The Chinese government issues a funny article where they bemoan their fortune and open themselves to suggestions as to how to deal with the world's biggest FOREX money stash. Russia warns us to ease up on Iran and North Korea or else and the Chinese warn us to build up our own FOREX funds or else. Funny money means many dangers to our tipsy, warring Empire.
Figures released by the People's Bank of China on January 15 show that at the end of December 2006, China's foreign exchange reserves totaled US$1.0663 trillion, an increase of 30.22 percent from 2005.
During the last two years, China's foreign exchange reserves have grown by US$200 billion annually. Last February, China overtook Japan as the country with the largest foreign exchange reserves in the world.
Along with the deepening of reform and opening up, China has reported sustained economic growth. The influx of foreign investment and the rapid development of foreign trade are the main reasons for the substantial increase in foreign exchange reserves. The inflow of speculative funds and the ballooning trade surplus has caused the US dollar to prevail in China. In normal circumstances, the excess of dollars would have pushed up the RMB exchange rate. To maintain the stability of the RMB, China's central bank has bought almost all the foreign exchange streaming into the country and managed these funds on its assets balance sheet. In this way all the foreign exchange became the country's foreign exchange reserves.
China is on a buying spree. Purse in hand, Hu and Wen flit from continent to continent, discussing this embarrassing problem they must deal with: how to invest all this lovely money, it must make money in return, of course. Or buy something tangible like influence. The World Bank, the International Monetary Fund, they used to be bankers but they are no longer, they trail after the Chinese weeping and wailing and screeching that the Chinese might charge interest rates like their own punishing rates! Oh dearie me.
The collapse of power is near total now. Europe and America have been reduced to threats, con jobs and weeping. On every front, we have to wave guns about and shout that we might get violent if the bank teller doesn't hand over some more cash. Only we are stupid bank robbers, we ask for loans and have signed away the future of our children and grandchildren.
From the same article comes this warning aimed straight at our own faces:
There is a belief among developed countries that foreign exchange reserves should be able to pay for at least three to six months of imports. By the end of 2005, China's foreign exchange reserves were equal to 35 percent of its GDP. According to IMF standards, China's foreign exchange reserves are too large.
Six months of imports? Taking out our calculator, we hem and haw and note that last year's trade deficit with the world was a whopping $800+ billion...this means we must have $400 billion in our FOREX funds. Well, we barely have half of that.
And every penny of it is from LOANS from China and Japan. This use of loans to mask the loss of our FOREX cushion means we are in seriously dire straits. The Commedia del Arf with the poodles in Europe joining the USA blood hound in a chorus of howling doesn't fool either the Chinese nor the Russians.
Lately, I notice the attacks have shifted to accusing both countries of...oh my...pollution! I remember our own industries here in America and in Europe: the Rhine was so polluted, it caught on fire and so did the Ohio River, for example. Swimming in the Atlantic which wasn't even in the NY harbor, was like swimming in the toilet of a Gold's Gym franchise. In Pennsylvania, one had to scrub away the black grime on street signs to read them.
The air in LA was often unbreathable and ditto NYC despite the ocean breezes. Power plants pumped coal smoke from short, fat stacks right smack dab in the middle of the city in Greenpoint!
It is much cleaner now only because we removed all our dirtier industries to places like China. They pay for this, we get the goodies they produce and we give them pieces of paper which becomes part of their very dangerous FOREX loot.
Russian new chief negotiator at six-party talks urged the United States to lift financial sanctions against North Korea, Reuters news agency reports.
“The United States should make some steps towards the (North) Koreans by lifting financial sanctions,” Alexander Losyukov was quoted by the agency.
We won't cooperate. Or rather, we will grudgingly pretend to heel only we won't, we will snap at the Russians, snap at the Chinese. Unfortunately, the Chinese can withhold our daily bones and Purina Dog Chow Mein.
U.S. Assistant Secretary of State Christopher Hill has described his talks with Kim Kye-Gwan, top nuclear negotiator from the Democratic People's Republic of Korea (DPRK), in Berlin as useful and productive, the State Department said on Wednesday.
The Chinese have already thoughtfully drawn up and set before us, the peace treaty they want us to sign with North Korea. We are balking and that FOREX pile in Beijing is getting bigger and bigger and at this rate, will reach $2 trillion in just 3 or less years. If our debt clock reaches $12 trillion in the same time scale (a very likely possibility) we become Argentina. Our SUV will, at midnight, turn into a pumpkin again and the mice will run off and we will be dressed in rags and no prince will come to fetch us.
Since the middle of 2006, the frenzied condominium market here and in several other big cities like Las Vegas, Miami and Boston has collapsed. Once roaring sales have slowed to a trickle, sparse inventory has mushroomed into a glut and soaring prices have flattened out and started falling.
In many cities, banks have significantly scaled back loans to condominium builders. Some have demanded that developers sell half or more of the units in a building before even beginning construction.
In hopes of salvaging something from their costly plans, hundreds of developers like Mr. Franco are looking to the strong market for apartments, planning to rent their units for at least a couple of years while waiting for today’s condo surplus to shrink. Mr. Franco and Mr. Blum hope to break ground on what will be a somewhat less expensive building this spring.
Who is going to rent? As usual, when things go bad, they turn places into slums. Move in illegal aliens, eight to a room. In Manhattan during the grinding depression of 1892-1896, most of lower Manhattan piled in the refugees pouring out of Europe that was in even worse shape. They lived a dozen to a room, my own father-in-law's Jewish family did piecework in their tiny room during the day and then everyone slept all over the place at night. It was very gruelling.
As I keep warning, the course we chose leads to exactly that.