Has anyone else read this and read it from other sources? What do you think? Mindreader, say?



Report - China To Dump
One Trillion In US Reserves
Chinese tell visiting Bush administration officials they will not sit back
and lose their shirts as U.S. Dollar collapses; they are getting out fast and large.
HalTurnerShow.com
12-15-6


BEIJING -- 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."

Arabs to the rescue?

In a strange twist of fate, Arabs and OPEC may come to the rescue of the U.S.!

Senior officials in OPEC made clear that they too would be severely harmed if the U.S. Dollar collapsed, and hinted they "would not be inclined to sell oil to any particular nation that intentionally caused such a collapse."

This was a thinly veiled threat to China, which depends heavily on OPEC oil for its rapidly developing energy needs.

The OPEC officials even went so far as to say "Since China lacks the ability to project their military power, OPEC nations need not worry about any Chinese military response to an oil cut-off."

Such brutally candid remarks will not sit well with China; and signal ominous things for the U.S. .

Arabs and OPEC will want something in return for saving the U.S. from economic collapse and it is already widely speculated what they want will be a complete change in U.S. backing of Israel in the Middle East.

If such demands are made by the oil-rich Arabs, the U.S. would be left with little choice but to virtually abandon the jewish state to preserve itself.


UPDATE - 10:18 PM 12-14-6
The Washington Post confirms. . . .
'US, China Clash On Currency'


UPDATE - 12:07 AM EST
Saturday, December 16, 2006:

Additional sources, one in the U.S. Commerce Department and another in the US Treasury have confirmed the initial report above and referred me to another, Third, source in the Pentagon.

Both the Commerce and Treasury Sources report that while China will not be able to simply trade their Dollars for other paper currencies, they will spend their U.S. Cash on commodities such as gold, silver and Rhodoium as well as military hardware; ships and planes, placing large orders and paying for those orders with the one point one trillion in cash dollars they possess.

Extreme Military Concern

In speaking with the contact at the Pentagon, I am able to now report the Pentagon views this currency-killing as a cunning military aspect to Chinese plans:

The Pentagon says that while China has a 2 Million man army, they lack the logistics and heavy lift capability to move that army and supply it. They can, however, get that military to South Korea and to Japan.

The Chinese see that the U.S. Military is over-stretched and almost exhausted by its globe trotting Commander-In-Chief. They feel that by intentionally destabilizing the dollar, the U.S. economy will fail, putting tens of millions of Americans on the unemployment line and putting unbearable pressure on the US Government.

Then, with the U.S. economy in shambles and its manufacturing base eroded by a steady stream of manufacturing plants moving out of the US., the American government will be too occupied with troubles at home to do much internationally. America will be in no position to challenge China, allowing the Chinese to act militarily elsewhere in the world;

Further, if the U.S. attempted to intervene against any Chinese military action, the only plant in the world which can manufacture the specialized gyros needed for U.S. Cruise Missile guidance systems, is now located in. . . . .China.

China could prevent that plant from shipping to the U.S., and once our arsenal of cruise missiles was depleted, it would take a long time to re-tool a plant to make more gyros and resupply cruise missiles for battle. The Chinese feel they could accomplish certain military goals before the U.S. could re-tool.

They are also confident the U.S. will never "go nuclear" as long as the U.S. itself is not attacked.

The Pentagon source went so far as to say "Even if China was to lose the entire one trillion in cash to a collapse of the Dollar as a currency, they will have succeeded in taking the U.S. off the world stage as any type of effective military or economic power -- without firing a shot!" A 'classic' Sun Tzu paradigm of victory - the art of fighting, without fighting.

The crippling of the US is a highly desirable military benefit for China at a relatively cheap price since it will leave their human capital and infrastructure assets in place; assets they know they would lose if a hot war erupted with the US.

Aoa


Where is the link???


w/salaam

Damn Arabs, they are just about to ruin all the chinese plans.

is this a april fools

I don't buy it. This sounds like typical fear mongering the Americans tend to do, just on a bigger scale. I'll believe it when it happens.

Why would China dump $1 trillion in dollar reserve? Once it starts doing that, the dollar will fall right through the floor. It will be the equivalent of purposefully devaluating your own holdings portfolio. A massive devaluation of the dollar won't buy you many Euros.

This is especially unconvincing considering how long it took China to move the dollar peg from 8.26 to 8.06. Now they are suggesting China will drop the dollar peg when they haven't even allowed their own currency to float? Yes that's right, dumping the dollar effectively means the end to the dollar peg. If it happens, you will see massive inflations in China followed buy significant changes to import/export amounts. Only a moron would believe that it will happen.

Furthermore, suppose China does intend to dump the dollar (they will eventually, just not all at once), they are gonna go tell the US government? We'll dump the dollar, let us tell the US government who will publish it, then agree to hold off until the gold market closes. That's just rich. I wouldn't be surprised if this was a ploy by the Fed to further tie the Chinese to the dollar.

My predictions are that the dollar will drop on Monday as there always are speculators and other morons sitting on edge, but will rebound by next week.

And the Arabs, that's just funny. China may not be able to reach them militarily, but they have a lot more leverage on the Arabs than the other way around. A ceasation of oil export to China is akin to a 5 year old threatening Mike Tyson.

Where did you get this trash of an article any ways?

The chinese initial plans to have a significant amount of dollar reserves was to create a sort of american dependency on china, it was not a purely economical move so this article is suggesting otherwise.

You know, I looked up the source of this article:

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

Here's what the website itself had to say on the front page:



As I expected, all hot air from a moron who knows jack.



Gee, and here I thought they were buying it because of the high interest rate.

True.

I don't believe this article either.
Any dummy who wrote this got be

for links, you may help yourself in the future. simple enough
to click on this link you will get all you need and can learn from..


http://www.google.com/search?q=One+Trillio...lient=firefox-a

China has over US$1 trillion dollars reserve in total. But that does not mean all reserve was in currency nor deposited in US. I read similar topic last year China had 60% of reserve put in US -- around $280 billion in US bonds when China had about $700. If the ratio is still 60% that means only $600 billion inside US.

Since US applies a lot of economic pressure on China especially force China to appreciate the RMB currency. China just plays a little fight-back on the $1 T reserve. Think in this way, China had added $300 billion reserver this year alone. IF China stop buying US dollars, the RMB is prossibly at 5 Yuan = $1 today. It will has huge impact on China's economic as well as in US econ. Why bother to sell reserve in US.

China needs to grow, US needs cash to import and power its grow. China needs markets and tech so do US needs China to help press the inflation down and keep interest low. They are in WIN-WIN situation. Those are just joke no matter how the media blows it. US and China continue on what they are doing. Dont worry, the sky is not falling down.

You are kidding right? A purchase of a dollar donominated bond, be it US T-bills, T-notes or T-bonds or Eurodollar bonds or otherwise, IS A VOTE OF CONFIDENCE in the dollar.

You are spending your current holdings, which in China's case is RMB, converting it to US dollars in order to buy a stream of cashflows donominated in US dollars.

And that's the bottom line. You are using your current basic spending power now to buy a stream of future cashflows in US dollars. If you don't believe at least somewhat in the stability of the dollar, you don't do that, because even with a high YTM, if the dollar fall through the floor, you still get sh1t.

So in that sense, it is inconsequential whether the Chinese holdings are in dollar reserves or dollar bonds as far as their expectations of the future dollar prices go. The only advantage of holding bonds over dollar reserve (since the RMB is pegged) is the interest income.

Whether China holds on dollar reserves or bonds, once it launches a massive dumping campaign, the results would be practically the same.

Suitable place for this kind of article together with "As China Cools, India Expected To Grow Faster In 2007" is trash bin.

Well, I don't know you guys, I've sold all my US $ reserve (that's about 5 bucks) anyway, just so I won't lose more on my money. As we all know that whether China dumps the dollar, the dollar is going down steadily and surely against the RMB. So I figured: why the heck shouldn't I sell my 5 bucks now to get more RMB than later when it will be worth less? I'm no freakin' eoncomist, but I know the "sell high and buy low" stuff... Hehe

rofl., that was funny bro.,

Let's calm down, guys.

US and China have reached the deal, here is the prove

http://today.reuters.com/news/articlebusin...p;from=business

Nothing wrong to sell your bucks. What I oppose is the suggestion in this article that China and the US are in head on clash regarding China's holdings in USD assets that is equivalent to declaration of ecomomic war. I sold my holdings in USD too, even earlier . My first sale was RMB8.21 in cash, my second was 7.82 because the downward trend was obvious, but not for reasons given in this article.

You must be busy thoses days to dispose your dollars. you are allowed to sell USD10,000 per day for personal account, quess yours isn't corporate account.

The dollar will never be worthless, the country is there, the people are there together with their brains which is the most important, the military power is there. It is too early to declare the demise of US economy.

What is on the shoulders of Chinese and US high officials are not pumpkins.

Are you telling us that you only had two dollars to dump??!! Come on, we ain't no fools to believe that! I'll bet if I had said I had only one buck, you'd say you had only a quarter!

Or did you mean that those first two sales were just trial and you will have a LOT more to sell? Let's all fess up how many dollars each of us has in reserve, shall we?

I'll go first: I didn't even have a dollar account. I have only had that 5 bucks to start and to finish and it had been hidden below my matress for some three years just for the rainy days. And it only took me a trip to the local bank and in one decisive and quick move, I proudly became foreign currency-free!

Now if my account had been a corporate one with a few million dollars in it, that would have given me some huge headache... How lucky I am being poor and being without dollars!

It is the exchange rate USD1:RMB8.21 and USD1:7.82, I don't need to disclose how much I sold.

Do some of you understand how currency exchanges work? Shouldn't that be a consideration before you convert?

I thought I did. But since you so ask, I'm no longer sure. So please enlighten us!

Well, there are generally three theories/factors that influence exchange rates: demand, inflation and interest. In real life, it's probably some combination of all three factors.

Demand means demand for goods/services of another country. Suppose you have French wine and Californian wine (which sucks, by the way). Suppose the Americans know their wine sucks and start buying French wine, they need to convert US dollar into Euros, which means more demand for Euros compared to dollars. So the Euro would appreciate in value compared to the dollar.

Inflation of course, is the rise in price. Suppose inflation is higher in the US than Europe, its wine would be higher priced than French ones over time. Demand for them would drop and demand for Euros to buy French wine would rise. Euro would appreciate once again.

As for interest, if interest rates are higher in Europe, US investors would invest there to take advantage of higher returns, once again the Euro would appreciate.

The effect of all of the above are short term though. Once people start demanding Euros, price for it and French wine would rise, making Californian win cheaper. The flow would reverse the other way, eventually returning to balance.

That is what will happen with the dollar. Eventually it will drop the extent to make American goods "cheap" compared to others. The US dollar will appreciate in value once again. So I don't know why you bother to exchange your dollar holdings. You just lost some money in terms of bank fees for the exchange. The only hypothesis I can come up with are:

a) you are into speculating
b) you don't believe in the cyclical nature of the economy.

Both of which are generally bad ideas, because nobody ever makes money on currency exchanges precisely for the reasons listed above. In fact, the only parties that try to do it by speculating are banks, because they hold large enough quantity of deposits to actually have marginal earnings on a 0.00000000001% fluctuation of the currency in their favour. Of course, they could also lose.

The only relationship in which the demand theory doesn't hold true is in the US/China relationship, due to the dollar peg. So in other words, the morons in Washington actually have a point in that China is keeping its currency artificialy low and not allowing the dollar to rebound per the demand theory.

Of course, what make them morons is the fact that they conveniently left out the other half of the equation, that China is spending RMB to buy up US bonds/debt, without which, the American economy would be just as bad, if not worse than without the dollar peg.

So in other words, the economists advising the NPC are really smart. They are keeping the currency low to boost exports, all the while earning interest on the bonds at the same time. Washington can do nothing more than yelling and screaming like a damn 5 year old. Oh well, that's what happens when you are at the mercy of others.

Thanks a lot for the clear explanation on the theory, Mindreader! From this, I'm sure that many of us have learned or been reminded of something from Econ 101. That's what I call progress made and knowledge gained.

Now. there is a third reason for those of us to dump our savings on the dollar:

c. We believe that the RMB is indeed under-valued. Therefore, despite the cyclical nature of the exchange rate, the dollar will further depreciate and will eventually stablize (i.e. fluctuate) at a LOWER position against the RMB than where it stands now.

Besides, I believe that the above belief alone can be a self-fulfilling prophecy. And I believe that even with my 5 bucks dumped, I have contributed hugely in the fall of the dollar (i.e. the butterfly effect).

Ha ha ha!

It doesn't really matter. If you think about it, the demand theory already took into consideration the effects of undervalued currency/speculation.

Think about it. If the RMB is undervalued, it means Chinese goods are undervalued as well. If the RMB appreciates relative to the dollar, its goods would also become more expensive. The unsuing decrease demand for Chinese goods would then drive the RMB downwards.

So which of the two effects are bigger, the real answer is you don't really know. You could make an educated guess, but that is still a guess. All of this basically mean that currency speculation is generally a bad idea.

As for self-fulfilling prophecy, you do know of course that those have generally formed bubbles in the past.

Stability in the exchange rates are the best things for both China and the US right now, because suppose the RMB does indeed appreciate to the extent of forming a bubble, when it bursts it will be a severe setback to both the American and Chinese economy, not to mention the impact on the global economy.

Besides, keeping a dollar peg saves both sides tens of billions of dollars in hedge costs in trades.

http://www.iht.com/articles/2006/12/27/business/reserve.php

China to use foreign reserves to build strategic resource base

The Associated PressPublished: December 27, 2006

SHANGHAI: China will take advantage of its huge foreign-exchange reserves to expand its stock of strategic resources such as oil and minerals, the state news media reported Wednesday, citing Deputy Prime Minister Zeng Peiyan.

Zeng, who is a senior economic planner, told leaders of the national legislature that the government planned to step up exploration for key resources including oil, natural gas and coal. It also intends to use the opportunity afforded by the country's more than $1 trillion in foreign reserves to improve strategic resource bases, The China Business News, a state-run newspaper, reported.

The report did not provide details on how the government would use funds backed by the foreign-exchange reserves, which cannot directly be used for such purposes because they belong to the central bank.

Zeng criticized China's relatively weak resource base, compared with its huge population of 1.3 billion people.

China has 12 percent of the world's known mineral reserves, ranking third after the United States and Russia, he said. But huge demand means that supply increasingly falls far short of consumption in many areas.

The trend worries Communist Party leaders who have a long viewed self-sufficiency as a strategic priority. Newspapers also published front-page reports Wednesday quoting President Hu Jintao as having emphasized the need to conserve scarce resources while protecting the environment.

Zeng said China would hasten the development of deep-sea oil and gas and newly discovered onshore fields to increase oil and gas output.

"By 2010, we hope to form a number of important strategic mineral resources bases in the west and make breakthroughs in exploration work in the eastern and central parts of the country," Zeng was quoted as saying by Xinhua, the official press agency.

http://news.bbc.co.uk/1/hi/business/6211513.stm

China mulls energy reserves spend

China has signalled that it could use its vast foreign exchange reserves to bolster its strategic energy resources.
Vice-Premier Zeng Peiyan said China needed to speed up the hunt for fresh oil and natural gas supplies.

China's foreign exchange reserves are the world's largest at more than $1 trillion (£511bn), supported by the country's strong global exports.

China is keen to secure future reserves of oil, coal and other raw materials needed to fuel its booming economy.

Earlier this year, Beijing hosted a summit of African leaders, at which access to Africa's natural resources was discussed in return for Chinese investment in Africa's roads and railways

Price controls

China should "take advantage of the fact we have quite large foreign exchange reserves to enhance our national strategic energy reserves", Mr Zeng told the standing committee of the Chinese parliament.

He added that the country should establish a coal resources reserve system, the official Xinhua news agency reported.

Mr Zeng's comments came as Chinese state-run oil refiner Sinopec revealed that it had been handed a 5bn yuan government rebate to compensate it for refining losses.

Sinopec, Asia's biggest oil refining company, was hit by a 12.58bn yuan loss during the third quarter of 2006, up from 6.6bn yuan a year earlier.

Analysts said the surprise rebate was, in effect, a subsidy for Beijing's refusal to allow Chinese domestic petrol and diesel prices to rise as fast as international markets.

'Balanced level'

Separately, China said it planned to increase efforts to make its currency, the yuan, more flexible and allow market forces to play a bigger role in setting its value.

The yuan has inched higher ever since Beijing loosened its peg to the dollar in 2005 and revalued it by 2.1%.

But central bank governor Zhou Xiaochuan said China was committed to keeping the yuan at a "reasonable, balanced level".

Critics say the yuan remains heavily undervalued, allowing China to keep its export prices low.

A high-level US delegation, including US Treasury Secretary Henry Paulson, visited Beijing earlier this month to press China on its huge trade surplus and the value of the yuan.

China promised a more flexible currency policy to help close the trade gap with the US, which is set to reach a record $229bn by the end of 2006.