China threatens to trigger US dollar crash

[Awesome]

So basically if China sells all of its dollars and buys Euros in return that spells an enormous crash for the US economy right?

To make matters worse, others might get spooked and sell off their dollars for Euros as well.

The have been considering this for the past coupla years now, but the Arab economies are nothing like America's. Of course China would get hurt in the process too, but its pretty much going to get hurt in the long run if its forced to re-evaluate the yuan. Who knows maybe US products might just lose out even further to Chinese goods?

The other issue that America would get pissed and ban all Chinese goods altogether... well I don't see that happening. That's like banning a big percentage of all goods. Where is it going to get the replacement from? Any replacement they'd bring would just hurt their economy further. On the other hand China would continue to at least 'survive'.

 

[Adux]

I am not going to say anything more that,I am sure Neo would agree with me on this or maybe not

You can replace cheap labour and others to a different country such as India, Pakistan, Brazil etc while you cannot replace the 13.3 trillion dollar GDP/Year American Market. Not in the forseeable future. Americans have a grip over the global economy, they can borrow money and people will give them money, cuz if they go down everybody goes down.

 

[Adux]

No country will buy euro than a certain percentage. Euro and Dollar are too inter-tangled anyways. Where is Bull when you need him?

 

[parihaka]

Americans have a grip over the global economy, they can borrow money and people will give them money, cuz if they go down everybody goes down.

Exactly. Every reserve bank in the world has a strategic interest in stablising the US currency. Asim, you really need to understand the implications of the US dollar being the Fiat currency.
China says it can damage the dollar by dumping 1 trillion? At worst it drives the dollar down against the yuan, which America wants anyway, while at the same time turns China into a pariah state for trying to destroy the international medium of exchange. This isn't a support America thing, it's business.
And like Adux says, cheap labour is, well, cheap.

 

[Tiki Tam Tam]

Asim,

I will agree that Parihaka knows this subject rather well.

 

[Adux]

Exactly. Every reserve bank in the world has a strategic interest in stablising the US currency. Asim, you really need to understand the implications of the US dollar being the Fiat currency.
China says it can damage the dollar by dumping 1 trillion? At worst it drives the dollar down against the yuan, which America wants anyway, while at the same time turns China into a pariah state for trying to destroy the international medium of exchange. This isn't a support America thing, it's business.
And like Adux says, cheap labour is, well, cheap.

Thank You , Pari

As much as any of you want to do , or wish for American domination to fall, It is just not going to happen through the dollar route. You guys can dig up or figure some other way. They have compelete control of the world economy. China is in a loose-loose situation.

This has nothing to do with China-bashing,or US chest thumping. In business you just analyze and make an informed decision based on that.

 

[Awesome]

You're talking IFs and I'm too talking IFs.

If China does this in collaboration with others it can pull it off too. You are assuming every country would want to stabilize US currency to save its own. The other countries can just jump on the bandwagon and switch to Euro. Europeans would love it and might even encourage it.

Leaving who to stand by America? Japan? Australia?

Quite frankly I know its far fetched today. But hypothetically a similar move with much larger numbers may just do the trick. May be 1 trillion doesn't do much damage to 14 trillian dollar GDP. But remember this theory floated about 1 year ago and everyone called it fiction, now the Chinese are believing in it enough to make international, serious, without a doubt, threat to America about it.

 

[Adux]

Asim,

Pull what off, US going down will make China dig its own grave along with other economies of the world.
Do what Trick?
We are not assuming anything. Every country still buys treasury bonds, Including China. They are buying as we speak. All the countries in the world keep a major portien of their reserves as dollar. Dollar is the most important currency of the world.

I am not talking if's, you are.

You dont understand Financial Markets, and how globalization has intertwined Economies of the world.
Adu

 

[Awesome]

Dude and I'm saying they will all switch, you're saying they won't.

You're saying they would sit and frown over China while their currency falls as its valued against the dollar. Instead of frowning, they can just switch to Euro and reduce the impact. It will be bad for them still, but it will be doomsday for America. Just imagine, if right now, everyone just decides to switch? America would be the only country with the surplus of dollars and everyone else would have Euros. Surely you can see my point of how this scenario is much worse for America than the world.

 

[Adux]

Switch When Asim?
So just by switching reserves and stop funding to American economy, What will it do. Stop global economic crash? No it wil not. The factors are not just the two. Situation is worse for the world as for America. All this wealth brought by companies and through stock markets will just go away in poof.
Real estate prices in India, Europe, Companies in China will close down, Japanese car makers will not have buyers.

The only way to switch from dollar, making a dollar a non-entity will take atleast 30-40 years. US needs just 4-5 years to clear of their debts.

You are not aware of how things are.

 

[Awesome]

Japanese car makers will still be selling to the Middle East and Euro markets.

Real estate in middle east would survive since most of the buyers are Europeans not Americans.

Chinese companies would do less business but still the most in the world since the WORLD buys from them.

You keep saying "you're not aware" but then give me a solid reasoning why this won't work! What are the steps America would do if no one comes to their rescue?

 

[Adux]

Japanese car makers will still be selling to the Middle East and Euro markets.

Who are the biggest buyers of middle eastern products like Oil etc, Americans. You have to understand 13.4 Trillion dollar economy goes kabbom, the largest in the world.

Real estate in middle east would survive since most of the buyers are Europeans not Americans.

Where is the European money, when they are closely entangled with the Americans. The first economies to crash after the American will be Chinese, then europeans. And this will happen in SECONDS.

Chinese companies would do less business but still the most in the world since the WORLD buys from them.

The world buys from them? Most of them are for American companies, who in turn sell to the rest of the world.

You keep saying "you're not aware" but then give me a solid reasoning why this won't work! What are the steps America would do if no one comes to their rescue?

I have given you reasoning, but your America will fall love-affair is not letting you see reason. India and Pakistan will crumble, There is no need for any rescueing, cuz people still buy treasury bonds. In a economic crash of America, The world will be in tatters, America will be in tatters and the biggest loosers in this will be Chinese followed by the Indians.

 

[Adux]

[YOUTUBE]

Look at how much Sub-prime debts in America is making Markets accross the world go nuts. Imagine the scenario when the Dollar goes down,

 

[Adux]

French bank BNP Paribas has been the biggest loser in US Sub-Prime Fund crash...

Now Asim,

A French bank went down cuz of American Home-owner's of low credit ratings couldnt payback the money. I hope you see how everything is just way too interwined with the dollar.

 

[Adux]

China dollar attack would be 'foolhardy' : Bush

Aug 8 11:56 PM US/Eastern





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President George W. Bush on Wednesday said China would be "foolhardy" to attempt to push down the dollar in retaliation for US pressure over Beijing's alleged currency manipulation.
Bush said he had not seen the report that Beijing was hinting at such a move, in Britain's Daily Telegraph newspaper, but warned against any attempt by China to hit back at Washington using vast foreign currency reserves.

"That would be foolhardy of them to do that," Bush said in an interview with Fox News, adding he doubted the report was based on sources from the office of Chinese President Hu Jintao.

"If that's the ... position of the government, it would be foolhardy for them to do this."

US Treasury Secretary Henry Paulson meanwhile said on CNBC that suggestions that China was considering selling off dollar denominated assets to hammer the already weakened US dollar were "absurd."

"We have tensions and we have to deal with tensions on both sides ... but overall, both of our countries are committed to a constructive economic relationships," said Paulson, who returned from talks with top leaders in China last week.

China said on Friday it would not be pressured into currency reform as Washington and the US Congress renewed calls for it to speed up changes to make the yuan more market-oriented.

The Telegraph reported that two officials at leading Communist Party bodies had given interviews in recent days warning that Beijing might use more than a trillion dollars in foreign reserves as a political weapon in the event of US sanctions designed to punish Beijing for yuan manipulation.

Described as China's "nuclear option" in the state media, such a move could trigger a crash of the already-falling greenback and a spike in the US bond yields, which could then dampen the beleaguered housing market and put the world's richest economy into a recession.

When asked whether such an option would hurt China more than the United States, Bush said, "Absolutely. I think so."

China reportedly holds some 900 billion dollars in a mix of US bonds.

Bush said the United States and China could resolve their differences "in a cordial way" as opposed to the reported option by Beijing of liquidating its vast holdings of US dollars or through legislation by the US Congress imposing sanctions on China.

He cited a high level "strategic economic dialogue" chaired by Paulson and Chinese Vice-Premier Wu Yi as an effective channel to discuss differences between the two powers.

Bush said the two powers had "a very complex trading relationship" and that it was "very important" for the US economy to have access to the vast Chinese market.

Critics of China in the United States say the yuan currency is undervalued by as much as 40 percent, making Chinese exports cheaper.

Some blame the low currency value for the loss of US manufacturing jobs and a US trade deficit with China that hit 232.5 billion dollars last year, according to Washington's figures.

Bush said Chinese goods had been beneficial for US consumers as they had helped hold down inflation, particularly in the face of rising energy prices.

Life aint that simple as we think