US $ replaced by the Euro

[lendaddy]

Originally Posted by Shaun 84 Targa

because you have created a red herring apples and oranges motif that changes with the wind. My analysis deals with the reality of the day.

I have created no such thing, despite your many attempts to shift the conversation I am still focused on your claim.

I want to know what China is or is not doing now that would be different if they owned none of our debt.

[Shaun @ Tru6]

Originally Posted by lendaddy

I have created no such thing, despite your many attempts to shift the conversation I am still focused on your claim.

I want to know what China is or is not doing now that would be different if they owned none of our debt.

Well you have if you go back and read your posts.

Anyway, I just got it. Your last post talks about "investment." What you call investment, I call squandering our children's' futures on loans to pay for a war resulting in negative ROI. that's our difference.

But please, go back and reread all my posts, then yours.

[lendaddy]

Originally Posted by Shaun 84 Targa

Well you have if you go back and read your posts.

Anyway, I just got it. Your last post talks about "investment." What you call investment, I call squandering our children's' futures on loans to pay for a war resulting in negative ROI. that's our difference.

But please, go back and reread all my posts, then yours.

I'm done with the games on this and have work to do. If you can't give me one or two lines backing your claim then I think you've made my point for me.

[Shaun @ Tru6]

Ok, I'll bite. What is my claim?

[lendaddy]

Originally Posted by Shaun 84 Targa

Ok, I'll bite. What is my claim?

I asked:

"There is no global enforcing body, China doesn't own us in the least. They expect and pray we honor their investments.

Do you expect a repo man to come at some point? Look at they various countries that have defaulted on our investments(and those of other countries), we didn't get anything but the shaft."

Then you replied:

Originally Posted by Shaun 84 Targa

that repo man has already shown up at the door Len, voting against us at the UN in placing sanctions against Iran

I then asked for the following clarification and got none:

"You suggest those votes would have been/gone differently if China had less investment in the US? If anything they have a greater vested interest in our well being."

So once again, how did/does China holding our debt motivate/empower them to screw us on foreign policy? You said the repo man already came with the UN vote and you should probably clarify why that would have gone differently had they no interest in our debt.

[Shaun @ Tru6]

When party A owes money to party B, B has the power in the relationship especially when party B has options that lessen the value of party A.

you are mixing cause and effect here. but you already answered your own question and just don't know it:

"...we got the shaft." Did our economy crumble when they went belly up? no. Just as China's won't if we try to negotiate from our traditional source of strength because every day that we borrow more and more and the trade deficit increases while the rest of the world strengthens it's own currencies and one-time manufacturing economies cross the line to consumer economies means our economy has less and less value on the world stage.

Will it happen tomorrow? no. 5 years from now. yes. India and China will both be buying more goods from within and from each other than selling to the U.S.

What does that give China? Leverage. Leverage to align themselves with our enemies because they have oil. Perhaps you haven't noticed, but for the past 3 years China has been making friends all over the world and buying up raw material assets all based on checks coming in from Walmart.

What have we been doing? Congratulating Moldava for their part in the Coalition of the Willing while making enemies all around the world.

I'm sending you a game of RISK for Christmas.

[svandamme]

Originally Posted by lendaddy

I asked:

"There is no global enforcing body, China doesn't own us in the least. They expect and pray we honor their investments.

actually , the global enforcing body is called the free market
on the free market, your currency is what gives you strength

if your currency turns to mush
then so does your strenght

the US has had a historical superior currency due to WW2, lend-lease, control of the blanc cheque oil/dollar thingie, superior production capacity and so on

superior production capacity... gone
oil/dollar thing ... soon to be gone

how do you think it will work out, if the oil becomes disconnected from the oil?

here's a few hints
you will be paying some serious moolah for the gas in your car
perhaps you'll end up with prices like we have in Europe now

difference being, we in Europe, might actually see our gas prices go down from what they are now, and we are actually used to them, while the average American get's depressed just thinking about those kinds of prices
how good is your public transport?? NYC i think is fine, Chicago, Boston too

but how about SoCal? FL? the rest?

US still relies mostly on road transport for goods
not so good when gas prices go that high, you'll need a lot of rail transportation, in a dense network to overcome that

it goes well beyond gas in your car, anything you want to buy, becomes hugely expensive, since most companies produce it where labor is cheap




China doesn't need you to actually pay back what you loan, to reap the benefits of what the US owes it, on the contrary, the more you owe them, the more they own you... businesses can be bought for cheaps, goods, resources... whoever owes a lot, has no strong arm in the world market

the US has had the strong arm for the last 50 or so years, but at this rate, that strong arm will turn to jelly

the only thing y'all will have left, is military power
what do you suggest? take what you want by force?
Do you think China will just give in under threat? Russia? Iran? or even Europe?

think about it , military force,is nothing if there's no moral ground from which to use it...
economic force has been the ideal tool to actually force things without morals... but the US is bleeding, draining via Afghanistan and I-wreck

if the dollar crashes completely, then you'll be either poor, or waging offensive war, which might just as well be the end... either way, it's going to suck

Bush and the ADD crew in the WH , are giving it away, i'm sure they'll have enough wealth built up to kick back at the ranch while everybody else in the future will be busy "taking one for the team"

[widebody911]

Originally Posted by svandamme

Bush and the ADD crew in the WH , are giving it away, i'm sure they'll have enough wealth built up to kick back at the ranch while everybody else in the future will be busy "taking one for the team"

The sad thing is, their supporters among the rank-and-file think that somehow they'll get to share in the spoils.

[reed930]

Last week Bear Stearns announced that Citic Securities, a top state-controlled investment bank in China, is planning to invest $1 billion in Bear Stearns. If you think countries like China and India have a major influence on US policy as holders of US securities, just watch as these countries shift from holding T-Bills to buying key US assets instead. Bearn Stears, Nasdaq, etc.

This is the beginning of a shopping spree that will have a major impact on the US economy and foreign policy for a long, long time.

[svandamme]

Originally Posted by widebody911

The sad thing is, their supporters among the rank-and-file think that somehow they'll get to share in the spoils.

i think that anybody not in that room, better not plan on any of those spoils
very few people are in that group of "havemores" or "his base"

[svandamme]

Originally Posted by Rich76_911s

Has anyone in this conversation mentioned the Yuan peg to the dollar? The Yuan is way undervalued relative to all other free market currencies. Is the US governments’ intentional devaluation of the dollar tied to that in any way?


Personally if I was going to attempt to trade currency I wouldn't touch Euros with a ten foot pole, give me Yuan. It is the only world currency undervalued. The Euro, Canadian dollar, they are all overvalued because the US is playing China's game. Personally I think it is frightening when Governments try to manipulate markets that are bigger than they are.

Rich

the yuan is not valued like the other currencies are
the Chinese government set it's value, and they under value it , there is some political pressure on them to fix that... it ain't working they just go "blah" whenever it's mentioned

it's a major export advantage to them
and if the US forces the yuan to be revalued 40% plus, or slaps a 40% import tax on em
that would suck for wallmart
and for the American consumer
guess what will happen?

[svandamme]

Originally Posted by Rich76_911s

Yeah no kidding. I'm asking if the intentional devaluation of the $ is tied to the Yuan's valuation?

Say for example; because of Chinas lower valuation, all governments decide to devalue their currency to make it more inline with China's.

the 40% under value is not relative to just the USD
it's relative to all currencies, including the EURO, the Brittish pound, and others


so i'de say it's not just that alone that's dragging down the USD



i'm no economist, but my take is that free market economy , is doomed to fail
it's a greedy cesspool of low accountability respective to nations and the people in those nations... rich getting richer, sure, that's not new
but the current business methods are not sustainable
look at wallmart, dumping prices on everything, shaving every bit of cost in it's stores, not the least of it the employees... driving real "american" business , out of business with unbeatable tactics

and they can do it , because the consumer likes to buy lot's of cheap stuff rather then just the good quality stuff they really need

so what's happening with the US, if all businesses are finished off by wallmart like competition? eg, bottom dollar wages, chinese import products

all you get, is more unemployment
more debt
bigger gap between rich and poor and fewer inbetweens

all this , because companies these days, only manage and run based on delivering results to shareholders, nobody cares anymore about sustaining the local business, and the local employees

that's no part of free economy, and that's why it will not last
something has got to give

in history there has always been trade
and until the last hundred or so years, trade has always been enforced by military power

not anymore, sure the military still influences economies these days
but it is no longer a parallel partnership

all you get now, is inflation, growth, more, more more
but nothing more is added to the mix, there are no new conquests of territory, there are very few places left to start mining
just increased efficiency, every year

tell me
how much better can efficiency get, till it hits a ceiling?
can we get to 120% and keep going?

how many western countries, could ( if they wanted to ) shut down their borders and feed it's civilians with own produce? no more imports of essential supplies....?

now everybody rates economies on GDP surplus and deficit
if you sell more then you buy, you're doing good

but that doesn't mean you can take care of your peoples

in the future, i'm sure the true rating will be "who can take care of his own"
and GDP surplus, will be like in the old days, who can actually sell things he has in surplus, after all things locally are taken care off

those who fail, will have instability, internal struggles, violence, famine, disease, look at Africa

rough times ahead, sooner or later, doodoo will hit the fan, one way or another

the 2000 internet bubble was just a small scale example of what really is going to happen with the free market as a whole...

[turbo6bar]

Originally Posted by Rich76_911s

Personally if I was going to attempt to trade currency I wouldn't touch Euros with a ten foot pole, give me Yuan. It is the only world currency undervalued. The Euro, Canadian dollar, they are all overvalued because the US is playing China's game. Personally I think it is frightening when Governments try to manipulate markets that are bigger than they are.

Taken further, it might also be a good time to go long the US dollar, considering its weakness against other major currencies. It certainly has crossed my mind. Zig when others zag.

[legion]

Because the Yuan is pegged to the dollar, which is declining, it is making raw materials VERY expensive for China to buy. Eventually, they will have to let their currency float (making them a less attractive exporter) or their economy will implode.

[Shaun @ Tru6]

Originally Posted by legion

Because the Yuan is pegged to the dollar, which is declining, it is making raw materials VERY expensive for China to buy. Eventually, they will have to let their currency float (making them a less attractive exporter) or their economy will implode.

could you please expand on this Chris.

[jluetjen]

For some reason people always seem to see currency flows in terms of their local cash economy. Thats kind of like discussing the intricacies of the Space shuttle based on a model that you built as a kid. Some things to consider...

1) Everyone b1tches about how devalued the dollar is, and how the Chinese are buying everything in sight. This is nothing new. In the past it was the Taiwanese and the Koreans, and before that (and in a much bigger way) the Japanese. Sure they came, bought a lot of stuff (land-mark buildings, companies, etc) and inevitably ended up sucking wind because they inevitably overpaid with their overvalued currencies. Meanwhile the previous (American) owners laughed all the way to the bank.

2) Isn't it curious that even with the exploding Chinese stock market, so many investors are still buying American stocks and bonds? Aren't these the same American companies that can't compete? Or is it that these companies really are worth something when compared to overseas companies?

3) Everyone laments the loss of jobs overseas. Welcome to the 21st century! It's not the jobs that are the value added, but the ability to create new jobs by developing new products and services which is where the value added exists. Most of the jobs which are being moved overseas are mature, routinized, comparatively easily repeated and copied jobs. To put it differently, they are boring, demanding and don't pay that well. I'd be surprised if anyone on this board would be happy doing them for the wage that's being paid, even in the local economy. While workers overseas may do better then their counterparts in the local economy overseas, the jobs only exist because they can be done there cheaper they can here. If they weren't being done in country C, they'd be done in country I, M or countless other places in the world. The reality is that it's comparatively easy to copy the job, and this is reflected in the very competitive and cheap wages associated with an exported job.

The key to American economy is that we export ideas and jobs. That is the biggest difference between the American economy and the "Asian tiger" economies. Aside from maybe Singapore, the rest of the Asian Tigers only wish that they could create as many new ideas in their economies as the US does. Why can't they? They often have the rigorous schooling, entrepreneurs and the "high tech" economy -- but somehow it just doesn't happen.

In my opinion it's because we have a culture and economy based on creativity. China and the other Asian Tigers don't have this because it would threaten the status quo, both culturally as well as politically.

At the end of the day, the cost of living in China is increasing as everyone makes some money and wants to buy big-screen TV's, expensive cars and other stuff. It's already happening along China's coast. When that happens, suddenly they don't have the wage advantage that they once had. Manufacturers then take the jobs and go to the next cheap economy. The smart companies aren't bothering to put more factories in Shanghai because it's not much cheaper the Malaysia, Taiwan or Korea. Instead they're looking further inland to provinces where there is more competition for each job. While the Chinese certainly have a vast labor pool, so this isn't going to happen as fast as it did in Taiwan, Korea and Singapore -- it will happen. Watch out for when that happens because there will be a huge "correction" to the Chinese economy that will make the Japanese "Bubble" bursting look mild. The drain on the world's economy will be huge when that happens.

[Shaun @ Tru6]

I see a few flaws in your argument John, though well presented.

RE: Taiwan, Korea, etc. First, you can't compare them with China. it's like comparing a flashlight to the sun. Scale.

RE: American economy is based on ideas. I agree. Too bad it's so easy for China to copy our ideas with little to no repercussions. And at the end of the day, if all we come up with are ideas for products that are made overseas, at best you add to the upper 5% class. Ideas that create American jobs are great, but that's not really the trend.

RE: labor pool correction. This is like trying to imagine God, or comprehend the number of stars in the sky. Combine its population with access to raw materials on its own terms with modernization while China opens up the very top industries like aerospace, and the correction won't be in our lifetime.

[Hetmann]

I've heard so much about the US loss of manufacturing capability. Hogwash. We're outsourcing to people willing to do it for less. As their economies change and it gets cheaper to do it here again it will come rushing back.

Some of the boomers will end up paying the price for their lavish lifestyles and there will be many who don't see an inheretance. So what, life goes on, they will have to make their own money and learn from their parent's mistakes.

The US is not going belly up. If current fiscal policy is unsustainable, it will need to change at some point.

[The Gaijin]

[QUOTE=Hetmann;3572585]

Some of the boomers will end up paying the price for their lavish lifestyles and there will be many who don't see an inheretance. So what, life goes on, they will have to make their own money and learn from their parent's mistakes.

QUOTE]

The most sensible thing I have read all day.

[turbo6bar]

DXY dollar index is at 75.45 after hitting a new record low of 75.07, approximately 4% below the previous multi-decade low of 78.13.

Looks like this is becoming a game of which country blinks first.