President Bush, you’re a real winner

November 16, 2007 | Filed Under News 

Yesterday, the Internet was overflowing with information on the fate of U.S. currency. For the first time in SIXTY TWO years, the American dollar’s dominance in the world market is in jeopardy. Myriad nations are ready to get rid of the failing dollar in order to preserve their own security. The American dollar can barely compete with Canadian currency at this point, and that’s a real shame.

The latest news on the American dollar:

BEIJING, Nov 16 (Reuters) – Chinese lunchtime television on Friday gave ordinary people a basic tip on how to play the currency markets: sell the dollar!
A state news programme, quoting unnamed “wealth management experts”, told residents with dollar accounts on the mainland to convert their holdings into yuan or a range of other foreign currencies, including the pound and the euro.

The prospect of ordinary Chinese ditching the dollar should be less alarming than reports that have roiled global markets of Beijing diversifying its official foreign exchange reserves.
Whereas China’s official reserves of more than $1.4 trillion are the world’s biggest, private foreign currency deposits in China are a fraction that size: $162.1 billion at the end of October, according to People’s Bank of China. The central bank did not give a currency breakdown of these deposits.

The state news programme, which did not quote any government official, said people were getting squeezed because the pace of yuan appreciation against the dollar was greater than the interest rate earned domestically on dollar accounts.

Analysts expect the yuan to rise anywhere from 5 to 7 percent annually against the dollar, while domestic dollar accounts earn depositors just 3 percent a year.
The programme proposed three solutions.

“Selling dollar for yuan as soon as possible may be a safe approach,” the news programme said, adding the yuan could then be used to invest in domestic mutual funds.
“Secondly, you can change the dollar into strengthening currencies,” it continued. “Currently, the U.S. dollar is falling against the euro, the British pound, the Australian dollar and the Canadian dollar, and you can change the dollar into these currencies for deposits.”

The third recommended strategy was to invest the dollars abroad, in search of higher yields, by buying into Qualified Domestic Institutional Investor (QDII) products offered by Chinese banks and fund managers. (Reporting by Zhou Xin, Editing by Simon Rabinovitch)

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Comments

4 Responses to “President Bush, you’re a real winner”

  1. Bart on December 5th, 2014 5:39 pm

    > Lots of food products would come from the US, but thinnikg there’s going to be a huge net increase in US jobs ignores the economics.OA, you have the basics right, but haven’t really fully fleshed out the reasons.WE ARE NOT A MANUFACTURING ECONOMY ANY MORE. We haven’t been that since around 1970, when economists began using the term “post-industrial” to refer to our economy.Since that point, we have been in the process of becoming an “IP And Services Economy” — the world’s first.Just as the Ag economy fell by the wayside, and all food production was easily handled by a mechanization-fueled 2-3% of the population, so, too, can our manufacturing side, fueled by roboticization and mechanization, become at most 2-5% of our population.What does the other 92-96% of the population do?IP and services. We make movies. We make music. We make TV shows. We win Nobel Prizes for science. We produce more patents per capita than any other nation. BY FAR.All future substantial wealth increases will come in the IP and services sector. NOT food, NOT goods. This is where all the wealth increase in the 1990s came from. Hell, it’s where the wealth increase we got in the 2000s came from, that wasn’t thrown away in the housing bubble.This call for “more US manufacturing” is stupidly ignorant and worthless.IP is where it’s at because there isn’t another nation which has the capacity to do what we do with IP. Our movies sell around the world. Our TV shows are popular everywhere. If your music sells in America, chances are it will also sell in a lot of other places. This is because of our experimental, adoptive, and polyglot nature as a nation. We welcome those from other cultures, learn from their culture, appropriate what has wide-spread interest, and make it our own. Unlike the French, who “protect” their own culture to the point of actually banning foreign loan words, we embrace other cultures, and freely adopt what works from them.That’s why our IP not only IS the best, it’s going to STAY that way for the foreseeable future. Because no other nation is so willing to embrace new things, to make entire swaths of paradigm shifts in a decade or less, as new ideas and ways of looking at things come available. Combine that with our gigantic, inherent “test bed” for new ideas (if it has widespread appeal here, it has widespread appear for the entire world), and you have an unstoppable engine for creating IP-based wealth.We don’t NEED manufacturing. If some nation we “depend on” craps out, we will either get yet another nation to pick up the slack, or we will just build a robotic plant to make it for ourselves using a fraction of the population required to make it elsewhere inside of a couple years.No, the reason for encouraging China to turn to business is that aforementioned innate jingoistic quality inherent in a predominantly male population.If China’s business end is there, then the Chinese males can compete financially and economically for resources to woo Chinese women with. They don’t have to steal them with a military. And for the only time so far in human history you might not wind up with a nation at war to deal with excess males.

  2. Migen on March 6th, 2015 5:46 pm

    > First of all, the military does have a ceirtan ‘national security’ imperative.Well, I’d call “shenanigans” back on you, but I’d never have time for anything else if I started doing that with your posts.Aren’t you the one who was kvetching elsewhere on the blog about military spending?Further, I could be wrong, but most of the stuff we actually sub out is older stuff that we also sell on the world market. The top-end stuff might get built in Japan or Korea, but I don’t see them crapping out anytime soon. And I’m sure we’ve got adequate back-supply of parts and stuff to make it long enough to get that supply chain cleared up.It’s one reason there’s a ceirtan amount of reserve steel kept in stock, ditto oil. To deal with supply interruptions that have national security consequences.Of course, you have NO IDEA about any of this, of its even being done, or who is in charge of it, or why.> Second, you speak of it as if it was used as a weapon – you consider US citizens to be the enemy. That is, there is no room for a manufacturing sector, and that it must go even if there is more than enough economic room for it.Again, shenanigans.WT >>>>> F <<<< In other words, you just want a bunch of IP lawyers and easily dumped, second-class permatemps. And, again, shenanigans.Dumbass:IP creators are hardly low-paid temps.Musicians, artists, craftsmen, movie makers, writers, programmers, scientists…F’in DUH, you incompetent moron?And that’s not even all of it — a technical world does require technical skills in general… Tech support on all levels, customer service, these ARE industries which are woefully under-appreciated. As time passes, they will get better as people realize that they need to reward companies which provide good service, that it’s worth it to them to NOT have to talk to some semi-understandable Indian in a tech sweat shop in Kuala Lumpur (and yes, I know where that is), instead of someone for whom English is not a foreign language.A lot of that tech outsourcing which was occurring in the early ‘aughts has been coming back, because the benefits that seemed to be there were counterbalanced by a lot of negative things previously unseen.Programming, Tech Support calls, etc., tend to be much more in-country than they were just 7 years ago. The only things which have stayed outside the USA is the mindless grunt work — cels for animation would be an example here: the main storytelling is entirely done here, but the dull, boring, and highly repetitive (read: “does not require education or creative talent in any way, shape, or form”) grunt work of doing individual frames is getting done by others….(continued)…

  3. Mohamed on April 9th, 2015 6:19 pm

    There is, however, aoenhtr side to the story. The loss to American producers comes with a gain to the many millions of American consumers who prefer to pay less for the goods they buy.China’s Communist Party, which values control above all else, strives to maintain a growth at all costs policy. This growth is dependent on cheap exports that often have razor thin profit margins. In order to continue shipping its huge bulk of exports, China is forced to keeps its currency artificially low by purchasing foreign currency reserves (such as the USD). While this does make China’s exports cheap, fuels its growth and gives Western consumers cheap goods, it unfortunately does hurt the real economies of Western nations – as evidenced by the anemic ‘recoveries’ we’ve been seeing. While China can continue purchasing foreign currency reserves, thus artificially lifting Western consumers lifestyles, China is continuing trade relations that are artificial, and thus not sustainable – particularly while China remains so highly dependent on exports, despite her recent attempts to turn consumerism inwards.There’s a growing chorus of analysts who are not so sure China can maintain its amazing growth, and that it may in fact have a bubble of colossal proportions in the works. With Europe’s currency problems plus America’s own uncertainty (a lot of people are concerned about the corporate debt clock that will go off in 2012), seeing a major trading partner hemorrhage blood would devastate China’s export engine; however, some analysts believe China may have plenty of internal problems – a monster , a surprisingly among others things – that may also burst her economy.China’s demographics are truthfully very fragile. A major bubble burst could spell huge consequence to a Communist Party that still recalls the Cultural Revolution. Again, while China’s currency manipulation has brought the world cheap consumer goods, it’s also hurt the real economies of the West by ravaging their industries and hurting the services/necessities that were created because of them – schools, infrastructure, basic civil services, etc. While it may seem plausible to have China continue making these goods cheaply, and buy our currency reserves, it may be ultimately a dangerous situation to put so much the world’s supply chain dependent on one nation. If Jim Chanos is correct, in that China will be ‘Dubai times 1,000,’ we may think twice in the future before letting aoenhtr nation take over much of our textile industry.Here’s a question: if the real unemployment is closer to 17% (rather than the reported ‘official’ rate) and we’re in a jobless recovery, what happens when the bottom comes out on the ‘recover’ – how much further will unemployment shoot up? 2012 doesn’t look good.

  4. Hasini on April 11th, 2015 6:30 pm

    You misread the artilce.The Chinese own a large amount of American dollars. With the lowering of the value of the dollar, their holdings are not worth as much. And since they have such a large amount, if they sold most or all of what they have, it would make the dollar become worth even less. And if they sold American dollars, they could buy Euros, instead, since it is currently a strong currency.If this happened, it would be catastrophic. Europeans do not want their currency worth so much, either, because while it can make traveling cheaper, it makes the cost of living at home increase greatly. The hope is that the Chinese would not do something so rash. Was this answer helpful?

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