Sunday, March 29, 2009

New Open forum

Everyone should know what to do in this forum...


BettyJane said...

Yahoo Financial News Reports that China is worried about US Treasury holdings and value of trillion plus US dollar value.

Steven said...

Randy is this that February-March thingy?

Anonymous said...

China 'worried' about US Treasury holdings

BEIJING – China's premier didn't say it in so many words, but the implied warning to Washington was blunt: Don't devalue the dollar through reckless spending.

Premier Wen Jiabao's message is unlikely to be misunderstood at the White House. It is counting on Beijing to help pay for its stimulus package by buying U.S. bonds. China already is Washington's biggest foreign creditor, with an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.

"Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference Friday after the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

The appeal suggested the outlines of Chinese President Hu Jintao's stance when he meets with President Barack Obama at an April 2 summit in London of the Group of 20 major economies on possible remedies for the global crisis.

Wen gave no indication whether Beijing wants changes in U.S. policy. But economists said his comments reflect fears that higher U.S. budget deficits from Washington's $787 billion stimulus package could drive down the dollar and the value of China's Treasury notes.

"China is telling the U.S. to be careful, not to overspend and keep an eye on the dollar," said Kelvin Lau, regional economist at Standard Chartered in Hong Kong. "There are risks that China cannot control, so they're depending on the U.S. to maintain fiscal prudence and keep the dollar reasonably stable."

Analysts estimate China keeps nearly half of its $2 trillion in foreign currency reserves in U.S. Treasuries and notes issued by other government-affiliated agencies.

"Inside China there has been a lot of debate about whether they should continue to buy Treasuries," said Frank Gong, chief China economist for JP Morgan.

Beijing is trying to increase its leverage at the London G-20 meeting by reminding its partners of its role in financing U.S. spending, Gong said.

"Without China's buying (Treasuries) and continuing to fund U.S. deficit spending, interest rates could have been much higher. That could be very destabilizing in this very recessionary environment," he said. "By attracting a lot of attention to this issue, China is already increasing its influence ahead of the G-20 meeting."

Finance officials from the G-20 meet this weekend. U.S. Treasury Secretary Timothy Geithner is pressing for a new coordinated global stimulus. Japan is supportive but European governments are reluctant to make expensive commitments before they see how current plans are working.

Wen also offered an unqualified defense Friday of his government's policies in Tibet, ignoring questions about a massive security buildup in the Himalayan region.

Tensions have spiked ahead of two key anniversaries this week — the 50th anniversary of a failed Tibetan uprising that sent the Dalai Lama into exile and Saturday's one-year anniversary of violent anti-Chinese riots in Lhasa that sparked the largest protests in decades.

Asked whether the massive security presence pointed to failings in Beijing's policies, Wen said: "The situation in Tibet is on the whole peaceful and stable. The Tibetan people hope to work in peace and stability.

"Tibet's continuous progress (has) proven the policies we have adopted are right," he said.

Wen expressed confidence the world's third-largest economy can meet its official growth target of 8 percent this year and emerge from the crisis "at an early date." But he said Beijing is ready to expand its 4 trillion yuan ($586 billion) stimulus if needed.

"We already have our plans ready to tackle even more difficult times, and to do that we have reserved adequate ammunition," he said. "That means that at any time we can introduce new stimulus policies."

Communist leaders worry about rising job losses and possible unrest amid a trade slump that saw Chinese exports fall 25.7 percent in February from a year earlier. They have promised to spend heavily to create jobs and boost exports.

Chinese bank lending and power demand have risen, suggesting the stimulus is taking effect. But growth in retail sales is weakening, indicating it has yet to spur private sector spending and investment, which analysts say will be key to its success.

Private sector economists expect growth as low as 5 percent this year. That would be the strongest of any major country but could lead to more waves of job cuts.

"I really believe we will be able to walk out of the shadow of the financial crisis at an early date," Wen said. "After this trial, I believe the Chinese economy will show greater vitality."

Wen also said Beijing wants the G-20 summit in April focus on helping the poorest countries.

The premier said Beijing has met its own commitments to help developing countries by erasing a total of $40 billion in debt owed by 46 countries and giving out 200 billion yuan ($29 billion) of aid to developing countries."

"We must see to it that we show concern for developing countries," he said.

Anonymous said...

16 Signs That You Live In A Tyranny

Anonymous said...

Excellent pick for the cartoon Randy. LOL


Ramanand said...'s something...the ticker guy has pretty much dealt a body blow to the idea that "Fractional Reserve Banking is a Fraud" in this article:
Reserve Banking
Would be interesting to see how they recover from this one..if they pick on it at all.

Anonymous said...

Hey Randy and all;

This story is just crossing the wires right now- "Bernanke: recession could end in '09". I guess it's all over now and we are all safe huh? He said we have safely avoided a depression and all the major banks are solvent. Great news huh? Wink wink.

Next Dimensions said...

Ticker guy's article was an interesting viewpoint on fractional reserve.

The thing I see wrong with trying to support the CURRENT fractional reserve system is that it is still using money created out of debt to fuction. We must go to the root problem first, and the money itself is the foundation of any type of banking system; fractional reserve or not; where does the money originate? How is the money created? Is it spent into the economy without debt attached, as it should be? Is it gifted into the economy? Is it loaned into the economy with debt attached, causing a never ending debt burden mathematically impossible to get rid of (currently, yes it is)

Willy2 said...

I must say something on the topic Peter Schiff. He has been critisized by Mike "Mish" Shedlock. But according to my information it seems that in this quarter his stockspicks haven't gone down in price.

Mark said...

Next Dimension has it right. I think Denninger is beating a straw man here as most folks understand FR banking as an accepted principle. It is what backs the underlying paper that makes FRB dangerous. Fiat currency just begs to be exploded with Ponzi like manipulation.

Anonymous said...

Latest in a series:

Something readers here have been discussing for over 2 years... always interesting to see the discussion move further into the mainstream international press. From the above link:

The foregoing quotes beg the following questions:
What about the widely held view, which is even at times recited by Chinese central bank officials themselves, that says China has no choice but to maintain its holdings of Treasuries and to keep buying more, lest any significant slowdown in its rate of purchases risk triggering a global dollar panic?
Is that view correct, or does China's central bank actually have other viable options, as Luo Ping and other officials insist that it does?
What might those other options be, are they really viable, and what might happen to the dollar if China's central bank began to exercise its professed "other options"?
What kind of scenario might prompt China's central bank to attempt to do so?
Could its enactment of "other options" be carried out in a way that would be difficult to trace, so that China would avoid triggering a dollar panic while it steadily reduced its exposure to the dollar over the coming months?

Saying "goodbye!" sooner, not later
With respect to whether China will continue to purchase Treasuries at anywhere near the same rate at which it has in the recent past, a new and fundamental problem is arising. Its significantly slowing economy is causing a rapid slowing of the rate of growth of its reserves, which makes much less new reserve accumulation available, and therefore also undermines the need for the purchase of Treasuries. Experts state that even if China's central bank uses all of its new accumulation of reserves each month to purchase Treasuries, the sums it would purchase would still fall.


jerry said...

Jon stewart goes after short selling

Anonymous said...

Cronyism and incompetence continues in government.

Citigroup Economist Takes U.S. Government Job

Mark said...

IMF to release billions in "super currency" to facilitate "global quantitative easing"? Yahoo! We are saved - the crisis is so OVER!!11!1
I knew our betters would come up with a sound plan. Read to the end for a hilarious caveat.
The (Nearly) Final Solution

Anonymous said...


Went to Las Vegas last night for St. Paddy's Day at McMullins (Great).

The trip up Decatur from Trop to Sahara was an eye opener. Almost every single strip mall had a "For Lease" or "Space Available" sign. I mean every single one. Tens of thousands of square feet, no doubt.

The Hash House was great, but we paid $30 for breakfast (no alcohol). How long can Las Vegas commericial owners stay above water? What will happen to their home mortgages when their tenants leave? Glad to be back in St. George.

Steven said...

Hey Randy: Fed buying Treasuries was that your Feb-March news item?

Steve (your Bro in Reno)

Willy2 said...

I took another look at this chart.

I modified the graph and stored it here.

By looking at the modified graph, this is what I see:
1. Although there was a crash (2008 & 1929) the overall movement of the stockmarket was down and followed the red line surprisingly accurate. I therefore expect no additional crashes.
2. The graph suggests there will be no major bearmarket rally anymore, as well. There was one in 1929 and 1930 because that crash came direct after the peak of the stockmarket.
3. We're already halfway the bearmarket and a little over 50% down. So, I think the bearmarket already will be over by september, oktober 2010. And the market will end at approx. 100 or 50 on the S&P 500 and 1500 to 1000 on the the DOW.

B.T.W. According to John Williams unemployment in the US went up by close to 900,000 last month and unemployment is already at 19%.

Randy said...


I've discussed and/or posted about it several times, but unsure of the specific post you are asking about - anyway Fed's pronouncement certainly IS big!

Yup - it's all sunshine and daisies from here on out. Thank God - I was beginning to worry Bernanke and the Boyz had lost control!

Anon 8:17,

Thanks for your LV trip report. Yes, empty retail spaces dot the valley landscape and it's certain to get worse in the coming months/years.

Great charts Willy2 - Thanks

So what you are saying is: We'll likely see more gradual market declines (vs massive drops) until we eventualy bottom out somewhere in the dirt?

Regards to all and thanks for posting


Willy2 said...


I DO NOT expect the S&P 500 to rise above the red line again. (See the graph in my comment above). One can expect a lot but predicting what the precise path will be in the future is EXTREMELY difficult. But the overall direction of where we're heading is - IMO - crystal clear.

A friend brought today to my attention two very disturbing graphs. These are charts from two bond ETFs. An Investment Grade ETF and a Junk Bonds ETF. And that is going to be the next disaster: Bonds (Both corporate and T-bonds).

Willy2 said...

For those who haven't learnt any german in school ;) the uploaded file on a possible development of the S&P 500(see my comment above) can be downloaded here as well.

Anonymous said...

Well, I don't know what happened to my recent post about the Yahoo article "D.C. to America: You Can't Handle the Truth". So I'll try again. There is another very article that just been posted about "New Deficit Estimate Worse than Expected". Just those two articles plus the recent Obama sudden realization that military veterans shouldn't pay for their care of Service Connected Conditions or Injuries is enough to be the March thingie. Even the news clips have shown the administration saying that people are more concerned with what is happening to them, their jobs and homes rather than the overall details. I think the Obama people are in for a big shock. Too bad we are too. BettyJane

Justin_n_IL said...

Excellent piece from Nyquist this week.

"Life in consumer society has been about self-gratification. The most important questions have hedonistic assumptions built-in. Such are not questions at all. They are ready-made answers; false answers, in fact. The ancient formula for happiness was self-knowledge, not self-gratification. For self-knowledge is the hardest school of all, involving many painful realizations."

Creative Visualization 101

Anonymous said...

The US government can cut back on military spending and reduce the budget deficit.

How utterly, totally and completely insane US military spending has become can be illustrated by the nuclear weapons. The US has still over 9.000 nuclear warheads but in spite of that the US has commissioned the development and the building of a new generation of hydrogen bombs.

Two highly crtical pieces on military spending is How to sink America and this article.

How the new F22 and F35 combat aircraft seems to be total disaster.

Anonymous said...

I would happily concede a large chunk of wasteful DoD spending, as long as the left was willing to give up a lot of their Big Government wet dream as well. There has to be a realignment of priorities and the only true starting point is the Constitution. Turning the Fed into a giant arm of ACORN isn't sustainable either. Everyone, DoD included, has to break free of the entitlement mentality that has rotted us from the inside. Corporate welfare has to stop. Political patronage has to stop. Term limits have to be preferable to the current fiefdoms. Why should the mouth breathing idiots of New Bedford MA (think Gone Baby Gone) have the right to inflict Barney Frank on the nation ad infinitum?

Anonymous said...

Looks like there's a clarion call for resistance!


Steven said...

A video called "The mismanagement of America Inc.". Duration 27 minutes, dated june (??) 2008. Click here.

Willy2 said...

Although this graph suggests there will be no crash in the stockmarket anymore, one shouldn't rule it out either.
Tickerguy thinks there will be a (major) bankingcrisis in the fall of this year.
He and Marc Faber think there will/could be a crash in the US long bond (30 year) later this year. And both events could be accompanied by a stockmarket crash.

Here one can find comments on the US TIC data. The TIC report looks at flow of money into and out of the US.

Anonymous said...

To spend money on building aircrafts who end up here is the ultimate waste of taxpayers money.

Siege said...

I think one key concern is the two renewal surges due on sub-prime morgages this year. We've seen what happened with the first, and I don't see any of the current stimulus package making those any more desireable. Sure, they aren't a base cause, but they're hidden damage just waiting to be exposed. And they'll have aftershocks.

As more 'stimulus' is added, faith in the US dollar abroad will continue to weaken. I expect the banks will fund another narrow escape when the next sub-primes come due, but by the time we're due for the third, there will be more currency diversification abroad and the financial markets will be tumbling due to excess supply of USD. Organizations and governments will more aggressively secure safer assets... at least while US currency is still accepted abroad. But a tipping point will be reached, where the desire to sell US dollars is greater than the desire to have them, and we'll hit freefall. What good is fiat money without faith? A stimulus package printed in uncashable funds?

The good news is that OPEC is already looking at a basket of funds, or an alternate base currency. If they switch, we won't have to worry about a freefall hitting during a sub-prime morgage collapse. We'll already be enjoying the ride down.

Stimulus is coming in great abundance! Enjoy, and spend yours now. Buy necessities, and a good foreign parachute.

Chet said...

NYSE Runs Out of Gold Bars

Max Keiser on China’s threat to dump dollar - Aljazeera English

Chet said...

Lyndon LaRouche Emergency Statement to the President 27/03/2009

Change now or you'll take down the United States with you in short order!

Maybe Mr. Larouche should address the puppetmasters and not the puppet.

Willy2 said...

The opinion of Marc Faber.

Anonymous said...

In Las Vegas right now. I was shocked that there is so many people here. Maybe it's the inflow of spring breakers that were going to Mexico, but ended up going to LV instead. From what I've noticed, the shops at Caesars doesn't seem really crowded--it's the streets and gambling areas that appear quite packed. Who knows...maybe this is the last hurrah before the breaking of the back of the US.

Angus said...

The financial pattern stimulus will play is clear... faith will fail and the dollar will crumble. But I think fear of a failing dollar isn't the biggest worry. I'm concerned about how the US will respond on a military level. As a nation with the power to destroy the entire globe several times over, will the 'leaders' within attempt a show of force to save it?

I look back to Maslow's hierarchy of needs, fearful of how Americans will respond when basic needs are challenged. For a moment, look at Maslow as a representation of a government, or group of people. A lack of fiscal responsibility is eliminating esteem or self-actualization layers (morality, problem solving, acceptance of facts, confidence, achievement, respect of others, respect by others). Joblessness is shredding the safety level, as is the reduced international faith and demand for USD.

If the model proven for individuals holds true for the aggregate, our liberty is at risk. The pyramid crumbles in movement toward chaos, taking with it the options for American people. In chaos, brute force is the usual means of management. So I ask, faced with almost certain implosion of a flawed system, will the US government attempt tyranny to save themselves when all else has failed?


nice blog.

Mark said...

Speaking only for myself Angus, the informed among us know the problem is homegrown and will resist any attempt to scapegoat or 'wag the dog' this issue. As many honest money commentators have noted, the only true way out of this mess was to take our medicine and build a legitimate system from the rubble. That message hasn't changed, but your fears may be well founded seeing how the powers are dealing.

Willy2 said...

Brad Setser looks here at the TIC data from january of this year. And the message which emerges isn't pretty.

Already in june 2008 foreign creditors started to sell bonds of the GSEs (Fannie Mae & Freddie Mac).
Already in the 1960s (during the Vietnam war) the US started to run budget- and trade deficits. (Yes, wars are extremely expensive) Only thanks to foreigners who were willing to invest their money in the US for over 45 years the US was able to mitigate the balance of payments drain according to this article.(read the entire article). So, in order to stay afloat the US has relied on the inflow of money from drugtraffickers, crooks and criminals.

Stefan said...

This is an interesting graph as well.

To Visit My said...

your blog is good good good......

Anonymous said...

I'm getting a bit inured to the claims of imminent:

1) hyperinflation
2) dollar collapse
3) gold sky rocketing
4) financial armageddon
5) social upheaval

either it actually happens soon...or those predicting it need to re access.

Justin_n_IL said...

Anon 9:37

It's an absolute undeniable fact that it's all going to come crashing down. The system is flawed, PERIOD.