Japan and China lead flight from the dollar

[aggiesal]

Source: UK Telegraph

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 5:21pm BST 17/10/2007

Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.
# Fears of dollar collapse as Saudis take fright
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# Ambrose Evans-Pritchard: This bear is not capitulating

Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. "These numbers are absolutely stunning," said Marc Ostwald, an economist at Insinger de Beaufort.

Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said.

The release comes a day after the IMF warned that the dollar was still overvalued and likely to face "some depreciation in the medium term".

The dollar's short-lived rally over recent days stopped abruptly on the data, increasing pressure on US Treasury Secretary Hank Paulson to shore up Washington's "strong dollar" rhetoric at the G7 summit this week.

The Greenback has already fallen below parity against the Canadian Loonie for the first time since 1976 and has touched record lows against a global basket. It closed at $2.032 against the pound.

David Woo, an analyst at Barclays Capital, said Washington was happy to see the dollar slide. "They don't care so long as the fall is not disorderly. They see it as a way of correcting the deficit. " he said.

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Read more: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/16/bcnchina116.xml

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Let the fun begin.

[LakeSamish706]

1. Nothing like a great leadership to be able to accomplish this wonderful...

task in just over 6 years... Not sure where this country is headed, but it's not looking good to say the least.

[hatrack]

2. Interesting times - esp. with the Canadian Dollar at $1.05 as of today

Interesting times, indeed.

[DLnyc]

10. not quite that high; day's top probably below $1.028

http://finance.yahoo.com/q/bc?s=CADUSD=X&t=5d&l=on&z=m&q=l&c=

still, you are right that things are getting interesting.

[ChairmanAgnostic]

11. a truly effective chinese curse, it is.

timeless.

[dickbearton]

25. Interesting times, what the hell is so interesting about getting it shoved up you.

Everybody in America is poorer for this.

[DLnyc]

12. not quite that high; day's top probably below $1.028

http://finance.yahoo.com/q/bc?s=CADUSD=X&t=5d&l=on&z=m&q=l&c=

still, you are right that things are getting interesting.

[phantom power]

3. The only thing that's "stunning" to me is how long this took to start happening.

[aggiesal]

5. My favorite line, ...

Washington was happy to see the dollar slide.

[pampango]

8. Yeah, I could see that our exporters are happy about the dollar slide,

but I can't imagine anyone else is happy about it.

[dickbearton]

27. The Criminal Bush isn't happy destroying American foreign policy...

Now the crooks are determined to destroy America itself.

[lvx35]

33. Oh c'mon! That's how we will pay back the trillion we owe China!

devalue the dollar till it costs $1,000,000 for a candy bar! Then pay them back!

I smell something really stupid behind the scenes here...

[sinkingfeeling]

4. Wheeeeee! Get ready for the big slide!! China's starting to bail.

[Alcibiades]

6. It's time to get a government job

It's global financial crisis time. The only people able to keep up with inflation will be the folks who work for the folks who print the money.

[KamaAina]

7. The name "Ambrose Evans-Pritchard" is a major red flag.

He was the leader of the pack of press hyenas who jumped on President Clinton. His book about Clinton is published by wingnut outfit Regnery. 'Nuf ced.

[dickbearton]

29. That doesn't surprise me...

The Telegraph is a British RW shit sheet.

[gateley]

9. Could someone explain this to me?

Last sentence:

David Woo, an analyst at Barclays Capital, said Washington was happy to see the dollar slide. "They don't care so long as the fall is not disorderly. They see it as a way of correcting the deficit. " he said.

[pampango]

13. As the dollar falls our exports get cheaper for others to buy and

the things we import get more expensive, so we buy less of them. Like now Canadians can buy more of our stuff with the same amount of Canadian money, while we have to pay a lot more to buy the same Canadian stuff we bought a year ago.

The idea is that a cheaper dollar will reduce the deficit by decreasing imports and increasing exports.

[jordi_fanclub]

15. Only one "little" problem with that kind of rethoric...

When they say: "the things we import get more expensive, so we buy less of them."

They forget to explain that to buy LESS things you need to pay MORE !!!

(because don't exists anyone worldwide interested to be paid the SAME... in "cheap" dollars)

[pampango]

17. It depends on how much of the imports you are still buying and how much they cost.

If you were buying 6 shirts for $60 before the dollar dropped, the exporter may now want $12 for the same shirt, so you can only buy 5 shirts. You are paying more per shirt and getting fewer of them. That's the reason that, in theory, the amount of shirts imported into the country would decrease.

[gateley]

20. Okay. I understand the point he was making now. Thanks for your help. nt

[liberation]

23. Except that we have very little to no industry left...

Even our heavy industries like Boeing, for example, rely of goods made else where. This is, for the most part little of the intermediate raw materials are now processed in the US of A.

The irony, is that the US has plenty of raw materials. For example, most of the aluminum used to build the Boeing 777 comes from the US, except that most of the sections of the plane are made by Mitsubishi in Japan. So the ore is extracted here, sold for cheap to Japan, who transforms it into plane sections... that are then sent back to Seattle to be assembled into a final product. The theoretical "cheap" plane would only happen if those sections were manufactured in the US of A. Since most of the plane is made of Japanese manufatured parts, you can't pass the savings as you are tied to the cost of not the raw materials, but the "refined/transformed" materials. The same situation applies to the auto industry, had the US still kept its industrial base, the US could be flooding the rest of the world with cheap cars. But since most of the car parts are made else where, the cost is minimal.



Thanks to our MBA elite, who have managed to even screw up that part of having a weak dollar: We depend on imports even when generating exports. Brilliant! We are stuck with a weak currency and having to sell expensive exports... sometimes you couldn't make this shit up. But they have managed to screw even something that is well understood and that should be expected in the cyclic nature of economic cycles.

Anyhow, good job idiots! As we have suffered through our very first MBA-president, I fail to understand why the business class is not run out of the country in tar and feathers....

[madrchsod]

31. you my friend are exactly right

all those sub assemblies that went to mexico and beyond because american workers were over paid worthless bums...needless to say we have become the most efficient in anytime in our history,produce better products,and create more profits and get paid less each year...yes mba degrees are not worth the paper they are printed on

[UncleSepp]

34. Ah, but we do export a lot of food, especially basic staples!

Oh wait. That's not really a good thing, is it? The price of grain is set globally, as it is a global commodity. That grain price will rise just through the dollar's fall, and also due to upward pressure from other market factors such as failed harvests and increased global demand. If American grain buyers can't afford it, even more of it will go overseas. Besides, it's just bread. So the price of bread rises to $10 a loaf. What harm could that possibly do? After all, we can always plant potatoes!

*sigh* What a colossal clusterf%ck. I'm sure we'll all be comforted by the trade surplus we'll have when the food riots start.

[OutNow]

14. Is It Wiemar Republic Time Again?

Remember the picture of the German man pushing a wheelbarrow full of marks to pay for one day's food. Economic policy can do that, and in the Wiemar Republic's case, reducing the value of the mark to pay off WWI reparation payments with cheaper currency was the economic plan of the day. It got a bit out of hand. And we all know what happened next in Germany in the 20's and early 30's, don't we.

When the s*it hits the fan in our country, and it will, probably in the next couple of years when we have a Democratic president that is trying and failing to fix the incredible mess left behind by the Bush crime family, watch for the resurgence of the right wings nuts trying to find someone to blame - the Jewish bankers, the liberal elites who "lost" Iraq, etc.

This is serious business.

[Devlzown]

30. That's why we're hearing the war drums again.

I know we've been at war for years now, but we're hearing "World War III" out of Bush's own mouth. For a president to even mention a coming world war, even in passing, should make everyone take notice.

[UncleSepp]

35. Bingo.

Our situation is more like WW1. Our quick little war in France... er, Iraq... against the supporters of those Serbian... um, Al Qaeda terrorists turned into a sucking pit of no escape. The resurgent right that's coming is going to make the Bush regime seem comical and quaint.

I carry a hundred thousand Reichsmark bill in my wallet next to my dollars, btw. It's there as a reminder of how far things still have to fall.

[Hydra]

16. "It can't happen here! We're a world superpower!!!"

This should be fun. Any bets on how many die because of this?

[liberation]

22. Not that many, in my opinion, if any at all...

Never underestimate that a superpower that can't pay or feed its soldiers is irrelevant, and no matter what temper tantrum the people at the top throw, most soldiers won't do diddly squat if the don't get paid.

See what happened in the old Soviet Union, no matter what their super power status was at the time of their collapse, their military might did nothing to prevent its demise. In fact, it was the cost of that military power that did them in.

In fact, if anything unpaid troops tend to have nothing to lose by stop following orders and bite the had that is not feeding them. This is as true now, as it was when the Roman legions had it with the empire when the Pax Americana was coming to an end.

[jeff30997]

26. But the US don't need the troops anymore.

Never fear Blackwater is here!:sarcasm:

[liberation]

28. Blackwater is the least of my worries, mercenaries by definition will only "kill for money"

Paid assassins don't work for free, and I doubt any blackwater thug will move a single finger for a bunch of worthless dollars. Mercs have a tradition of being the first ones to turn on their masters as soon as somebody else pays a higher price...

A worthless dollar means that the US is a true paper tiger, lots of bark no bite.... Heck the nukes will not operate w/o

[knight_of_the_star]

18. Attention passengers please return to your seats and fasten your seatbelts

In the event of a water landing your seat cushion can be used as a flotation device.


Well time for everyone to buckle up and brace for impact cause this is about to get damn ugly.

[nebula]

19. The Canadian Dollar now worth more than U. S. Dollar

1 Canadian Dollar = $1.026 American
1 American Dollar = $0.974 Canadian

http://www.x-rates.com/

Today's close was the highest exchange for Canada since the mid-1970s. If the Canadian Dollar rises to $1.07, it will be the highest exchange rate for Canada in decades, eclipsing the record of $1.06U.S. set in 1957.

Back in 2002, the Canadian Dollar was only worth about $0.63 U. S. Dollars. Your American Dollar was worth over in $1.50 Canadian. I was last in Canada in 1999 when the values were similar. It was great getting $75 hotel rooms for less than $50.

[Stuckinthebush]

21. Get out of here!

That's bad.

We are sooooo screwed.

[Skink]

24. The Looney takes over....

OOOOhh!!

Calling Merv.

[razors edge]

32. Rats, Ship. n/t