Category Archives: TEOTWAWKI
China Proposing Dumping $2 Trillion U.S. Dollars!
This is the beginning of the final end for the dollar. If China revalues it’s currency to make it more competitive with the dollar while dumping ours can you imagine what the so called “main street” everyone pretends to care about will be paying at Wal-Mart? Access to cheap goods is the only thing that allows us to keep up the illusion of still living in a first world country, and China is about to take that away from us.
From Xinhua:
BEIJING, April 23 (Xinhua) — China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.
The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.
China’s foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.
Tang’s remarks echoed the stance of Zhou Xiaochuan, governor of China’s central bank, who said on Monday that China’s foreign exchange reserves “exceed our reasonable requirement” and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.
Meanwhile, Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.
Zero Hedge has great analysis. If you think inflation is bad now wait until the world follows China’s lead and dumps the dollar.
Dollar Burns as Fed Policies Come Home to Roost
I told you to start buying stuff you need. Everything is going to get more and more expensive as the dollar drops. From Financial Times:
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The dollar dropped to its lowest level in more than two-and-a-half years on Thursday as buoyant risk appetite prompted investors to sell the currency to fund carry trades.
Analysts said robust corporate earnings figures had boosted hopes over global growth, while the prospect that US interest rates would remain at ultra-low levels was fuelling demand for carry trades, in which low-yielding currencies such as the dollar are sold to finance the purchase of riskier, higher-yielding assets elsewhere.
Market rumour that the People’s Bank of China was poised to implement of substantial, one-off revaluation of the renminbi also weighed on the US currency.
The dollar index, which tracks its progress against a basket of six leading currencies, fell 0.8 per cent to 73.785, its weakest level since August 2008. Traders said the stage could now be set for the index to target the record low of 70.698 it hit in March 2008.
The dollar also dropped 0.9 per cent to a 16-month low of $1.4641 against the euro, fell 1 per cent to a 16-month trough of $1.6560 against the pound, lost 0.8 per cent to a record low of SFr0.8817 against the Swiss franc and plunged 0.7 per cent lower to Y81.93 against the yen.
The Australian dollar, which with its relatively high yield and commodity-linked status has been a favourite target for carry trade investors, surged to a fresh 29-year high against the dollar, rising 0.6 per cent to $1.0758.
Lee Hardman at Bank of Tokyo-Mitsubishi UFJ said dollar weakness continued to be mainly driven by widening expectations of monetary policy divergence between the Federal Reserve and other major central banks.
He said the downgrade of the outlook of US sovereign debt by rating agency Standard & Poor’s on Monday had reinforced this dynamic by increasing expectations that the Fed would have to keep interest rates at ultra-low levels for longer to offset the negative impact from the expected fiscal tightening.
Mr Hardman added, however, that while near-term concerns over monetary policy divergence and heightened US fiscal concerns were genuine, he believed there was a strong case that current dollar weakness was overextending.
“With market liquidity thinning heading into the Easter holidays, it provides the ideal conditions for a dollar undershoot relative to fundamentals,†he said.
This weakness is coupled with some of the worst crop yields in recent history – especially things like cotton. Time to go out and buy the things you will need next year,because you won’t be able to soon.
Dollar Continues Slide into Collapse
The AP tries to put a pretty face on this but as your money loses buying power you’re not going to care about stock windfalls:
NEW YORK (AP) — The dollar fell against most major currencies Wednesday, hitting a 15-month low against the euro, after solid earnings from major U.S. companies and a healthier reading on the housing market fueled investors’ appetite for currencies linked to higher benchmark interest rates.
Higher interest rates tend to support investor demand for a currency, since it can generate a bigger return on investments denominated in that currency. The Federal Reserve has kept its key rate near zero since December 2008, while most of the world’s other central banks are raising interest rates.
The euro jumped to $1.4514 in afternoon trading Wednesday from $1.4340 late Tuesday. Earlier, the euro hit $1.4547, its highest point since January 2010.
The dollar had advanced against the euro earlier in the week as speculation mounted that Greece would need to restructure its debt, but that fear wasn’t weighing on the euro Wednesday as investors turned to assets of countries where interest rates are higher.
Greece’s finance minister also said that the country’s debt was “absolutely sustainable.”
Investors’ distaste Wednesday for the low-yielding dollar came after good news from major corporations and the troubled housing sector. The Commerce Department said that home construction rose 7.2 percent in March from February. Building permits, an indicator of future construction, rose 11.2 percent after hitting a five-decade low in February.
Strong earnings from technology companies in the U.S., including those from Intel Corp. and Yahoo Inc., pushed U.S. stocks higher, with the Dow Jones Industrial Average rising 1.5 percent. Oil prices settled above $111 per barrel on the New York Mercantile Exchange, while gold settled at $1,498.90 an ounce, its seventh consecutive day of gains.
Stock up now.
Government Handouts Top Tax Revenue
This is why we’re doomed. Via Fox Business:
U.S. households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the Great Depression.
Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things.
But that’s more than the $2.2 trillion households paid in taxes, an amount that has slumped largely due to the recession, according to an analysis by the Fiscal Times.
Also, an estimated 59% of the 308.7 million Americans in this country get at least one federal benefit, according to the Census Bureau, based on 2009 data. An estimated 46.5 million get Social Security; 42.6 million get Medicare; 42.4 million get Medicaid; 36.1 million get food stamps; 12.4 million get housing subsidies; and 3.2 million get Veterans’ benefits.
And the handouts from the government have been growing. Government cash handouts account for a whopping 79% of household growth since 2007, even as household tax payments–for things like the income and payroll tax, among other taxes–have fallen by $312 billion.
Obviously this is completely unsustainable, even in the short term. But if you cut entitlements what will the lefty protests look like? This?