U.S. Dollar Is ‘One Step Nearer’ to Crisis, Yu Says

Discussion in 'Economics' started by Kassz007, Sep 28, 2010.

  1. http://noir.bloomberg.com/apps/news?pid=20601087&sid=aoB6cWYcz8Yo&pos=6

    "The U.S. dollar is “one step nearer” to a crisis as debt levels in the world’s largest economy increase, said Yu Yongding, a former adviser to China’s central bank. "

    "Yu also said China is worried about the safety of its foreign-exchange reserves including those invested in U.S. Treasuries..."

    "The U.S. will record a $1.3 trillion budget deficit for the fiscal year ending Sept. 30..."

    "The estimated budget deficit for this fiscal year would be equivalent to 9.1 percent of gross domestic product..."

    "The CBO also projected the U.S. would have a cumulative deficit of $6.27 trillion in the next decade..."

    "China, the biggest foreign investor in U.S. government bonds, cut its holdings by about 10 percent to $846.7 billion in the 12 months ended July, according to the Treasury Department."

    "The nation should convert some holdings in U.S. dollars into assets denominated in other currencies, commodities and direct investments overseas, he wrote in a commentary in the China Securities Journal."
  2. And the Currency War begins.

    Dumb ass DEMS fired the first shot the AM in the house...approving their "Currency" bill.
  3. It is impossible to buy any asset with all those dollars without creating a bubble.

    Wait a second, why is gold shooting up lately?

  4. Yep. Currency/trade wars in full effect. The winners? Nobody. The losers? Everybody.

    Personally, I don't have a solution. And I don't hear of ANYBODY offering up potential solutions either. Not the USA, China, Japan, EU...nobody.

    On the other hand, a bunch of CB intervention in forex markets should make trading currencies quite exciting.
  5. Let's have a trade war!

    Don't you like volatility? I thought traders liked volatility.

    Much better to have a trade war now than in 5 years.
  6. Chinese are desperate. They will be the only loser from trade/currency war. The moment they try to convert USD assets to other currencies they will be signing import taxes into effect. USD will fall for a while and this will be to the detriment of China. I mean, this Chinese guy is talking about measures that will have a negative effect on its own country. Quite silly. Maybe he thinks people are stupid. Anyway.. then, after a couple of years, the dollar will start rising again but with one notable difference. China will be in recession for the next 20 years like Japan.
  7. dtan1e


    chinese trying to own the US by buying up their assets, US trying to screw them back by diluting those assets, now its a matter of who do who first and do it faster
  8. Check out the daily on USD/JPY. BOJ intervention so far unsuccessful. No successful forex intervention can take place without the go ahead from the USA. The market it always right.