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A Euro collapse - The WHAT IFs

woolsworth

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All this talk about Yuan being a reserve currency is simply a myth and hype. The markets will not bite such alternatives and will always seek the trust and dependability of the US dollar backed by its democratic open transparent institutions.


Then perhaps the world should consider using the Indian Rupee (INR) then ? India posses many democratic open transparent institutions.


I do not think China intends to let the Yuan become a reserve currency ; instead , they will just do their trades in non USD .

Over the last six months, China has entered into currency swap agreements with several Asian neighbors including Malaysia, South Korea, Hong Kong and Indonesia. Currency swap lines are essentially currency accounts with the others currency so they can trade with each other directly. Without having to swap for dollars first.

Ordinarily you might say “so what” to agreements like these between Asian nations. But now China has arranged swaps with Brazil and Argentina. Two commodity-rich, Latin American countries who are just as happy to take the dollar out of the trade loop as well.

If the Indian Rupee (INR) fails to become the reserve currency of choice, then by default , that role will revert to Gold .

Guess who has the largest reserves of Gold in the world ? LOL....
 

theDoors

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Stocks fall on fears euro debt woes to spread

The euro hit a 14-month low. -Reuters

Thu, May 06, 2010
Reuters

NEW YORK - Stocks sagged on Wednesday as more signs emerged that the fallout from the Greek debt crisis could spread to bigger European economies.

The euro hit a 14-month low as investors shunned the debt of weaker euro zone countries and jumped into safe-havens. Treasury prices and the dollar surged on fears Greece's debt problems could hinder global growth.

On Wall Street, resource and industrial stocks, sensitive to the outlook of global economic growth, weighed on the market. Energy shares were also pressured as the price of oil fell nearly $3 to $79.97 a barrel.

Trading volume was among the highest this year, and while losses on the major indexes were only moderate, the overall market tone was decidedly bearish. On the New York Stock Exchange four stocks fell for every one that rose.

"The focus right now is primarily on how this is going to play out in Europe, how much damage is going to be done," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co, in San Francisco.

European leaders warned the debt crisis could spread beyond Greece, and Moody's Investors Service said Portugal could be next to have its debt downgraded, stoking fears that a "contagion" effect could cause complicated international debt arrangements to topple like dominoes.

German Chancellor Angela Merkel gave a stark warning of what was at stake. "There is no alternative to the aid to be agreed for Greece if we want to secure the financial stability of the euro area," she told lawmakers in Berlin.

The cost to insure the debt of Germany and France hit their highest levels in more than a year on Wednesday, as weakness spread through credit markets on concern about widening fiscal challenges for peripheral European nations.

The Dow Jones industrial average dropped 58.65 points, or 0.54 percent, to 10,868.12. The Standard & Poor's 500 Index fell 7.73 points, or 0.66 percent, to 1,165.87. The Nasdaq Composite Index lost 21.96 points, or 0.91 percent, to 2,402.29.

The S&P Energy Index fell 1.5 percent and Chevron Corp shares eased 0.7 percent to $80.19.

Volume in put options, giving investors the right to sell the SPDR S&P 500 and the tech-heavy PowerShares QQQ, exchange-traded funds that track underlying equities, was again active in a sign some investors were seeking to insure their portfolios against losses.

TRADING OPPORTUNITIES?

Wall Street's losses were more modest than Tuesday's more than 2 percent decline. Losses were also were more muted than those in Europe, where the pan-European FTSEurofirst 300 shed 1 percent on Wednesday.

Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles, said traders were looking for buying opportunities generated by the volatility.

"Bigger picture, U.S. investors continue to be of the opinion that corrections are to be bought," said James.

Big-cap consumer staples names were among the winners on the Dow, including retailer Wal-Mart Stores Inc, up 1.4 percent at $54.77 as it rose for a second straight day, and Coca-Cola Co, up 0.9 percent to $53.66.

Protests in Greece against the government's planned austerity plan turned violent, underscoring the difficulty faced by cash-strapped governments trying to force spending cuts.

Protesters clashed with police as tens of thousands of strikers marched. Three people died when rioters set a central Athens bank ablaze.

The flight from risky assets pushed up the U.S. dollar, considered a safe-haven investment, and the greenback gained 1 percent against a basket of major currencies.

Generally positive data on the U.S. private sector job market and the economy's services sector cushioned the negative tone.

The Institute for Supply Management said the pace of growth in the U.S. services sector, which accounts for some two-thirds of U.S. economic activity, was unchanged in April compared with March, while a separate report showed the U.S. private labor sector added 32,000 jobs in April.

About 12.33 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, more than last year's estimated daily average of 9.65 billion and the fourth highest this year.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 4 to 1, while on the Nasdaq, about three stocks fell for every one that rose.



Copyright ©2010 Singapore Press Holdings Ltd.
 

theDoors

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<object width="480" height="385"><param name="movie" value="http://www.youtube.com/v/SmWQxNKOD7U&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/SmWQxNKOD7U&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object>

Interview with William Engdahl

Engdahl says the debt crisis in Greece is politically activated by Goldman Sachs.
 

longbow

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I think you miss the point. You need to have a large GDP, regulation and a strong economy to be a reserve currency. You need all 3. I think of the 3 components the toughest is a large GDP. People are just not interested in your currency if they cannot easily use it in trade. Singapore, Swiss, Germany all have strong central banks, strong economies, strong regulations (probably much better than US) but they do not have large GDP, so do no dice.

As far as regulation and transparency is concerned, recent Wall Street meltdown shows a lack of such.

Looking forward the next 30 years, it is highly likely for Chinese Yuan to become a reserve currency. It will have the largest GDP and as its economy progress, its financial structure will further mature. As it is, HK, part of China, is one of the largest financial centre in the world with a strong regulatory framework. The Chinese can easily tap into this wealth of knowledge. FYI mkt cap of listed companies on HK stock exchange alone is US$2.7 Trillion. Compare that with BSE which only has $1.8 Trillion. and we are not even taking into account Shanghai Stock exchange (3.2 Trillion)

The scary thing (for us, competitors) is that so far, Beijing seem very pragmatic. Just look at how they have systematically strengthen their banking system (probably to shield against property bubble), how they are building their infrastructure for the next 50 years.

So if there is a bursting of the property bubble, it will be an opportunity for the country to make changes and improve its regulations. Just like how the wall Street crash in the 20/30s lead to all the new SEC rules - they even required separation of banks and investment banks.



The USD is always will be the biggest beneficiary because it is the only currency that has the real safe haven status in the world. Regardless of how bad or good its economy is.

As I mentioned many times, it is not a country's GDP that determine its real power. The underlying institutions - from the Fed reserve, the congress, the independent judicial system , the transparency guaranteed by its constitution, and so on. The intangibles.
 

zuoom

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saw this on the local HWz forum.
SIC to all butties!!!

Europe's Web of Debt :eek::eek:

Banks and governments in these five shaky economies owe each other many billions of euros — converted here to dollars — and have even larger debts to Britain, France and Germany. Arrow widths are proportional to debt amounts.

02marsh-image-custom1.jpg
via : http://forums.fuckwarezone.com.sg/showthread.php?t=2749415&page=19
 

woolsworth

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Loyal
Looking forward the next 30 years, it is highly likely for Chinese Yuan to become a reserve currency. It will have the largest GDP and as its economy progress, its financial structure will further mature. As it is, HK, part of China, is one of the largest financial centre in the world with a strong regulatory framework. The Chinese can easily tap into this wealth of knowledge. FYI mkt cap of listed companies on HK stock exchange alone is US$2.7 Trillion. Compare that with BSE which only has $1.8 Trillion. and we are not even taking into account Shanghai Stock exchange (3.2 Trillion)

.

It may well be much sooner . The rumours from the Financial circles is that China may (soon ?) introduce a new currency , one that is backed with Gold.
They are one of the largest hoarders of gold anyway.

China then 'insist' that all trades with China be done using the yuan (or the 'new' yuan) . No one will have a choice , not even the Arabs and their oil, for the simple reason that no one can afford to lose their biggest customer.

Size does matter in any environment , and unfortunately for the USA, in the new world order , the USA is getting too 'insignificant'.
 

theDoors

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October 6, 2009
The demise of the dollar
http://license.icopyright.net/user/viewFreeUse.act?fuid=ODI4NzQ4Nw==
By Robert Fisk

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading

In the most profound financial change in recent Middle East history, Gulf Arabs are planning - along with China, Russia, Japan and France - to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place - although they have not discovered the details - are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil - yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power - along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system - which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq - blocked by the US until this year - and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements - the accords after the Second World War which bequeathed the architecture for the modern international financial system - America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
 

Sperminator

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I'll like to really thank theDoors for posting such excellent information for layman like me who have totally no idea on how the financial world works.

I really think that the information that you've posted gives a very clear picture of how the TRUE economy works.

Basically we can all throw out our Economics Books out the window as this is already manipulation of market right from the beginning, and economic theory will all just be theory, but one rule that holds true would be;

"LAW OF SUPPLY & DEMAND"

&

"Willing Buyer / Willing Seller"

Using paper to be in-exchange of real commodities and services, and when there is trade imbalances in other nations (they would have to use their surpluses to buy T-BILLS)

This is a perpetual cashflow system!

This financial system is truly genius, however evil it is, but it's really genius!

So, it's just a matter of time...
 

Einfield

Alfrescian
Loyal
Till today, US$ have not defaulted once, no matter how bad the economic situation is globally, it is still the safest currency now.
China once try to suggest that an alternate currency should replace the US$ after Leman brother's shit hits the fan.

But like you say, do you see the RMB as one such currency? The intangibles in China is a complete joke.

The USD is always will be the biggest beneficiary because it is the only currency that has the real safe haven status in the world. Regardless of how bad or good its economy is.

As I mentioned many times, it is not a country's GDP that determine its real power. The underlying institutions - from the Fed reserve, the congress, the independent judicial system , the transparency guaranteed by its constitution, and so on. The intangibles.
 

Sperminator

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Loyal
I think if Euro collaspe, this will let the Euro nations revert back to their own accountability, thus, with their own currencies.

And this may actually help USD entrench their de facto power.

May not be that bad, considering the fact that if USD fails, the world economy goes with it.

Thus, since everyone is already living in a fantasy world of making money out of thin air, I guess, it'll at least buy the world some time to figure a way out of this mess...

A replacement currency is obviously the solution, however, the implementation part would be rather difficult...

The world is intertwind with USD, it's T-BILLS and it's reserves... it's simply not so simple...

I rather think, EURO collaspe, meaning less alternative, and everyone just take the blue pill, and never wake up from this fantasy world that we live in.
 

longbow

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You are mistaken. Without size of GDP who wants your currency? You need both! Might as well just buy gold.

And you can remove all that constitution stuff. Just need strong regulatory framework and transparent legal system.

If you know constitution was written with vagueness. You can interpret it anyway you want. That is why you have Republicans and democrats on both ends claiming to abide to the same constitution.

As for democracy all you need is per capita wealth with much of it generated from well paying jobs. Once the common man has $, they have a voice and will demand to be heard. It is almost like a natural progression. And in a democracy those with more money can talk even louder than those with less money. If you look at Saudi Arabia - $$ controlled by Royalty and they dole out social programs - that is not wealth generated from jobs.

BTW Congress, FED, Wall Street banks were all partners in running a casino till the US economy fell apart. Right now economy is running around on a borrowed Chinese spare tire. Lets just hope the chinese tire does not leak or else!


The USD is always will be the biggest beneficiary because it is the only currency that has the real safe haven status in the world. Regardless of how bad or good its economy is.

As I mentioned many times, it is not a country's GDP that determine its real power. The underlying institutions - from the Fed reserve, the congress, the independent judicial system , the transparency guaranteed by its constitution, and so on. The intangibles.
 

theDoors

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The key to the petrodollar is Saudi Arabia. Saudi Arabia is the leader of OPEC, and decides the currency oil is priced. Oil is exclusively priced in US dollars.

Why this unholy alliance between the United States (the great Satan) and the Saud family?

Lessons in history.

Iran

It's common knowledge that CIA (Capitalist Invisible Army)helped to overthrow democratically elected Iranian Prime Minister Mohammad Mosaddegh and installed Shah Pahlavi thru operation AJAX in 1953.
http://www.nytimes.com/library/world/mideast/041600iran-cia-index.html

What is less commonly know, in the last days of the Shah, the Carter administration ceased support funding to Iran's clerics, who had basically been accepting money in exchange for inhibiting anti-western sentiment in the region. Triggering the Iran revolution in 1979.

This was not lost on the Saud family which faced a very similar situation at home.

Iraq

US government had no qualms supporting Iraq's new strong man Saddam Hussein in a proxy war against cleric controlled Iran from 1980-1988, shipping chemical biological weapons to Iraqis.

In 1990, when Iraq invaded Kuwait, the US military did not invade Iraq, after liberating Kuwait. Iraq was preserved to serve as a bulwark against Iran.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x1101

On November 6th, 2000 the U.N. administered “oil for food” program switched the currency accepted for Iraq’s oil sales from dollars to euros. <2> Saddam subsequently converted Iraq’s $10 billion reserve fund into euros as well. Since November 2000 Iraq’s oil purchases were routed into the U.N.’s “oil for food program,” and then into a euro-denominated account with a French bank.

Somewhat ironically, the steady depreciation of the US dollar since late 2001 means that Saddam’s switch to the euro currency actually provided Iraqi’s ‘oil for food’ program with windfall profits totaling hundred of millions of euros. <3>

However, this crucial detail appears to be a “quasi-state secret” within the U.S. government, as it exposes one of the core reasons for the war.
The week after “major actions” in Iraq were declared over, the U.S. proposed U.N. Resolution #1483. This resolution passed on May 22, 2003, which achieved a number of goals:

1) lifted the 1991 sanctions despite that UN inspectors were not able to declare Iraq “free of WMD”,

2) phased out the ‘oil for food’ program,

3) provided US/UK control of Iraq’s oil revenue,

4) created the “Iraqi Assistance Fund” that quietly converted Iraq’s oil currency back to the dollar. Incidentally, it appears that Saddam’s 1990s oil exploration contracts with France, Russia and China are now void.

US tolerated Saddam Hussein. But once he converted his reserves from US dollars to Euro in 2000, the United States had no qualms invading the Iraq on a false pretext of existence of WMD.

It is very clear to Saud family, they must priced oil in US dollar regardless how much the USD depreciates.
 

theDoors

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With 100,000 troops on Iraqi soil. If the Saud family decides other wise, they can always conveniently drive into Saudi Arabia.
 

GoFlyKiteNow

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The greatest beneficiary of Petrodollar, pricing of oil in USD, is the United States of America.

How else can US Federal Reserve, print 7 trillion dollars of paper money to inflate their economy at will, if oil was not priced in USD, creating this artificial demand for the Greenback?

Why would anyone want a reserve currency that is being printed like toilet paper?

How can the US be the biggest debtor nation without ever having to repay a single cent of the principal of it's debt?

Happening today in the global currency market - The whole world is running to the US dollar.

Does that answer your question ?
Not directly.
But if you ask your friends in the finance markets, why the world is rushing for the USD, they may give you some clues.

Many times earlier and in this post, I have explained the reasons.
Hence repetition on my part is no longer needed.
 

theDoors

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I think if Euro collaspe, this will let the Euro nations revert back to their own accountability, thus, with their own currencies.

And this may actually help USD entrench their de facto power.

May not be that bad, considering the fact that if USD fails, the world economy goes with it.

Thus, since everyone is already living in a fantasy world of making money out of thin air, I guess, it'll at least buy the world some time to figure a way out of this mess...

A replacement currency is obviously the solution, however, the implementation part would be rather difficult...

The world is intertwind with USD, it's T-BILLS and it's reserves... it's simply not so simple...

I rather think, EURO collaspe, meaning less alternative, and everyone just take the blue pill, and never wake up from this fantasy world that we live in.

You catch the drift of the story very fast.
The world is indeed a matrix. The program is the US dollar regime.
 

theDoors

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Happening today in the global currency market - The whole world is running to the US dollar.

Does that answer your question ?
Not directly.
But if you ask your friends in the finance markets, why the world is rushing for the USD, they may give you some clues.

Many times earlier and in this post, I have explained the reasons.
Hence repetition on my part is no longer needed.

Trust me, it has absolutely nothing to do with the strength of the dollar.

If you an oil exporting country who sold oil in Euros, if you don't revert back to dollar, your earnings will be eaten by the ever weakening Euro.

Which comes back to the question:

Why?
Who triggered the Euro crisis, who benefited from the Euro depreciation?
 
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GoFlyKiteNow

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Till today, US$ have not defaulted once, no matter how bad the economic situation is globally, it is still the safest currency now.
China once try to suggest that an alternate currency should replace the US$ after Leman brother's shit hits the fan.

But like you say, do you see the RMB as one such currency? The intangibles in China is a complete joke.

Exactly.!...The intangibles of the USA and its unified federation under the benign open umbrella of a wise and profound constitution that is over 200 years old today. That is what makes the US the dominant nation on earth.

Its economic power, its technological and innovative leadership today, geo political clout and world leadership..they all downstream effects of the above intangibles. People who use GDP to stake claims of a nation's power are either simplistic or under self delusion.

That being the case, a country like China..( BTW: It keeps its huge reserves in USD..not in its own remimbi ! )...has got a million miles to go before it can even aspire to be like the USA.!
.
 

Sperminator

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You catch the drift of the story very fast.
The world is indeed a matrix. The program is the US dollar regime.

Thanks for your information.

I really do agree that The program is the US dollar regime.

This concept was designed to control the world, via financial means.

In fact this financial war has been happening since 1971, 15 August, when NIXON announced the depegging of USD with GOLD.

And USD is the dominator of WORLD CURRENCY.

USA are full of consumers, and very few factories. It is as good as taking USD from USA, and world give them "FREE" GOODS. The world is acting as the slaves of USA... providing goods and services, in return of USD (purely perceived value).

If one day, everyone decides that USD is valueless, it will be valueless, on the other hand if everyone decides that USD is worth it's value, and so shall it be, because, every value that man place in any object, or person, anything, is all perceived...
 
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