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« Rubber Ducky: Understanding Asian Diplomatic Naval Games | Main | Pax China »




Who do u think is going to be the next major player to jump the USS Titanic?

Is it Opec or EU??

Would it be THE eye opening moment for US?


It will be interesting to see what happens after the Fed meeting on the 11th. I fully expect Helicopter Ben to drop US rates at least a quarter point, more likely a 1/2 point.

What will China & Japan do? I don't see them intervening to prop up the dollar. It costs a lot of money to prop up the dollar, and it costs Bernanke nothing to cut rates. Bernanke has a lot more of nothing than China & Japan have FOREX reserves.

Japan is not going to be happy to see the yen appreciate against the dollar. China isn't going to be happy to see the yen depreciate against the yuan. I think China wants the yuan to appreciate to control inflation, but it can't do that when the yen is dropping as fast as the dollar.

I suspect the "right" thing is to raise the value of both the yuan and yen, while the euro drops, and everyone punishes the US for stupid fiscal policy. But the right thing is going to be painful for a lot of people, and when does anyone ever do the right thing?



It might depend on the deal worked out between China and Japan. Seems like they are very keen on the Co-Prosperity Sphere thing...they might create an artificial currency and push the value of that currency up.

It is interesting to note that China is issuing bonds at this time...the timing suggest they are testing waters but for what purpose?

They probably do not see issuing bonds as getting loans - they don't need the money. They already have enough problems dealing with $1.4 trillion dollars surplus (soon to be $2 trillion next year this time).

I am guessing large - trying to find out who is interested to be on their side or fence sitting? A modern form of tribute like the old days??

Elaine Supkis

I, too, am still puzzled by this. But we will see what happens next. I can't wait.


Part of being the world's reserve currency is being a safe haven in times of trouble. US bonds have served that role for a long time. Maybe the Chinese are preparing for the yuan to take over from the dollar.


I read news that China is thinking of offering "China Bonds" to investors. Perhaps this is the first step for them to replace the dollar as a "safe haven".

Elaine Supkis

You are all probably right about this.

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