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petegz28
08-06-2011, 12:39 PM
* G7 major powers to confer on markets crisis - source

* Obama says let's work together



(Adds German reaction, analyst, ECB sources on Italy bonds)

By Walter Brandimarte and Melanie Lee

NEW YORK/SHANGHAI, Aug 6 (Reuters) - China bluntly criticised the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.

Standard & Poor's cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation's budget deficits and climbing debt burden.

China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.

After a week which saw $2.5 trillion wiped off global markets, the move deepened investors' concerns of an impending recession in the United States and over the euro zone crisis.

Finance ministers and central bankers of the Group of Seven major industrialised nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.

The source said the credit rating downgrade had added a global dimension on top of the euro zone debt issue, raising the need for international coordination.

"The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said.

French Finance Minister Francois Baroin, who would chair such a meeting under France's G7 and G20 presidency, said it was too early to say whether there would be an early G7 gathering.

In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling.

"China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.

It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.

In Washington, U.S. President Barack Obama urged lawmakers on Saturday to set aside partisan politics after the debt battle, saying they must work to put the United States' fiscal house in order and refocus on stimulating its stagnant economy.

S&P blamed the downgrade in part on the political gridlock in Washington, saying politics was preventing the United States from addressing its deficit and debt problems.

Obama called on Congress to back measures to give tax relief to the middle class, extend jobless benefits and pass long-delayed international trade pacts.

"Both parties are going to have to work together on a larger plan to get our nation's finances in order," he said.

"In the long term, the health of our economy depends on it...in the short term, our urgent mission has to be getting this economy growing faster and creating jobs."



STAY COOL

In contrast to the Chinese criticism, France's Baroin said France had faith in the United States' ability to get out of this "difficult period".

Friday's U.S. unemployment numbers were better than expected and so things were heading in the right direction, he said.

"Therefore, one should not dramatise, one needs to remain cool-headed, one should look at the fundamentals," he told France's iTele.

While the impact of the rating cut on financial markets when they reopen on Monday may be modest because the decision was expected, the shift may have a long-term impact for U.S. standing in the world, the dollar's status, and the global financial system.

"I think even if it was half-expected, the consequence will be far reaching," said Ciaran O'Hagan, fixed income strategist at Societe Generale in Paris.

"It will weigh on secure assets. The bigger reaction will be on risky assets, including equities and on agencies (Freddie Mac, Fannie Mae) and states backed directly by the federal government."

But he added: "U.S. Treasuries will remain a benchmark. This is a ship which takes a long time to turn around."

Norbert Barthle, a budget expert for German Chancellor Angela Merkel's conservatives said the downgrade would certainly provoke further turbulence in markets.

"I'm not surprised about the U.S. rating downgrade, rather I am astonished that for weeks, international rating agencies have focussed their attention on the European debt situation but not the American one. For a while, there have been clear worries about America's economic woes but also the fact the U.S. is heavily indebted."



NO EARLY ITALIAN ELECTION

In Europe, Italian Prime Minister Silvio Berlusconi on Saturday ruled out calling early elections to stem market panic that has pounded Italian assets and forced his government to bring forward austerity measures.

Italy buckled on Friday to world pressure by pledging to bring forward cuts to balance the budget in 2013 in return for European Central Bank help with funding.

European policy makers are concerned that a debt emergency in the euro zone's third largest economy could completely overwhelm bailout mechanisms set up to help smaller troubled countries like Greece or Ireland.

Italy is due to go to the polls in 2013 but Berlusconi dismissed any suggestion of emulating Spain, where Prime Minister Jose Luis Rodriguez Zapatero has called an early election to tackle the crisis.

"This has absolutely not been talked about," Berlusconi told reporters. "This has never been an option."

The European Union's top economic official praised Italy's decision to accelerate budget-balancing measures and structural economic reforms and said swift implementation was now crucial.

"I strongly support this announcement and call on the authorities to quickly translate it into concrete measures," European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters in a telephone interview.

"This will help to boost potential growth, secure budgetary retrenchment and bolster market confidence," Rehn said.

The European Central Bank sources said the bank remains divided over whether to buy Italian government bonds but even some of those who favour the move say Italy should do more to front-load austerity measures.

Two sources said they expected ECB President Jean-Claude Trichet to hold a teleconference of the bank's policy-setting Governing Council over the weekend to discuss how to respond to turmoil in financial markets and Italy's latest measures.

China and Japan have called for coordinated action to avert a new worldwide financial crisis. India's finance minister Pranab Mukherjee told reporters: "There is no need to unnecessarily press the panic button."

http://www.reuters.com/article/2011/08/06/crisis-idUSLDE77504R20110806

Ace Gunner
08-06-2011, 01:54 PM
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary"

pwned

KILLER_CLOWN
08-06-2011, 01:55 PM
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary"

pwned

We'll just have the Ben Bernanke to print us up some more of them Greenbacks baby!

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Ace Gunner
08-06-2011, 02:01 PM
China scorned the United States for its "debt addiction" and "short sighted" political wrangling.

"China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.

It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.

kooks.... ya. that's it.

Stewie
08-06-2011, 02:06 PM
In contrast to the Chinese criticism, France's Baroin said France had faith in the United States' ability to get out of this "difficult period".

Friday's U.S. unemployment numbers were better than expected and so things were heading in the right direction, he said.

This is the problem with the huge debt in the West. France is about 3rd in line to have to be bailed out and he's looking at employment numbers (bogus) in the US for salvation?

Stewie
08-06-2011, 02:08 PM
I know you know my stance, but China wants a stable currency based on gold. Not that we go back to a gold standard, but some sort of sanity that regulates the printing press.

Ace Gunner
08-06-2011, 02:14 PM
Ya, that was why I highlighted that "secured" statement. It should begin to sink into even the hardest heads that Nixon made a huge mistake taking america off the gold standard and off the trail of governing accountability.

orange
08-06-2011, 03:52 PM
... 'Cause if CHINA'S state mouthpiece wants it, it MUST be good for America!

:drool:

KC native
08-06-2011, 03:58 PM
Again, this should be another who gives a fuck what they say. The Chinese manipulate the shit out of their currency. They're pissing off just about everyone in the world with their trade policies and manufactured competitive advantages. When China gets it's own house in order then they can lecture the US. Until then they can fuck off.

petegz28
08-06-2011, 04:01 PM
Again, this should be another who gives a **** what they say. The Chinese manipulate the shit out of their currency. They're pissing off just about everyone in the world with their trade policies and manufactured competitive advantages. When China gets it's own house in order then they can lecture the US. Until then they can **** off.

Except that China holds the majority of our debt. This is like your mortgage company telling you that you better get your shit together because WE own the house, not you.

Ace Gunner
08-06-2011, 04:02 PM
america is china's house

KC native
08-06-2011, 04:05 PM
Except that China holds the majority of our debt. This is like your mortgage company telling you that you better get your shit together because WE own the house, not you.

And because of the size of their position, they're fucked. They can't sell off because there is no where else to deploy their reserves. They can't sell off because it will kill the remaining value of their reserves. They can't sell off because then it would weaken the dollar and their cheap chinese shit won't be as cheap anymore and they can't sell it to people in their own country.

alnorth
08-06-2011, 04:05 PM
Except that China holds the majority of our debt. This is like your mortgage company telling you that you better get your shit together because WE own the house, not you.

well, actually they don't. They own more than anyone else, but it isn't even 20%.

As far as banking analogies go, if you owe a bank a gigantic amount of money, so much that if you flake out the bank could go under, you don't really have a traditional banking relationship anymore. In that case, the bank is basically a business partner.

Ace Gunner
08-06-2011, 04:08 PM
splitting hairs. If China called in their notes, what would happen to america's budget. ya. they own the house.

alnorth
08-06-2011, 04:11 PM
splitting hairs. If China called in their notes, what would happen to america's budget. ya. they own the house.

that is strictly theoretical because they won't do it.

Back to the banking analogy. A small bank is owed $100MM by a business owner where the raw equipment at firesale prices is barely more than $10MM. If this particular bank takes a $90MM loss, they will be shut down by the FDIC. He thinks he can pull through but he needs a break on payments for a couple years.

Can the bank call the debt and force him into bankruptcy? Sure. Will they? Hell no.

Stewie
08-06-2011, 04:29 PM
Again, this should be another who gives a fuck what they say. The Chinese manipulate the shit out of their currency. They're pissing off just about everyone in the world with their trade policies and manufactured competitive advantages. When China gets it's own house in order then they can lecture the US. Until then they can fuck off.

Chinese economists are much smarter than US politicians. They offer cheap labor in exchange for buying our debt. This is nothing new... it's been going on for years and years. It's why you see office building after office building in the US that are filled with people that do nothing for our economy.

This all started with the strong dollar policy. The world loved it! It meant moving real jobs outside the US and the US could import cheap goods. That game is over and now the US is mad because the countries with jobs are in the driver's seat?

KC native
08-06-2011, 04:38 PM
Chinese economists are much smarter than US politicians. They offer cheap labor in exchange for buying our debt. This is nothing new... it's been going on for years and years. It's why you see office building after office building in the US that are filled with people that do nothing for our economy.

This all started with the strong dollar policy. The world loved it! It meant moving real jobs outside the US and the US could import cheap goods. That game is over and now the US is mad because the countries with jobs are in the driver's seat?

You have absolutely no idea of what the fuck you are talking about. China is no where close to being as strong as they portray. There's a reason they're still a state capitalist country instead of being just a capitalist country.

Stewie
08-06-2011, 04:47 PM
You have absolutely no idea of what the fuck you are talking about. China is no where close to being as strong as they portray. There's a reason they're still a state capitalist country instead of being just a capitalist country.

OK. You win. You've been wrong about anything we've ever talked about. So, let's listen to KC native.

China is weak, yet they can buy trillion$ of US debt. China is weak because every major manufacturer in the world has enormous plants there. China is weak because their population is living a better life than 15 years ago. It's the stoopid US gov't policy, that's it.

KC native is mad about something, I just can't figure it out. He didn't believe me about gold at $1500 and said the DOW would crash to 5000-6000 again. He must have been short the DOW and gold to be so cantankerous.

Ace Gunner
08-06-2011, 05:41 PM
Chinese economists are much smarter than US politicians. They offer cheap labor in exchange for buying our debt. This is nothing new... it's been going on for years and years. It's why you see office building after office building in the US that are filled with people that do nothing for our economy.

This all started with the strong dollar policy. The world loved it! It meant moving real jobs outside the US and the US could import cheap goods. That game is over and now the US is mad because the countries with jobs are in the driver's seat?

hahaha, so true. Except the the assholes in DC decided to play this thing all out - what's about to happen now is the world will riot and the powers that be? they'll just join hands and send their army out to mop it up. Did you see the mexican army in arizona 2 years ago? yes. yes you did. DC will come out this smelling and looking good under World Super Council Rule. No more constitution. No more BOR. No more freedom. No more america and those in DC currently paving the way have big plans for the new and improved, up and coming reorg chart.

BucEyedPea
08-06-2011, 05:49 PM
I know you know my stance, but China wants a stable currency based on gold. Not that we go back to a gold standard, but some sort of sanity that regulates the printing press.

Yeah, I hear they read Mises, Hayek and Woods much to the disappointment of Soros. If there were to be a sane global currency gold would be better then what we have now. ( I still say it can be anything.)

BucEyedPea
08-06-2011, 05:52 PM
hahaha, so true. Except the the assholes in DC decided to play this thing all out - what's about to happen now is the world will riot and the powers that be? they'll just join hands and send their army out to mop it up.

Well Marc Faber is predicting war to mop up the rest of the world especially China in an effort to control natural resources:

"This shift in the balance of economic power to emerging economies is accompanied by a shift in the political and military power, and that..., the West will not just sit and do nothing about it."

"The Libya expedition is the first shot," he argued.

"I think the West would want to control China by controlling the oil supplies from the Middle East, and then it will come to war," he predicted.

http://www.bi-me.com/main.php?id=53876&t=1&cg=4

Smells like WWII all over again, with a war as a fixer-upper. ( to some anyways)

Ace Gunner
08-06-2011, 06:04 PM
War has solved many problems. But since WW2 that statement has not worked out in america's favor. Only the Gov't and MxIxCx have come out of the past 50 fucking years smelling like a zillion bucks. The US gov't doesn't use war for economic gain anymore. They use the black market and private sector for that. See, they are lining their pockets and you get the pat on the back.

Ace Gunner
08-06-2011, 06:07 PM
and, of course ... anywhere else they want to pat you.

BucEyedPea
08-06-2011, 06:17 PM
War has solved many problems.
Such as?

But since WW2 that statement has not worked out in america's favor. Only the Gov't and MxIxCx have come out of the past 50 ****ing years smelling like a zillion bucks. The US gov't doesn't use war for economic gain anymore. They use the black market and private sector for that. See, they are lining their pockets and you get the pat on the back.

Was our War for Independence for economic gain or England's economic gain?
I think economics played a role due to restraint of trade from Mercantilist England which is how the US is acting out today. How about our War of 1812? I think the Civil War and the Spanish American were but I'm not so our being in WWI was or even WWII, nor Korea or Vietnam were. Afghanistan and Iraq yes.

Here's the thing, I don't really see how war solves "many" problems as opposed to making other newer problems and war destroys economies and bankrupts govts, generally, contrary to the myth that it does otherwise. Here's the thing to note about China, they've gone abroad to work out deals to buy resources whereas the mercantilists running the US govt are using war to control resources. Sounds very expensive and it's not helping our economy. Now why would the so-called biggest and greatest free capitalist country be waging war for resource instead of using trade?

Doesn't make sense to be at all. It only makes sense to those who accept fallacies without ever questioning them.

Ace Gunner
08-06-2011, 07:17 PM
Hey, we kill sometimes. I'm not gonna say it's okay, but I am gonna say our forefathers fought to the death for what I have, and well, ... ya. war does solve some problems. just don't rely on it to do so or you're an idiot. like america is now. this is dumb.

KC native
08-06-2011, 07:51 PM
OK. You win. You've been wrong about anything we've ever talked about. So, let's listen to KC native.

China is weak, yet they can buy trillion$ of US debt. China is weak because every major manufacturer in the world has enormous plants there. China is weak because their population is living a better life than 15 years ago. It's the stoopid US gov't policy, that's it.

KC native is mad about something, I just can't figure it out. He didn't believe me about gold at $1500 and said the DOW would crash to 5000-6000 again. He must have been short the DOW and gold to be so cantankerous.

Did I say China was weak? Their economic growth is inevitable because of their population size and how ass backwards a good portion of that country is.

If you had spent any time paying attention to shit that mattered, then you would know that China has a property bubble that may be even larger than what the US had. They've cut off real estate loans in 2nd and 3rd tier cities. They're trying as best as they can to put a good face on their problems to the outside world but unfortunately technology has reduced the government's ability to suppress bad information.

Let's forget how much they control news and perception in their country. Let's also forget that vast amounts of their population still live in rural environments with horrible conditions. Let's also forget that they are losing the cheap shit jobs to other countries in the region.

Again, you resort to BEP style arm chair psychology because you are a one trick pony. Keep buying those gold coins and believing that Wall St doesn't make any money off of gold investors (go look up managed futures accounts).

I have maintained that gold and other commodities play a role in a portfolio. You unfortunately think that should be all that's in your portfolio. Keep slinging insults and not understanding the shit you talk about. It's entertaining to see another BEP being born.

BigChiefFan
08-07-2011, 01:19 AM
Look at a map and see where we are in wars, in regards to China. I think we start fucking with them pretty soon and all Hell could break loose. Both countries have been playing Russian Roulette with their currencies. The Chinese are more secretive with how they can play this and I believe they may see this as the most opportune time to strike. He holds the gold makes the rules and the pricks that ran this country ran us into the ground have chosen to flee, leaving us in bondage, unless we rebel.

booger
08-07-2011, 01:48 AM
With current developments in regards to China not only on the Debt issues but also matters of them standing up for Pakistan when the OBL compound raid took place, it makes one wonder (does me anyway) if a guy like Jon Huntsman is a good choice for '12. It's hard to tell with these POS politicians and what the hell to believe. I would bet that soon though plenty of "what this country needs, right now" or "perfect timing" sort of speak will be talked of.

I don't know enough about him on the rest of his ideals to consider him a good choice or just another run of the mill cocksucker i don't trust. His voice or even the sight of him doesn't make me ill or want to kick puppies so i guess that's a start. And you never know. Could be a situation that in the long run he isn't the choice for the top spot but would fit well in another seat under new direction in 2012.

ChiefaRoo
08-07-2011, 08:15 PM
... 'Cause if CHINA'S state mouthpiece wants it, it MUST be good for America!

:drool:

I agree. China should do this.
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jiveturkey
08-07-2011, 09:50 PM
Would leaving the dollar as the reserve currency weaken the dollar?

I believe that it would.

Wouldn't this ruin China's investment? Or am I missing something?

ChiefaRoo
08-07-2011, 10:17 PM
Would leaving the dollar as the reserve currency weaken the dollar?

I believe that it would.

Wouldn't this ruin China's investment? Or am I missing something?

You're right. If they bail they lose huge. If they stay they get paid. If they want to politic for a new reserve currency then they can do that but outside of using Gold (which is ridiculous) then who's currency would they use? There own isn't even fair valued and they aren't trusted in Asia and the rest of the world. The Eurozone countries have more problems than we do. The USA and the Dollar maybe in deep shit right now but it's still the best currency in the world.

petegz28
08-07-2011, 10:32 PM
You're right. If they bail they lose huge. If they stay they get paid. If they want to politic for a new reserve currency then they can do that but outside of using Gold (which is ridiculous) then who's currency would they use? There own isn't even fair valued and they aren't trusted in Asia and the rest of the world. The Eurozone countries have more problems than we do. The USA and the Dollar maybe in deep shit right now but it's still the best currency in the world.

If they bail they lose. If they stay the get paid in a very, very depreciated currency. Pretty much 6 and 1.