM, BillyTG (29.29) wrote:

I think it's going to get ugly. We're in the middle of a cold war with China, only it's not an arms race, but an economic race waged through currencies and the space/cyberspace fronts.  Some people believe the US has already lost to China.

It's not just China trying to secure future gold produce. I've been reading articles about wealthy private Americans withdrawing a TON of physical gold (literally), JP Morgan trying to secure future mine output, the Federal Reserve buying physical gold via JP Morgan according to that last link), and central banks around the world trying to secure physical.

For several years, the US and China have been engaged in high-tech covert military and economic cat-and-mouse games, much of which could easily be defined as "acts of war" were either government so inclined to escalate.  All of this is easily searchable online: China has recently cut off sales of rare earth minerals to Japan, has shot down a US satellite, regularly hacks into US defense networks like the pentagon and in 2007 downloaded basically the entire database according to Wesley Clark, regularly hacks into US public companies like google for many reasons one of which is the stealing of intellectual property.

I won't go into what the US is doing, but don't believe for a second that this is one-way  harassment.

One of my biggest concerns is a foreign-originated cyber attack or even a US false flag operation in which our electronic banking and brokerage accounts start being manipulated or erased. Think how much of our communication and money transactions are electronic. All of it! We are very, very vulnerable. Meanwhile China encourages its citizens to save gold. Scary stuff awaits.

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#4) On October 06, 2010 at 1:16 PM, chk999 (99.98) wrote:

There's a joke about China's preference for Greek debt in there somewhere, but I can't quite see how to phrase it.

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#5) On October 06, 2010 at 5:13 PM, blesto (31.70) wrote:

Thanks for the useful insights Sinchiruna.

If China is cozying up to the Eurozone, would European banks be of interest to Fools. NGB comes to mind.

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#6) On October 06, 2010 at 5:15 PM, blesto (31.70) wrote:

Geez!!!

I meant NBG!!!

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#7) On October 06, 2010 at 11:13 PM, jesusfreakinco (28.95) wrote:

Chris,

Yours is the only blog I really care to read about at MF.  Keep up the great work.

I'll send you an email off-line.

JFC

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#8) On October 09, 2010 at 1:12 PM, Momentum22 (29.55) wrote:

Through both actions and rhetoric, China is casting a vote of no confidence in the U.S. dollar, simultaneously with a vote of confidence in the euro.

The currency concerns you point out are warranted but there are many reasons why China would be considering strategic connections with Greece right now. Shipping, trade and a vested interest in the success of the European economy might also have something to do with it, no?

China does build a few of those ships used by Greek Shippers. 

 

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#9) On October 10, 2010 at 9:23 AM, silverminer (30.83) wrote:

Of course, but those considerations are secondary to the issue that's front and center on the world stage right now. It all boils down to strategic positioning with respect to currencies at present ... that is what will separate the victors from the losers in these currency wars, and China will be a victor.

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