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  • onedanelectroman onedanelectroman Nov 7, 2007 8:18 AM Flag

    US Dollar shot to hell

    i know you guys heard this alraedy. i cannot believe my poor timing. i started margin buying gld, fxe, fxc on monday after closing out my ML held cd's. my check to ameritrade is in the mail. now this news has me compleetly screwed:
    BEIJING, CHINA -- Sources with a U.S. Delegation in Beijing have told The Hal Turner Show the Chinese government has informed visiting Bush Administration officials they intend to dump One TRILLION U.S. Dollars from China's Currency Reserves and convert those funds into Euros, gold and silver!

    China was allegedly asked to withhold the announcement until Bullion Markets closed for the weekend to prevent an instant spike in gold and silver prices. This delay will give the world the weekend to consider appropriate actions rather than have a knee-jerk reaction which could see the U.S. Dollar totally collapse in value Monday.

    According to this Senior source, China told the U.S. delegation they no longer have faith in U.S. Currency for several reasons:

    1) The Federal Reserve Bank ceased publishing "M3" data in March, making it nearly impossible for anyone to know how much cash is being printed. China said this act made it impossible to tell how much a Dollar is worth.

    2) The U.S. Dollar has lost upwards of thirty percent (30%) of its value against other foreign currencies in the recent past, meaning China has lost almost $300 Billion simply by holding U.S. Dollars in its reserves.

    3) The U.S. has no plans whatsoever to reduce deficit spending or ability pay down any of its existing debt without printing money to pay it off.

    For these reasons China has decided to implement an aggressive sell-off of U.S. Dollars before the rest of the world does so. China reportedly told the US delegation; "we are the largest holder of U.S. Currency and if the rest of the world unloads theirs before we unload ours, we will lose our shirts."

    Early this week, in an unusual move, the Bush administration sent virtually the entire economic "A-team" to visit China for a "strategic economic dialogue" in Beijing Dec. 14 and 15.

    Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke lead the delegation, along with five other cabinet-level officials, including Secretary of Commerce Carlos Gutierrez. Also in the delegation is Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, and U.S. Trade Representative Susan Schwab.

    The Bush administration wanted to get China's cooperation in preventing a dollar collapse. The Hal Turner Show has been told the effort failed.

    According to the source, Fed Chairman Bernanke left the meeting "pale and in a cold sweat" as the implications of China's decision seemed to sink in.

    The implications are enormous: The U.S. Dollar is likely to collapse in value against all other major currencies as early as Monday, December 18.

    This would cause a worldwide sell-off of dollars, create almost immediate "hyper-inflation" in the US and also impact world markets at a level "worse than the Great Depression of 1929."

    http://www.halturnershow.com/ChinaToDumpUSDollars.html

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    • The hiding of M3 is shameful. Much like what we are doing to bail out the big banks. It infers foreigners are so stupid they don't know what is happening here, and if we hide the data they won't figure it out. I wrote about the M3 issue here. Its pathetic

      M3 is growing 15% annual rate per websites I am reading who are trying to measure it. Probably more than that in last month. WHile it would kill our country we deserve to have this done to us. (foreigners pulling assets) - they started in August. EVen Gisele (Victoria Secret model) wants to be paid in Euros now... dollars are pesos.

      http://www.fundmymutualfund.com/2007/09/what-is-m3-and-why-do-you-care.html

      • 1 Reply to markox5
      • There is very little satisfaction, at this point, in my luckily timed gains in SKF. Even I could not have imagined that the news in the financial sector could have been this bad. Between the banks beginning the process of coming clean, the Chinese making it clear they have lost confidence in the dollar, oil spiking on an ever weakening dollar, I am making money on the bad decisions of our political and business leadership.

        I would sure rather be long, but hey, I have future to preserve. This is really, really bad news folks...the kind of news that shakes economies to their cores.

        On the plus side, look at what Brazil and Argentina have been able to do with their currencies and economies in a very short amount of time. So all is not hopeless, but it sure is bad!

    • Just what the administration wants. You will never have a great country with a worthless currency. Ultimately, this will be very inflationary.

      Benefits are increased manufacturing here, and eventually foreigners will be big buyers of our stocks -- when they can see that the dollar has clearly bottomed.

      Oh yes, and our federal deficit just shrank appreciably.

    • Thanks, chairman. I was thinking of taking some profits, but now I've got the perfect contrarian indicator telling me to hold.

      chairman, your trading record stinks. Why do you insist on acting like an expert? It just makes you look foolish.

    • This story was from december of 2006.

    • the news article posted is wrong one- i grabbed first thing off goog,very similar. here is correct:

      part 1
      http://www.bloomberg.com/apps/news?pid=20601087&sid=alGVN031e30s&refer=home
      Nov. 7 (Bloomberg) -- The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves.

      The dollar fell against all 16 of the most-active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar. The New York Board of Trade's dollar index dropped to 75.21 today, the lowest since the gauge started in March 1973.

      ``Further weakening of the dollar is very likely,'' said Teis Knuthsen, the Copenhagen-based head of foreign-exchange, fixed-income and derivative research at Danske Bank A/S, the Nordic region's second-biggest lender. China may ``diversify out of dollar holdings.''

      The U.S. currency slumped to $1.4704 per euro, the lowest since the 13-nation currency debuted in January 1999, before trading at $1.4671 as of 7:15 a.m. in New York, from $1.4557 late yesterday. The dollar dropped the most in two months against the yen, trading as low as 112.87 yen. The euro fell against the yen to 165.84, from 166.99 yesterday.

      The U.S. dollar index may be due for a reversal, according to a technical indicator. Its 14-day relative-strength measure fell to 21.38 today, below the 30 mark, which may signal the currency's decline has bottomed out.

      In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

      Chinese Comments

      ``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, said at the same meeting.

      The dollar also fell to an all-time low against the synthetic euro, a theoretical value that estimates where the currency would have traded before its inception. The prior record was $1.4557 set in 1992.

      The U.S. currency may weaken to between $1.48 and $1.50 against the euro by year-end, Knuthsen said.

      Chinese investors have reduced their holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to August. China Investment Corp., which manages the nation's $200 billion sovereign wealth fund, said last month it may get more of the nation's reserves to invest to improve returns.

      Treasuries Rise

      U.S. 10-year Treasury notes rose today as mounting credit-market losses and declines in stocks pushed investors to the safety of government debt.

      ``The world's currency structure has changed,'' Xu said at the conference in Beijing. Cheng, speaking to reporters after his speech, said his comments don't mean China will buy more euros. The National People's Congress, China's legislature, isn't involved in setting currency policy.

      ``Cheng has a history of speaking out on a range of financial market and economic developments, and his comments are not always accurate,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.

      Cheng's remarks on Jan. 30 that China's stock rally was a ``bubble'' caused the benchmark index to fall the most in almost two years the following day. The Shanghai and Shenzhen 300 Index, then over 2,500 points, has since climbed above 5,300.

      The euro's gains may be limited by speculation European economic growth may slow, reducing the need for higher interest rates.

      • 1 Reply to onedanelectroman
      • part 2:
        ECB Rates

        The European Central Bank will keep its key rate at 4 percent tomorrow, according to all 61 economists surveyed by Bloomberg News. Data yesterday showed manufacturing orders in Germany fell more than expected in September.

        ``The euro is clearly overvalued against the dollar,'' Emanuele Ravano, co-head of European strategy for Pacific Investment Management Co., which manages the world's biggest bond fund, said late yesterday in Brussels. The ECB ``over the course of 2008 will totally change its tune'' by cutting in the second half.

        Europe's single currency will trade at $1.43 versus the dollar by year-end, according to the median forecast of 42 analysts and brokerages surveyed by Bloomberg News.

        The dollar's decline helped drive the price of crude oil to a record $98 a barrel and gold to a 27-year high, encouraging investors to buy assets in commodity-producing nations.

        Commodity Currencies

        Commodity currencies led the gains today. The Canadian dollar advanced to $1.1040. The Australian dollar gained to 93.98 U.S. cents, the highest since April 1984, from 92.87 U.S. cents. The rand rose to as high as 6.4294 per dollar, the highest since May 2006. The pound rose to $2.1052, the highest since May 1981.

        The dollar's 9.8 percent drop against the euro this year boosted the competitiveness of U.S. exports, helping shrink the nation's trade deficit to $57.6 billion in August, the smallest since January.

        French President Nicolas Sarkozy yesterday raised concern about the euro's strength during a visit to the U.S., saying ``you don't need too weak a dollar'' to spur growth in the world's largest economy.

        ``This is an asset story and shows sentiment for the dollar continues to be quite negative,'' said David Forrester, currency economist at Barclays Capital in Singapore.

        The Australian dollar gained after the country's central bank raised its benchmark borrowing cost to 6.75 percent today. Governor Glenn Stevens, announcing the quarter-point rate increase, said inflation will exceed the bank's target.

        Pressure on Fed

        The dollar fell against the Norwegian krone as traders added to bets Norway's central bank will increase its 5 percent deposit rate. It declined to 5.2835 kroner, from 5.3474. The dollar also dropped as losses from subprime-mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 percent next month.

        ``The interest-rate outlook is dragging down the dollar against major currencies such as the euro and the Australian dollar,'' said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world's second-largest currency trader. ``I cannot see the bottom of the dollar depreciation yet.''

        Interest-rate futures traded on the Chicago Board of Trade show a 62 percent chance of a quarter-percentage point Fed rate cut on Dec. 11, compared with 6 percent a month ago. Citigroup Inc. may write down an additional $2.7 billion worth of subprime- related assets, CreditSights Inc. said yesterday.

        New Zealand's dollar rose to 78.35 U.S. cents from 78 U.S. cents on speculation a report tomorrow will show the unemployment rate remained at a record low, boosting the chance of another increase to the country's record 8.25 percent benchmark interest rate.

        To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net ; Stanley White in Tokyo at swhite28@bloomberg.net

        Last Updated: November 7, 2007 07:17 EST

    • This could make subprime look like a minor blemish in comparison. To be precise, the M3 tracks the expansion of US credit while the M1 tracks the actual printing of actual dollar bills. Credit is scarier and more volatile because it can be extinguished with the stroke of a pen ... and as we all know, credit is ballooning in the United States. Some have been piecing together a model of the old M3 based on other Fed data.
      At some point Bernake will have no choice but to do the right thing, raise interest rates and lower unsustainable living standards for the long-term good of the U.S.
      Check it out:
      http://www.nowandfutures.com/key_stats.html

 
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