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   Author  Topic: RE: virus: The dollar vulnerability  (Read 961 times)
Blunderov
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"We think in generalities, we live in details"

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RE: virus: The dollar vulnerability
« on: 2006-01-10 02:04:35 »
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[Blunderov] It's beginning.

http://www.huffingtonpost.com/2006/01/09/china-to-give-up-on-dolla_n_13535.h
tml

Feed: The Huffington Post | Raw Feed
Title: China To Give Up On Dollar, Invest In Yen, Euro... 

China has resolved to shift some of its foreign exchange reserves -- now in
excess of $800 billion -- away from the U.S. dollar and into other world
currencies in a move likely to push down the value of the greenback, a
high-level state economist who advises the nation's economic policymakers
said in an interview Monday.

As China's manufacturing industries flood the world with cheap goods, the
Chinese central bank has invested roughly three-fourths of its growing
foreign currency reserves in U.S. Treasury bills and other
dollar-denominated assets. The new policy reflects China's fears that too
much of its savings is tied up in the dollar, a currency widely expected to
drop in value as the U.S. trade and fiscal deficits climb.




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MoEnzyme
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infidel lab animal

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RE: virus: The dollar vulnerability
« Reply #1 on: 2006-01-10 04:35:21 »
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Or perhaps rather its been a long time coming, certainly since 2001 anyway.

-----Original Message-----
>From: Blunderov <squooker@mweb.co.za>
>Sent: Jan 10, 2006 1:04 AM
>To: virus@lucifer.com
>Subject: RE: virus: The dollar vulnerability
>
>[Blunderov] It's beginning.
>
>http://www.huffingtonpost.com/2006/01/09/china-to-give-up-on-dolla_n_13535.h
>tml
>
>Feed: The Huffington Post | Raw Feed
> Title: China To Give Up On Dollar, Invest In Yen, Euro... 
>
>China has resolved to shift some of its foreign exchange reserves -- now in
>excess of $800 billion -- away from the U.S. dollar and into other world
>currencies in a move likely to push down the value of the greenback, a
>high-level state economist who advises the nation's economic policymakers
>said in an interview Monday.
>
>As China's manufacturing industries flood the world with cheap goods, the
>Chinese central bank has invested roughly three-fourths of its growing
>foreign currency reserves in U.S. Treasury bills and other
>dollar-denominated assets. The new policy reflects China's fears that too
>much of its savings is tied up in the dollar, a currency widely expected to
>drop in value as the U.S. trade and fiscal deficits climb.
>
>
>
>
>---
>To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l>

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I will fight your gods for food,
Mo Enzyme


(consolidation of handles: Jake Sapiens; memelab; logicnazi; Loki; Every1Hz; and Shadow)
Blunderov
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RE: virus: The dollar vulnerability
« Reply #2 on: 2006-01-11 01:38:42 »
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[Blunderov] Gold is good. It may look a bit expensive now but later current
prices may look like a thief's bargain. Get some today is my thinking.

The link below is a real eye opener
Best Regards.

http://members.aol.com/_ht_a/tma68/griffin.htm

<snip>
THE MANDRAKE
MECHANISM
The Method by which the Federal Reserve creates money out of nothing; the
concept of usury as the payment of interest on pretended loans; the true
cause of the hidden tax called inflation; the way in which the Fed creates
boom-bust cycles.

In the 1940s, there was a comic strip character called Mandrake the
Magician. His specialty was creating things out of nothing and, when
appropriate, to make them disappear back into that same void. It is fitting,
therefore, that the process to be described in this section should be named
in his honor.

In the previous chapters, we examined the technique developed by the
political and monetary scientists to create money out of nothing for the
purpose of lending. This is not an entirely accurate description because it
implies that money is created first and then waits for someone to borrow it.
On the other hand, textbooks on banking often state that money is created
out of debt. This also is misleading because it implies that debt exists
first and then is converted into money. In truth, money is not created until
the instant it is borrowed. It is the act of borrowing which causes it to
spring into existence. And, incidentally, it is the act of paying off the
debt that causes it to vanish.1  There is no short phrase that perfectly
describes that process. So, until one is invented along the way, we shall
continue using the phrase "create money out of nothing" and occasionally add
"for the purpose of lending" where necessary to further clarify the meaning.

So, let us now...see just how far this money/debt-creation process has been
carried -- and how it works...

... Summary

The American dollar has no intrinsic value. It is a classic example of fiat
money with no limit to the quantity that can be produced. Its primary value
lies in the willingness of people to accept it and, to that end, legal
tender laws require them to do so. It is true that our money is created out
of nothing, but it is more accurate to say that it is based upon debt. In
one sense, therefore, our money is created out of less than nothing. The
entire money supply would vanish into the bank vaults and computer chips if
all debts were repaid. Under the present System, therefore, our leaders
cannot allow a serious reduction in either the national or consumer debt.
Charging interest on pretended loans is usury, and that has become
institutionalized under the Federal Reserve System. The Mandrake Mechanism
by which the Fed converts debt into money may seem complicated at first, but
it is simple if one remembers that the process is not intended to be logical
but to confuse and deceive. The end product of the Mechanism is artificial
expansion of the money supply, which is the root cause of the hidden tax
called inflation. This expansion then leads to contraction and, together,
they produce the destructive boom-bust cycle that has plagued mankind
throughout history wherever fiat money has existed. <snip>




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Blunderov
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RE: virus: The dollar vulnerability
« Reply #3 on: 2006-01-11 17:17:54 »
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[Blunderov] 2006 threatens to be just as 'interesting' as 2005 was. "Looming
privation" of energy resources?

"What a country calls its vital economic interests are not the things which
enable its citizens to live, but the things which enable it to make war.
Gasoline is much more likely than wheat to be a cause of international
conflict."
Simone Weil - 'The Need for Roots'.*

Another storm petrel.

http://www.SmirkingChimp.com/article.php?sid=24355

'2006: The year of oil collapse?'

<snip>

With the cratering of the housing bubble, the U.S. economy has to fall on
its ass. The global economy is likely to fall on its ass, too, since so much
of it depends on the decisions of Americans to take out exotic loans for
buying houses they can't afford. Large numbers of jobs will vanish in
construction, remodeling, real estate sales, and the various mortgage
rackets -- those things precisely related to the recent gains in GDP.

The sheer falloff in new mortgages will send a tsunami through financial
markets addicted to continuous supplies of new "money" to preserve the
illusion of expansion. I'd called for a Dow-4000 late in 2005. I think that
was just an error in timing, and I still call for the Dow to sink into that
range, or worse, in 2006. This will represent a moment of painful clarity
for market professionals, as they realize that an industrial economy and the
finance that serves it must be based on the expectation of generating real
future wealth, not on zero-sum rackets, games of monetery musical chairs, or
casino legerdemain. Hedge funds, which depend on predictable stability, will
be especially vulnerable. They will certainly take some large banks down
with them when they go. I'll call for the so-called government sponsored
entities of Fannie Mae and Freddie Mac to groan under and then drown in a
sea of nonperforming loans, probably with overtones of criminal
irresponsibility.

If these things occur, ugly things would happen to the dollar. I would
predict an episode something short of hyperinflation -- say a rapid 30
percent drop in dollar value -- with a later deflation in the price of
things like houses, paintings by Childe Hassam and many consumer goods.
Which means that standards of living will fall across the board as incomes
vanish with jobs, and food and energy prices rise -- while Americans try to
shed their houses at the same time that consumer products sit unsold on the
shelves of WalMart, Target and Best Buy. This will spell the beginning of
the end for the chain store universe.

The commercial airline industry is already whirling around the drain. 2006
will send it decisively down that drain. Since we cannot do without aviation
in a nation as large as the United States (with train service on the level
with Bolivia), the government may have to take over the crippled air routes.
If that happens, then service will certainly be greatly diminished. Fewer
people will be flying under the circumstances, anyway, but there is no
reason to believe that this will all occur smoothly. Among other things,
huge pension obligations would remain to be worked out. </snip>


Jake Sapiens
Sent: 10 January 2006 11:35
To: virus@lucifer.com
Subject: RE: virus: The dollar vulnerability

Or perhaps rather its been a long time coming, certainly since 2001 anyway.



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Blunderov
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RE: virus: The dollar vulnerability
« Reply #4 on: 2006-01-13 16:50:21 »
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[Blunderov] Another writer who is uneasy about the possibility of an
economic tsunami is Patrick Doherty. News of the strategic alignment of
China and India vis a vis oil have done nothing to diminish his misgivings.

The upside is that the now dawning realisation of where the epicentre of
world affairs actually resides may offer the opportunity to change the
narrative away from Iraq and the Middle East.

I have a feeling that the West is going to have to bite the bullet and go
nuclear on a large scale. Already France generates something like 40% of its
electricity with reactors. I can't imagine that Japan will have any option
at all if things get tight.

I foresee very large public transport systems being built, where they do not
already exist, and a growing problem of how to dispose of the waste from
nuclear plants.

Happy w/e to all. 



http://www.tompaine.com/articles/20060113/china_and_india_change_the_game.ph
p


China And India Change The Game

What better to shake Washington out of its strategic tunnel vision than a
new alliance over oil between the world's two most populous countries? An
article that appeared last night in the Financial Times states that, "China
and India, the world's two fastest-growing energy consumers, on Thursday set
aside long-standing rivalries and agreed to co-operate in securing crude oil
resources overseas."

That's a strategic bombshell. It's also a major opportunity.

First the story. China and India have been busy over the past few years
attempting to secure oil fields and other energy assets for their domestic
or state-owned oil companies. China, for instance, has secured a major deal
to develop Alberta 's tar sands oil deposit, a deposit which places Canada
above Iraq in terms of recoverable reserves. It has sealed deals in Africa,
notoriously with fellow human rights violator Sudan. India has sealed major
energy deals with Iran but, as reported in the FT, "lost out to Chinese
rivals in the race to acquire fields in Angola, Nigeria, Kazakhstan and
Ecuador." China, of course, was recently rebuffed by the U.S. Congress in
its attempt to buy Unocal.

Faced with a market in which politics-be it the U.S. Congress or OPEC or
Hugo Chavez-have an equal if not greater influence on price as economics,
the two have agreed to coordinate their efforts to secure energy resources.
The plan is modeled on their recent joint deal in Syria. India and China
will essentially work together to secure their energy resources without
unnecessarily bidding up the price of those resources. In other words, the
Indians and Chinese have agreed to a consumer's cartel representing 2.3
billion potential consumers.

The significance of the alliance is hard to understate. India and China
represent the two leading sources of increased oil demand globally. Each
have enormous populations that are entering the modern economy at breakneck
speed. As these populations increase their per capita income, they demand
products and services that require higher and higher amounts of
energy-particularly oil for the new cars their citizens want to drive.

Both the Indians and the Chinese are feeling the pressure of diminishing oil
discoveries and flatlined oil production at a time when expansion of their
domestic economies is rapidly increasing demand for energy. One unit of
Chinese gross domestic product, for example, uses three times as much energy
as a unit of American GDP. And 10 times as much as a unit of Japanese GDP.

It is clear is that this pact escalates the global competition for oil. Yet
it does so in a fairly sophisticated way. The two nations have agreed to
distort the market rather than continue to compete and lose to global market
imbalances (India 's concern) or nationalistic politics (China 's).
Together, their combined markets and purchasing power offer an extremely
attractive partner to producing states-especially states like Syria, Iran
and Sudan, who might otherwise feel pressure from Western concerns over
human rights and democracy.

At the same time, the deal demonstrates that neither China nor India can, or
have an interest in attempting to, secure access to oil through military
means, as the British did through World War II and as the United States has
done since. This pact is not a military alliance. However, strategic
resources have a long and bloody history of attracting military protection,
and none less than energy. If this pact does not produce results and if the
balance between oil production and demand continues to weaken, we may in the
future see an Asian equivalent of the Carter Doctrine.

Here in Washington, however, this news offers leading strategic advisers and
their political clients a perfect moment in which to change the strategic
narrative-a false narrative-which has been imposed on America since the
attacks of 9/11.

In Washington, the conventional storyline is still that nuclear terrorism is
the single greatest threat to the United States and should therefore be the
center of our national security strategy. Indeed, John Kerry and George Bush
agreed on this assessment in their debates during the 2004 election. As Col.
Larry Wilkerson  pointed out earlier this week, that assessment is wrong.
And it has been since September 12.

This new alliance offers message-makers the out that they have been missing.
Ever since the White House starting hyping its war on terror to a scared and
underinformed American public as an existential conflict comparable to the
World War II or the Cold War, politicians have refused to say otherwise.
Now, with the failure in Iraq palpable, the arrogation of power so obvious,
and now the rise of a real strategic challenge evident, it is time to change
the story.

And yet, dangers lurk. The administration has released slides from its
forthcoming Quadrennial Defense Review that place an enormous priority on
preparing to deter the rise of a future "near peer" superpower. In other
words, Secretary of Defense Donald Rumsfeld is salivating at the prospect of
a rising China (and the massive weapons budgets such a foe would require).

To rush into the breech claiming China and India are the new grand strategic
threat is to play into Rumsfeld's hands. It would also hasten the economic
disaster that lies just over the horizon. Rather, it is time for really
big-picture thinking to figure out just how we can prevent the increasing
competition over oil to turn into a strategic threat that destroys the
American economy, doing to America what we did to the Soviets. That will
require a new grand strategy that bridges our economy and our foreign
policy.

The time to start is now.

--Patrick Doherty | 


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