China signals dollar swap

Discussion in 'Current Affairs, News and Analysis' started by KGB_resident, Nov 8, 2007.

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  1. Time to panic people.
  2. This sounds like strike two for America. Strike one was the housing market crisis, where they managed to avoid the worst when the central bank lowered interese rates and injected cash.

  3. It depends upon quite how much "some" is. As usual with China, you have to take the sabre-rattling element into account. I have no doubt that the US government is at this very moment calling upon every China government official they know, plus every contact in the PLA, in order to attempt to influence precisely how much is converted. I also have no doubt that the Chinese government will respond with "We'll see what we can do. Now, about this issue you weren't very keen to move on the last time we spoke..."
  4. Spot on. They'll hedge their bets with some currency movement, yes, but why sink the dollar on the world market? Not only would they not be able to shift them fast enough to realise more than a fraction of value, they'd be throwing away a pretty big lever in Washington. They'd only do that if there was something immediate and urgent at stake.

    My guess would be in the next few months we'll see a toning down of criticism over Darfur and some pressure on the Japs to keep the pacifist constitution intact.
  5. My Bolding.

    The only reason I can think of for China wamting/inducing a dollar crash is that AFAIK the USA has a large trade deficit with China. A weaker dollar (if that is the case) effectively increases any such debt does it not?
  6. A debt isn't much good to you if you can't redeem it for maximum value. What good does selling $1trn do you if you only get $300-400bn worth of value for it? The Chinese play the long game and won't sacrifice long-term advantage for a smash-and-grab gain, especially for such potentially poor return.

    A weaker dollar in any case makes US good more attractive abroad and effectively hampers China's attempts to gear their export economy to high-tech high value goods.

    Mind you, I'm secretly amused at finding arch-capitalists outmaneouvred by Communists famed for being rice-farmers...

    Edited for spelling
  7. True. But China is now competing with the rest of the World to buy raw materials. A weak dollar would possibly give China a competitive edge when bidding for copper (for example) produced by an African company.

    TBH, I do not know. I am just trying to imagine what purpose other than political gesturing China may have for weakening the dollar (should it choose to do so).
  8. Soon the world's markets will realise, China has no actual money of it's own, it just copies other peoples...

    Then they'll ALL be screwed :D

    China is doing this because after trying to strong arm America and being told to Fcuk off by Europe, it now thinks it needs to buy into Europe just to be able to pull off that move.

    It has however finally bitten off more than it can reasonably chew, given that Euroland actually does live on another planet when it comes to Economics. So come on over China, sling your false equities about (constructed on nothing more than flesh capital), when you try and do what you just tried with America on Europe... you no be hawwpy.

    Note to China: We are deliberately manufacturing our own market crashes you commie fcuknuts, they've been boyant for too long; so don't try and be 'world masters' with the people who invented it all and built your own market after you ejected it from your society for centuries.
  9. Political posturing on the part of the Chinese. Who knows why? Anger at the bad press Chinese products have been getting in the US media - and the backlash against them by American consumers?
    An attempt to persuade American capitalists to induce Bush & Co to back off over criticism of Chinese involvement in Africa or to rein in the Japanese?
    Probably just sabre rattling - for now.
    Time for the US to worry is when the Saudis start divesting itself of dollars!

    What a bloody awful financial mess the USA has gotten itself into and all driven by greed.
  10. Worry not. India's more screwed than America... Euroland will be bailing everyone out in the next 50-80 years.

  11. My Bolding.

    I doubt if that is physically possible.

    If India and China fail there is every chance that it will be a global calamity that will drag everyone down.
  12. Convert to the Pakistani Rupee, you know it makes sense!!
  13. Nehustan

    Nehustan On ROPs

    Op Obadiah does seem to be trotting along rather nicely. I'm sure that the Americans will understand (yeh right) as I have a feeling many have uttered the words 'It's nothing personal, merely business' on more than one occasion...
  14. OK, I give up. What does this actually mean? That the Chinese can’t make anything of value? Their balance of trade says otherwise.

    Personally, I think China is doing this as a shot across the US’s bows, letting them know they’re not the only game in town. They’ve got immense holdings of dollars, diversifying isn’t exactly rocket science. They’ve also been sending people over to the west to learn how we do things for decades now; these were the smartest top-slice of 1.3 bn people and some of ‘em are in senior positions now. They know how to do things without needing Europe as a crutch.

    Economics are the rules of the game, not laws of nature: change the game, change the rules. And see above about understanding what game we’re playing.

    “Nothing more than ‘flesh capital’”? It’s the best kind. It’s people who think things up, design them, build them, sell them, upgrade them for a new set of customers. As Stalin said, “Quantity has a quality all of its own”. Well, these days, China has both.

    Really? Have you told the folk running our economies, ‘coz they seem to be doing a poor job of not shitting themselves? And exactly which centuries plural did China eject the free market from their society? From my studies, part of the 20th and not universally successfully at that.

    P.S. it was the Mesopotamians who invented banking and the earliest metal coins were Chinese, called cash – hence our use of the term.