Thursday, April 28, 2011

Slides to Lowest Level Since 2008

Down, down, down she goes, where she stops, nobody knows:
The Dollar Index slid to the lowest level since 2008, Treasuries rose and gold rallied to a record after economic growth slowed. The Standard & Poor’s 500 Index climbed an almost three-year high as rising earnings and takeovers overshadowed the report on gross domestic product.

The Dollar Index tumbled 0.6 percent at 4:10 p.m. New York time after slumping to 72.871, an almost three-year low. It declined for an eighth straight day, its longest slump since 2009. Ten-year Treasury yields lost five basis points to 3.31 percent, gold jumped as much as 1.4 percent to $1,538.80 an ounce and silver rose for a second day. The S&P 500 climbed 0.4 percent to 1,360.48 while the Russell 2000 Index of smaller U.S. stocks rallied to a record for a second straight day.
Dollar Weakens, Treasuries Gain as U.S. GDP Slows; Stocks Rise - Bloomberg

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Monday, April 25, 2011

Chinese Banker: China Should Cap FOREX Reserves in US Dollars

China has had enough of the declining US dollar and one of its top financial officials suggested that it should cap what it buys in the future. Then who is going to buy all our shrinking dollars?

Details here:
China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday. The amount of foreign exchange reserves should be restricted to between 800 billion to 1.3 trillion U.S. dollars, Tang told a forum in Beijing, saying that the current reserve amount is too high.

China's foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March. Tang's remarks echoed the stance of Zhou Xiaochuan, governor of China's central bank, who said on Monday that China's foreign exchange reserves "exceed our reasonable requirement" and that the government should upgrade and diversify its foreign exchange management using the excessive reserves.

Meanwhile, Xia Bin, a member of the monetary policy committee of the central bank, said on Tuesday that 1 trillion U.S. dollars would be sufficient. He added that China should invest its foreign exchange reserves more strategically, using them to acquire resources and technology needed for the real economy.

IMF Bombshell: Age of America Will End in 2016

What???? China's economy is going to overtake the US in less than five years? I thought that wasn't supposed to happen for 20 or 30 years? Wrong!!!

Guess that's what happen when your currency isn't dropping like a rock like the US Dollar. When the International Monetary Fund starts talking, it's usually because they're the last to know. Or was that you?

Startling details from Market Watch:
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now. Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

Breaking US Dollar Collapse News

What's Behind the Decline of the US Dollar?

This is one the of the best and simplest explanations we have seen:
The U.S. dollar's downward slide is accelerating as low interest rates, inflation concerns and the massive federal budget deficit undermine the currency. - Wall Street Journal, April 23, 2011
Interestingly, the Federal Reserve is responsible for, or an active participant in all three of these factors.