Posts Tagged ‘U S Treasury’
Monday, May 17th, 2010
Giordano Bruno
Neithercorp Press
On August 23rd, 2009, we reported on a Chinese “People’s Daily” article which revealed that China had begun the process of dumping its long term U.S. Treasury bonds. 3.1% in a very short period of time. To the half main stream educated wannabe economist, this may not seem like much, and the news may roll off his back. So, it is up to Neithercorp to educate them on why this recent dumping of treasuries is such a big deal.
First, it has been nine years since China has dropped so many U.S. bonds in such a short period of time, and interestingly, it was right around this time that the U.S. Dollar value began to plummet, with a short upwards spike in 2006, and then a continued drop until now.
As you can see from the chart above, overall value of the U.S. Dollar compared to other currencies has faltered significantly in the past decade.
People who do not understand the significance of U.S. debt held by China often argue that China held less treasury bonds a year ago than they do now, so a 3.1% sell off is nothing to write home about. Their problem is that they are not looking at the big picture when making this assessment.
In the past, the U.S. deficit has been a cumbersome, but seemingly manageable affair, at least in the eyes of foreign investors. This changed with Barack Obama’s recent announcement that the U.S. deficit over the next ten years is now projected at $9 Trillion. As with all figures negative to the Government, this is a conservative estimate. The true figure will probably end in the double digits, which is a disaster for the American economy, simply because this kind of debt is completely unconquerable. Our current annual GDP is $14 trillion and falling. Around 70% of America’s economy is supported by the retail and service sector, which are also continuing to lose strength as the current recession drags on. This means that our GDP is getting smaller while our deficit is exploding. Soon, the national debt will be as large or larger than our entire GDP.
Based on these fundamentals, no economy can sustain itself. Due to this massive projected deficit, a comparison of all past Chinese holdings of T-bonds is irrelevant. The only possible way for the U.S. to continue on this path now is through foreign investment in Treasury Bonds. China is one of the few countries which has the national savings necessary to purchase our debt on such a scale. We NEED China to continue not only buying treasuries, but buying them at an ever increasing rate as each year passes. There is no way around this. However, as reported by the “People’s Daily”, China has not only stopped buying U.S. bonds, they have begun dumping the bonds they have already accumulated!
http://www.reuters.com/article/newsOne/idUSTRE57K4XE20090821
Hopefully, the gravity of this situation is starting to set in with any “green shoots” economists out there who still have blind faith in the dollar.
Some may argue that it is not in China’s best interest to dump treasuries because such a move would hurt their economy as well. This is an assumption based on nothing, as I will show.
In the past, China has used a favorable trade deficit between themselves and the U.S. to fuel their economy. Chinese labor is cheap, their goods are cheap, and they can be exported to the U.S. (the largest buyer of Chinese exports) for little additional cost……as long as the Greenback remains strong, that is. If the dollar were to drop in value against the Yen and other currencies, China would lose its trade deficit advantage, its exports would become more costly, and its current industry would collapse.
This is why China has continued to buy U.S. Treasuries and prop up the dollar far longer than was rationally prudent. Keeping the greenback strong meant China would be able to keep its export economy going. Until recently, China needed us as much as we need them, but this has changed.
Americans are no longer buying Chinese goods like they used to. Chinese exports have dropped consistently month after month, in some cases as much as 26%:
http://www.bizchina-update.com/content/view/2526/2/
http://www.telegraph.co.uk/finance/economics/5502353/Chinese-exports-fall-for-seventh-month.html
While it is difficult to gage China’s unemployment numbers because of the Communist Government’s knack for misreporting statistics even more often than we do here in the U.S., it has become evident from China’s college graduate suicide rate that jobs are simply not available:
http://www.telegraph.co.uk/news/worldnews/asia/china/5907368/Wave-of-suicide-sweeps-Chinas-graduate-class.html
So, China’s exports continue to plummet, the U.S. dollar continues to plummet because of inflation created by the privately controlled Federal Reserve, and the U.S. deficit continues to expand, further threatening any recovery.
The bottom line: China has nothing to gain any longer by investing in U.S. debt.
Their exports are falling anyway, and the dollars they already hold are losing value as I write this. China’s export economy is changing, which is probably why in December of 2008, the Chinese central bank announced a “baby step program” to begin allowing international trade using the Yuan, instead of the U.S. dollar:
http://news.bbc.co.uk/2/hi/asia-pacific/7799541.stm
And why China has been stockpiling gold since at least 2003:
http://www.reuters.com/article/goldMktRpt/idUST30612020090424
The Chinese government has even recently begun encouraging gold and silver investment in its average citizens, an unprecedented move!
http://www.youtube.com/watch?v=PqFpl31UwPI&feature=player_embedded
China is obviously moving to protect itself, slowly leaving behind its reliance on export markets and focusing more on its own citizens and currency as a potential driving force for its economy. Again, though it is gradual, China is breaking away from the U.S. This will likely move faster as the year of 2009 closes out, perhaps as soon as the G20 meeting this September in Pittsburgh, where it is rumored that BRIC countries may openly announce their intention to move away from the U.S. Dollar permanently and into the IMF’s new “Special Drawing Rights” (Global Currency):
http://www.chinadaily.com.cn/china/2009-09/03/content_8648691.htm
http://www.youtube.com/watch?v=u_5_KCKeM4k&feature=player_embedded
It is inevitable. Because China has nothing to gain by continuing its economic relationship with the U.S. they WILL drop the dollar, and this will probably occur soon. As this begins to happen, main stream media here and across the world will shrug off the whole affair as nothing out of the ordinary. China’s treasury dumping will go from 3.1%, to 10%, to 20% and beyond. Other countries, including Japan with its new anti-dollar government, will follow suit like a chain of dominoes. The dollar will lose most of its value and stagflation will commence, while the average American investor, blissful in his imaginary field of “green shoots”, won’t even see it coming until it is too late.
http://neithercorp.us/npress/
Tags: america, American Economy, august 23rd, Barack Obama, china, conservative estimate, debt, deficit, Dollar, double digits, economy, foreign investors, Gdp, giordano bruno, nothing, Time, trade, treasury, true figure, U S Treasury, u s treasury bonds, U.S., U.S. Dollar, value, Yen Posted in The soon to be former USA, finance, nation, world | 1 Comment »
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Thursday, April 29th, 2010
NESARA initiates PEACE IMMEDIATELY and
1. Restores Constitutional Law in America as of NESARA’s public announcement.
2. Removes US administration officials and all members of the US Congress from their positions due to their continuous unconstitutional actions. Bush, Cheney, Cabinet members, and all members of Congress are immediately removed from office by NESARA’s public announcement; specific law enforcement personnel shall physically remove Bush government officials from their offices. These removals allow a fresh start at the national level. Using the Constitutional Line of Succession, NESARA installs Constitutionally acceptable NESARA President and Vice President Designates until new federal elections can take place within six months after NESARA’s announcement.
3. Because NESARA abolishes unconstitutional states of emergency, NESARA’s public announcement declares “peace”. US military in Iraq and Afghanistan are immediately recalled to the USA.
4. As partial remedy for 90 years of government and banking fraud, NESARA requires zeroing out of credit card balances and bank debt relief be given to Americans.
5. Initiates the US Treasury Bank System with new U.S. Treasury currency backed by gold. The Federal Reserve is abolished; Federal Reserve facilities and most personnel are absorbed into the US Treasury Bank System.
6. Abolishes Income Taxes in US and creates a national sales tax on new, non-essential items as revenue for government. Essential items such as food and medicine, and used items, are exempt from the sales tax.
You can take action to get NESARA announced and implemented See the Action Plan!
ACT NOW! HELP US GET NESARA ANNOUNCED IMMEDIATELY!
NESARA, the National Economic Security And Reformation Act
Tags: /USA, Afghanistan, america, announcement, Bank, banking fraud, Bush Cheney, congress, Constitutional, credit card balances, government, IMMEDIATELY, Iraq, Law, line of succession, national sales tax, nesara, partial remedy, Peace, treasury, treasury bank, U S Treasury, U.S., US, Us Treasury, Vice President Designates Posted in research | No Comments »
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Thursday, April 22nd, 2010
Apr 22 12:05
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Russia on Thursday angrily rejected accusations by Georgia’s president linking Moscow to a case of attempted uranium smuggling and suggested he was lying, in a new flare-up of tensions between the hostile neighbors.
Webmaster’s Commentary:
Note that AP is still illustrating all these stories with a photo of Iranian technicians even though there is nothing in the story to link it to Iran.
Remember what I told you months ago; that before the attack on Iran the US and Israel had to sever the two major land routes by which Russia could support Iran, one through Afghanistan and the other through those tunnels in the Caucasus mountains. Afghanistan is and remains a war zone, and this so-called uranium seizure has provided grounds for President Mikhail Saakashvili to call for an American "Security Presence", meaning US military forces at those tunnels.
Apr 22 11:56
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It is well documented that climate models have been abject failures as global predictive tools, and should not be relied upon by policy makers for global decisions. The newest research confirms that the models are also incorrect regarding regional predictions, including the Arctic area climate.
Apr 22 11:31
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The women all paid their premiums on time. Before they fell ill, none had any problems with their insurance. Initially, they believed their policies had been canceled by mistake.
They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.
Webmaster’s Commentary:
Welcome to Obamacare!
Apr 22 11:30
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The Securities and Exchange Commission filed an emergency enforcement action on Tuesday to halt an alleged fraudulent scheme by two owners of an Albany, New York, brokerage who sold debt in unregistered offerings and used the proceeds for its operations and to hire strippers.
Chairman Timothy McGinn and President David Smith, owners of McGinn, Smith & Co Inc, sold about $120 million in more than 25 unregistered debt offerings, according to a complaint filed in a New York federal court.
Webmaster’s Commentary:
Fraud has become the standard American business model.
Apr 22 11:23
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Hedge fund manager John Paulson’s company reportedly made billions shorting the subprime mortgages packaged and sold by Goldman Sachs — which is now facing fraud charges by the Securities and Exchange Commission.
Paulson began betting against subprime mortgages as early as 2006, setting up two funds focused for that purpose.
Apr 22 11:23
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Webmaster’s Commentary:
Israel must be getting ready to do something really nasty if they are waving 95-year old Nazis at us right now!
BTW, Germany’s unquestioning obedience to Israel starts to make sense now that we know Israel is planning on buying warships from German manufacturers.
Apr 22 11:18
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Saakashvili gave few details of the seizure during an interview Wednesday with The Associated Press, saying only that the uranium was intercepted last month coming into his country in the Caucasus region of southeast Europe.
The Georgian Interior Ministry said a group of foreign nationals had been detained, and the uranium was in a secure location.
Webmaster’s Commentary:
The interesting points are that the seizure happened last month and is only now being made public, just in time to deflect the post nuclear summit attention away from Israel. Then there is the fact that the exact amounts and degree of enrichment are not reported. Note that the nationalities of the "foreign nationals" are not disclosed, and when you couple that with the photograph of Iranian technicians used to illustrate the story and intended to create a link to Iran that is not supported by the story itself, and this reeks of being a staged event to hype "nuclear threat" ahead of a possible false flag attack to kick off WW3.
Apr 22 10:46
By: poorrichard
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Marijuana smokers across the America lit up in public parks, outside statehouses and in the posh confines of a Hummer parked outside a pot gardening superstore to observe the movement’s annual ‘high holiday’ yesterday.
Those who weren’t within whiffing distance of a college campus or a reggae concert may not have realised that Tuesday was ’4/20′, the celebration-cum-mass civil disobedience derived from ’420′ – insider shorthand for cannabis consumption.
Read more: http://www.dailymail.co.uk/news/worldnews/article-1267696/National-wee…
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Apr 22 10:34
By: jo-ann F.
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"wait…"(she thought, laughing), "should I be laughing?"
Apr 22 10:23
By: suman
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The U.S. Treasury refreshes its currency every once in a while to stay a step ahead of counterfeiters, and this time they’re refreshing the new $100 bill. The new bill will contain a security feature called Motion, where each bill will contain up to 650,000 microlenses embedded in the printing which will allow for an underlying image to shift when the bill is moved. Yep, good old Benjamin Franklin is getting a facelift and here it is.
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Apr 22 10:12
By: jo-ann F.
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reposted from Alternet.
Since direct-to-consumer drug advertising debuted in 1997, pharma’s credo has been When The Medication Is Ready, The Disease (and Patients) Will Appear. Who knew so many people suffered from restless legs?
Apr 22 10:11
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Though they have admitted once again that they still haven’t actually got any proof that any such thing happened, the US State Department insisted today that “all options are on the table” with respect to retaliating against Syria over its alleged delivery of Scud missiles to Hezbollah.
Assistant Secretary Jeffrey Feltman says the State Department has “really, really serious concern” about the report, and said if Syria actually turns out to have done such a thing it would be a “provocative action.”
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Apr 22 10:05
By: Saladin
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You must understand just how important it is that you continue to convince yourself that America truly is the most exceptional country in the world. In this vein, it may be important that you read how we are The Number One Country in the World in many stats….
Sorry for such a rude awakening.
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Apr 22 09:55
By: homosaps
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The situation in Bangkok is growing even more extreme as pro-democracy Red Shirts demanding new elections appear to heading toward another violent confrontation with the Thai army.
Apr 22 09:48
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Big Pharma drugs that are being used on humans right now and promoted as potential treatments for Alzheimer’s disease (AD) could cause the very brain damage and memory loss they are supposed to treat.
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Apr 22 09:48
By: jo-ann F.
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WAPISHTA!
his is the fundamental thing… doing the right thing is really good politics, so support candidates who actually do the right thing. … My phrase always is, what would it it take… if the corruption… isn’t enough to make you fundamentally reconsider, & say ‘we are headed along a disastrous path,’ what would it take? because [speaking of America's financial crisis] the next one is even worse…
WAPISHTA!
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Apr 22 09:48
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First deportation from West Bank to Gaza under new apartheid-style IDF pass law.
Webmaster’s Commentary:
Have you noticed that the same people screaming "racism" about Arizona’s immigration law can spare not a word about the ethnic cleansing of the Palestinians?
Apr 22 09:46
By: Saladin
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A huge ongoing propaganda campaign is constantly churning out pro-Israel materials directed at a wide variety of special interest groups: the lobby’s most well-known success story is the Christian fundamentalist faction, which believes in the key role played by Israel as a harbinger of the second coming of Christ. The lobby has parlayed this into a powerful domestic constituency fanatically devoted to Israel’s cause – and not just the cause of the current Israeli government, but of the most extremist and expansionist elements in the Israeli polity.
Apr 22 09:43
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Webmaster’s Commentary:
Billions for Wall Street.
Billions for Israel.
Billions for War.
Nothing for you.
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Apr 22 09:36
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Matson was a chaplain at Tripler Army Medical Center before the Hawai’i crimes occurred in August 1998.
During his criminal trial in Honolulu, the victim testified Matson was showing him magic tricks about levitating when he started fondling him. Matson denied molesting the boy.
Matson remains behind bars at the Halawa Correctional Facility and is scheduled for release in 2020.
Webmaster’s Commentary:
"Wanna play with my magic wand, boy???"
Apr 22 09:30
By: portos
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Apr 22 09:28
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Apr 22 09:14
By: portos
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They are leading us to the Great War , they are squeezing the small people , this is an economy based on the bailout , when the bailout dries out we will have the crash from the crash we get into depression and from depression we will go to war , Obama has outbushed Bush on the patriot act , how anybody could call these people his leaders , they cannot lead us across the street all they care about is to get elected and re-elected , it’s a whole system that has been hijacked they are working for Wall street and the military industrial complex
Apr 22 09:07
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Flight training on RAF Typhoon jets was ”temporarily suspended” today after safety inspectors found deposits of ash in one of the fleet’s engines.
Apr 22 09:05
By: Saladin
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The criminal treatment of animals by the IDF and the jewish squatters is not directed at the animals per se, but is part of their strategy of genocide and ethnic cleansing against us Palestinians. The animals, donkeys, mulis, sheep, goats, chicken, dogs, cats … are kept by their owners as part of their business. They represent work resources, food, the livelihood of these farmers and their families. The purpose of “arresting” (holding for ransom), stealing, killing these animals and to destroy or poison artesian wells is to ruinate their owners.
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WHAT REALLY HAPPENED | The History The US Government HOPES You Never Learn!
Tags: america, Apr, Bangkok, Benjamin Franklin, Bill, breast cancer patients, Caucasus Mountains, climate, climate model, Climate Models, computer algorithm, country, Cover-up, DECEPTIONS, F. Tags, Georgia, global decisions, HEALTH, hostile neighbors, Iran, Israel, propaganda, Quot, Read, regional predictions, Russia, russia russia, science, Secretary Jeffrey Feltman, security presence, Southeast Europe, Syria, thing, U S Treasury, U.S., US, William Black Posted in headlines | 1 Comment »
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Saturday, March 20th, 2010
by Paul Craig Roberts
Global Research, March 20, 2010
Counterpunch – 2010-03-17
In the 20th century, Detroit, Michigan, symbolized American industrial might. Today it symbolizes the offshored economy.
Detroit’s population has declined by half. A quarter of the city–35 square miles–is desolate with only a few houses still standing on largely abandoned streets. If the local government can get the money from Washington, urban planners are going to shrink the city and establish rural areas or green zones where neighborhoods used to be.
President Obama and economists provide platitudes about recovery. But how does an economy recover when its economic leaders have spent more than a decade moving high productivity, high value-added middle class jobs offshore along with the Gross Domestic Product associated with them?
Some very discouraging reports have been issued this month from the Bureau of Labor Statistics. There have been record declines in both jobs and hours worked. At the end of last year, the U.S. economy had fewer jobs than at the end of 1997, 12 years ago. Hours worked at the end of last year were less than at the end of 1995, 14 years ago.
The average work week is falling and currently stands at 33.1 hours for non-supervisory workers.
In a major problem for economic theory, labor productivity or output per man hour and labor compensation have diverged markedly over the last decade. Wages are not rising with productivity. Perhaps the explanation lies in the productivity data. Susan Houseman found that U.S. labor productivity statistics might actually be reflecting the low wages paid to offshored labor. An American company with production in the U.S. and China, for example, produces aggregate results in labor output and labor compensation. The productivity statistics thus measure the labor productivity of global corporations, not that of U.S. labor.
Charles McMillion has pointed out that unit labor costs actually fell during 2009, but that non-labor costs have been rising throughout the decade. The rise in non-labor costs perhaps reflects the decline in the dollar’s foreign exchange value and the increased dependence on imported factors of production.
Economists and policymakers tend to blame auto management and unions for Detroit’s fall. However, American manufacturing has declined across the board. Evergreen Solar recently announced that it is shifting its production of solar fabrication and assembly from Massachusetts to China.
A U.S. Department of Commerce study of the precision machine tool industry has found that the U.S. comes in last.The U.S. industry has a shrinking market share and the smallest increase in export value. The Commerce Department surveyed American end-users of precision machine tools and found that imports accounted for 70 percent of purchases. Some U.S. distributors of precision machine tools do not even carry U.S. brands.
The financial economy which was to replace the industrial economy is nowhere in sight. The U.S. has only 5 banks in the world’s top 50 by size of assets. The largest U.S. bank, JPMorgan Chase ranks seventh. Germany has 7 banks in the top 50, and the United Kingdom and France each have 6. Japan and China each have 5 banks in the top 50, and together the small countries of Switzerland and the Netherlands have six with combined assets $1.185 trillion more than the 5 largest U.S. banks.
Moreover, after the derivative fraud perpetrated on the world’s banks by the U.S. investment banks, there is no prospect of any country trusting American financial leadership.
The American economic and political leadership has used its power to serve its own interests at the expense of the American people and their economic prospects. By enriching themselves in the short-run, they have driven the U.S. economy into the ground. The U.S. is on a path to becoming a Third World economy.
Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press. He can be reached at: PaulCraigRoberts@yahoo.com
Paul Craig Roberts is a frequent contributor to Global Research. Global Research Articles by Paul Craig Roberts
http://www.globalresearch.ca/index.php?context=va&aid=18239
Tags: A U.S. Department, aggregate results, Bureau Of Labor Statistics, Charles McMillion, china, decade, Detroit, economic leaders, economy, end, France, Germany, global, global corporations, Japan, labor, labor compensation, labor productivity, machine, Massachusetts, Michigan, Paul Craig Roberts, precision, President Obama, production, productivity, productivity data, research, Susan Houseman, Switzerland, the Netherlands, U S Treasury, U.S., United Kingdom, urban planners, wall street, Washington Posted in The soon to be former USA, bilderburg, finance, nation, world | No Comments »
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Sunday, March 14th, 2010
By Giordano Bruno
Neithercorp Press – 03/10/2010
Herbert West: Re-Animator
Winter is slowly melting away here in the U.S., and Spring will soon be upon us. Wall Street is currently flush with delight at the year long run of the stock market (driven by fiat bailouts), which at first glance appears to be doing quite well, though international incidences such as those in Dubai and Greece have revealed how shaky the market actually is in the face of any unhealthy news. In the meantime, the dollar, recently on the edge of detrimental value loss, has made a semi-miraculous recovery in the span of a few months, especially as the Euro suffers. Official employment numbers, despite the continuous loss of jobs monthly, have somehow fallen and are for the moment stabilized. Is it time for America to dust off the old credit cards and return to the wild and rollicking carefree spending days of pre-2007? Perhaps not…
While the mainstream media puts on the recovery song and dance, the fundamental problems of the collapse remain the same, and in some cases are growing ever more precarious. Subsections of the public, unaware of the real issues at hand, are holding a misguided jubilee in the tranquil eye of a hurricane, wrongly assuming that the storm has passed.
The world is breathing a hasty sigh of relief at the beginning of 2010, but what are the facts behind the current “peaceful” economic moment? In this article, we will examine whether or not the good news is legitimate, or, if are we being lulled into a false sense of security…
Job Market Statistics Manipulated
At the beginning of the year, official unemployment stood at around 10%. This number of course does not include those people who are off unemployment benefits and still have not found jobs, or those people who are underemployed. The Labor Department then announced their intention to revise their “birth/death ratio” method of calculating job loss, which would supposedly add a whopping 800,000 lost jobs to their books that were hidden before:
http://money.cnn.com/2010/02/04/news/economy/jobs_outlook/
Directly after this news was released, markets braced for a substantial increase in the unemployment percentage. Yet, by some act of magic, the unemployment percentage fell to 9.7%!
http://www.epi.org/publications/entry/jobs_picture_20100205/
How is this possible? Well, those of us who were hoping for greater Labor Department transparency (including myself) should have known better. With the Labor Department, two-plus-two NEVER equals four…
As the EPI article above indicates, while the government has reportedly changed their dubious “birth/death ratio” method, they also at the same time changed their “home survey” method. This survey is meant to give the Labor Department an overall view of unemployment percentages, but now the government has sharply reduced the number of households they actually survey, making the results more volatile and easier to manipulate. This why even though nearly a million jobless people were added to the unemployment rolls, the government was still able to report a drop in unemployment percentages. Sound like a dirty trick? Yes, it is…
According to the EPI’s estimates, which are probably still conservative, over 11 million jobs would need to be created in order to bring employment rates to pre-2007 levels. This is called the “jobs gap.” To fill the jobs gap by 2013 (which is about the time frame that the government has suggested it would take for a full recovery) the U.S. would need to generate over 400,000 jobs a month for the next three years! As I think most of you can see, this is not going to happen. Last month according to official numbers the U.S. lost another 36,000 jobs. Jobs are not being created, and will not be created anywhere near the 400,000 a month mark required for a three year recovery.
Also not often reported is the span of weeks at which those who are unemployed have to wait until they find another job. This “lag time” in-between jobs has grown markedly higher in recent months as the chart below shows:
In January of this year alone, 6.3 million people (over half of those unemployed) had been without a job for more than 6 months. This is an astonishing number, and it shows just how out of touch MSM reports of recovery are. Anyone who has been unemployed for more than just one month knows how tense and uncertain such a situation makes life. Imagine the misery of a 6 month hiatus from steady work, not able to fully support ones self and not knowing when you’ll be able to again. The Labor Department, nor the media, seems to take the factor of ‘duration’ into account when considering whether employment is actually in recovery. Nor do they take into account the fact that most of the jobs lost over the past two years were high paying and specialized, while most of the scant few jobs created have been low paying service sector positions.
What is most frightening about this information is that it reveals deliberate mishandling of statistics. Instead of being more open about unemployment numbers, the government is moving to hide them further. But why would they escalate secrecy on the economy?
The Day The Dollar Died
Last week, Li Ruogu, chairman of Export-Import Bank of China, a lender tasked with supporting the country’s foreign investments, stated that China would continue to support the dollar and that reports of a break from U.S. treasuries were “absolute nonsense.” Investors in treasuries this week seemed to take the comment as a good sign that the dollar’s place as world reserve currency is assured. However, one might ask why it was suddenly so important for China to comfort treasury markets?
Interestingly, statements of China’s “affection” for the dollar have come right after their central bank decided to dump $34 billion in U.S. treasuries. Along with other nations, the U.S. suffered the worst one month treasury dump on record so far at $53 billion:
http://finance.yahoo.com/news/Foreigners-cut-Treasury-apf-1402391707.html?x=0
This follows a treasury dump last year by China of $25 billion, after which we predicted that such dumps would occur more frequently and in larger amounts. Apparently, we were right:
http://neithercorp.us/npress/?p=105
http://english.people.com.cn/90001/90780/91421/6734461.html
Initially, it was reported after their latest dumping of U.S. bonds that China had lost its position as the number one investor in U.S. debt, placing Japan in the top spot. Strangely, only days later this report was rescinded after the Treasury released a statement claiming that China did indeed dump $34 billion in bonds, but, they were still the number one investor in T-bills:
http://sg.news.yahoo.com/afp/20100217/tbs-us-economy-finance-bonds-china-japan-ec2362a.html
How is this possible? According to the Treasury, they “forgot” to include Chinese treasury holdings in third markets such as Hong Kong and Britain. This is very strange. Who holds these extra bonds and what are they doing sitting in foreign venues? Is it not convenient that these bonds appeared from thin air just as news of China’s treasury dump was hitting the bond market? And now we suddenly have a Chinese finance official attempting to reassure the world that China still wants T-bonds while at the same time they are trying to get rid of them? If this behavior seems confusing it is because this is what occurs when governments lie big; no matter how good they are at it, they can’t make the facts add up.
If one examines Treasury Auctions month-to-month, they would find that “Primary Buyers” of treasuries (who have to buy treasuries when no one else is buying) now dominate auction sales. Indirect buyers, who cannot be tracked, also make up a large portion of competitive bids on treasury bonds. It is suspected that most of these indirect buys are made by the Federal Reserve itself in order to prop up the dollar. The article below explains the process succinctly:
http://community.nasdaq.com/News/2010-02/Something-Very-Strange-Is-Happening-With-Treasuries.aspx
The bottom line is that foreign governments are NOT buying treasuries at volumes necessary to keep the U.S. afloat amidst its ever climbing national debt, and in some cases, they are now trying to quietly and gradually dump what they have so as to not arouse immediate suspicion from the markets. In fact, the Treasury and the Federal Reserve seem to be helping them do this!
The dollar is, in effect, dead, but disinformation and market manipulation, mainly by the private Federal Reserve, is being used to reanimate it for appearances. The result is the conjuring of a kind of “zombie currency,” a Weekend at Bernie’s currency that the Fed props up with strings and pulleys to fool everyone at the party.
The most obvious question here is, why go through so much trouble to keep the dollar around at all?
World Government And The SDR
Since the “Great Recession” began, economic forums and conferences such as the G20, and the annual World Economic Forum (WEF) in Davos, Switzerland have spoken of little else except the formation of a centralized world economy and the establishment of a legal body that has the power to run it. At the Davos “workshops,” economists and others present ideas for world governance as if they were the originators of the concept. It may not be surprising to most of us that there is rarely if ever anyone who participates in the WEF meetings that supports the restoration of national sovereignty. In fact, nearly all the participants seem to assume that a world government is the solution to all our ills. It is also important that like the G20, government officials from all over the world attend, including those from the U.S., and that very often the policies developed at these forums end up in legislation and mass media here at home. Meaning, the laws and propaganda supporting forced globalization and world government are fine tuned at the meetings and then brought to America for mass consumption. Below are a couple video examples of Davos workshops:
It is important to recognize what exactly is being presented in these two videos because they reveal much about our current economic circumstances. The goal of the G20 and the WEF, as they have stated on numerous occasions, is to dissolve national sovereignty. If they had their way, America as we know it would not exist, along with the Constitutional framework that is meant to protect our liberties. To achieve this end, a carefully engineered breakdown of the U.S. dollar is being enacted.
As we have shown, U.S. treasuries auctions have tanked and those long term treasuries already held by foreign nations are being slowly cast off. So far, the Federal Reserve has propped up the dollar by purchasing T-bonds in the place of foreign banks who no longer want them. By continually monetizing this debt, the Fed will inflate an incredible bubble in the treasury market. When will this bubble burst? The key lay in the rules governing Special Drawing Rights.
Special Drawing Rights (SDRs) are securities much like treasury bonds. Their value is determined by a basket of international currencies including the Dollar, the Euro, the Yen, and the Pound Sterling. The IMF claims that SDRs are not technically considered currency, but SDRs serve nearly all the functions of a currency except that they are not available to the general public (yet). It walks like a duck, and quacks like a duck, but the IMF would rather not call it a duck. In the end, the SDR is a world reserve currency, and its purpose is to topple the dollar.
Not long after the economic meltdown began, the IMF announced that they would begin the unlimited printing of SDRs. In 2009, within the span of a few months, SDR circulation went from $21 billion, to nearly $204 billion, and this is only the amount they have admitted to:
http://www.imf.org/external/np/fin/tad/extsdr1.aspx
Governments across the world have purchased SDRs, while at the same time dropping U.S. treasuries. China in particular has shown sharp interest in the SDR as a replacement for the U.S. dollar:
http://www.chinaeconomicreview.com/dailybriefing/2009_09_03/China_buys__50_billion_in_first-ever_IMF_bonds.html
It may be prudent to mention that China’s heightened dumping of U.S. treasuries began right around the time that the IMF began mass printing SDRs. And, even more disconcerting, the U.S. Treasury also quintupled its supply of SDRs in August of 2009:
http://www.zerohedge.com/sites/default/files/images/US%20INTL%20RESERVES.jpg
Being that the U.S. dollar is supposedly the undisputed world reserve currency, why would the U.S. Treasury have any need to buy SDRs at all? Would this not be redundant? Unless, the Treasury knows that the dollar will not remain the world reserve currency for much longer….
Now we get to the tricky part…
The IMF has instituted new rules governing the SDR and those countries who trade it (called “member countries”). Drafting the “Fourth Amendment” governing SDR allocation, the IMF now requires member nations to retain a “special allocation” of the currency much higher than previous allocations. Countries who keep their SDR supply above the required level receive interest payment on their excess. Countries that fall below the required level have to PAY interest on the shortfall. That is to say, if the U.S. were to allow its SDR reserves to fall below the level demanded by the IMF, we would be punished monetarily. Also, under current rules, the interest rates of the currencies that make up the SDR help to determine the interest rates of the SDR.
The IMF claims it only acts as an “intermediary” between countries wishing to trade in SDRs, but since the IMF is the creator and printer of SDR’s, this would ultimately make them the controller of the SDR market, not some outside intermediary.
Participation in the SDR market for now is voluntary. However, what we are witnessing here is the subtle positioning of the SDR as the only alternative in the event that the U.S. dollar fails, and once again, China is the key.
China’s Slow Dollar Dive
The argument is constantly made by mainstream economists that China could never drop its large supply of U.S. T-bills because if they tried, the dollar would collapse, virtually erasing the value of their dollar holdings. The suggestion that “they are as dependent on us as we are on them” is rampant in the MSM, but, if we throw in the wild card factor of the SDR, this all changes.
If the Chinese central bank along with certain others amass enough SDRs over an extended period of time while gradually selling off their T-bonds, the SDR’s could act as a cushion to prevent foreign central banks from losing a large portion of their wealth while the dollar sinks. In fact, in the event that the Federal Reserve raises interest rates on the dollar (perhaps in response to the heightened risk of a mass treasury dump) those holding SDR’s actually benefit, because the interest they receive on their SDR reserves will also go up:
http://www.imf.org/external/np/exr/faq/sdrallocfaqs.htm
This would not absorb all of China’s losses in the event of a dollar collapse, but it would be a very effective stop gap, and ample incentive for them to continue dumping treasuries. I believe that this is the exact reason why the dollar and the Dow have been held up by the Federal Reserve for so long. They cannot allow a major dollar depreciation until the SDR is established on the world market as a ready substitute.
A good sign that this process might accelerate would be in the event that China de-pegs the Yuan from the Dollar and allows it to appreciate in value. This would signal that China is moving away from the traditional export arrangement with the U.S. Talks of a Yuan appreciation are already hitting the MSM:
http://www.telegraph.co.uk/finance/7386391/China-ready-to-end-dollar-peg.html
Investors in the U.S. will foolishly cheer a rise in the value of the Yuan, thinking that this will increase American exports to China. In reality, China will be preparing to dump the last of its U.S. bonds, and begin exports and imports with the new ASEAN trading bloc:
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201002280656dowjonesdjonline000247&title=asean-exports-to-grow-7-to-85-in-2010–indonesia-trade-min
This new bloc has the potential to surpass profit margins in U.S. markets, especially in the face of extremely weak consumer activity in America. As the U.S. falters under sovereign debt pressure, China will be in prime standing with a ready supply of SDRs and an organized trading bloc to take up the slack of falling exports to the West.
Shock And Awe
The illusion of U.S. recovery seems to be paramount in the plan for Globalist centralization. Every scam imaginable has been fashioned to lure the public into a sense of false comfort. In my original observations on the economic collapse, I believed that we would likely see a “trigger” event in 2010, which would set off a “rolling breakdown” that would not fully climax for a few years. Now, I am not so sure. After examining the facts behind the implementation of SDRs as well as the potentially explosive situation in the treasury market, I believe that a “shock and awe” scenario is becoming more probable. The behavior of the Fed, along with that of the IMF seems to suggest that they are preparing for a focused collapse, peaking within weeks or months instead of years, and the most certain fall of the dollar.
As I think of it now, the advantages of a sudden financial flash flood are numerous. In a drawn out collapse, the Liberty Movement is given a tremendous time advantage, allowing us to double and redouble our membership while the public opinion of the Federal Reserve and the government in general would deteriorate. In a sudden breakdown, our time will be cut short, and the public will be distracted and fearful, desperate for an organized authority to offer any semblance of “order.” A slow collapse allows for the Liberty Movement to work peacefully within the system to build a third party capable of dethroning the current two party farce. A sudden collapse erases all political activity and opens the door to martial law and illegitimate government. And finally, a fast moving meltdown leaves a much stronger psychological impression; a catastrophic waking nightmare, instead of a slow grinding depression. A world government could never be brought about due to the “monotony” of a long slow economic burnout. Too many factors could present themselves in such an extended period that might interfere with the desired end result. Too many variables to calculate. In an abrupt collapse, the Globalists would need only to gage and influence the amount of fear in the populace to a sufficient boiling point then leap in with their intended solution to the problem; centralized global governance.
I feel that in either method, the Central Bankers will fail to reach their ultimate goal, but the prospect of a direct monetary break with limited warning does make the atmosphere much heavier. One can only prepare as much as possible mentally and emotionally, and keep his eyes wide open…
http://neithercorp.us/npress/
Tags: america, Bernie, Britain, china, continuous loss, currency, Dollar, employment numbers, false sense of security, federal, giordano bruno, government, herbert west, Hong Kong, imf, Japan, Mainstream media, miraculous recovery, ratio method, reserve, SDR, Sdrs, Sterling, Switzerland, tranquil eye, treasury, U S Treasury, U.S., Unemployment Benefits, world, Yen Posted in The soon to be former USA, finance, nation, world | No Comments »
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