The Mexican Standoff Over The Dollar: Instruction To Blink. - Tilted Forum Project Discussion Community

tisonlyi · 06-10-2009, 06:18 AM

There's been a lot of sabre-rattling from some European countries, Russia, Japan and China recently, but now we have the intention to sell US treasuries and move into other vehicles expressed clearly.

Across the Curve Blog Archive Dow Jones Story on Russia and the $

Quote:

Dow Jones Story on Russia and the $
June 10th, 2009 9:21 am | by John Jansen |
Submitted on 2009/06/10 at 8:59am
MOSCOW (Dow Jones)–Russia’s central bank said Wednesday it plans to reduce the proportion of foreign exchange reserves it invests in U.S. Treasury bonds as Moscow continues to bemoan the dollar’s status as a global reserve currency.

“We plan to cut the share of U.S. Treasuries since the window of opportunity to work with other instruments is opening,” Deputy central bank Chairman Alexei Ulyukayev told Russia’s State Duma, or lower house of parliament, according to a report by the Interfax news agency.

Russia holds around $400 billion in gold and forex reserves, the world’s third-biggest stash behind China and Japan.

Ulyukayev said reserves are just over 30%-invested in U.S. Treasuries at present. He didn’t specify by how much that figure would fall.

Ulyukayev said Russia would shift some into bonds issued by the International Monetary Fund and deposits at commercial banks.

Russian Finance Minister Alexei Kudrin said in late May that Moscow is ready to invest $10 billion in a potential bond issue by the IMF, which may raise debt to help support struggling nations during the global economic crisis.

The bond offering, which would be the IMF’s first, would be tailored to the so-called BRIC countries of Brazil, Russia, China and India.

“From an economic standpoint it makes sense,” said Roland Nash, chief strategist at investment bank Renaissance Capital in Moscow.

He said Ulyukayev’s comments should be seen against the background of a depreciating dollar and rising U.S. government debt burden.

“It shouldn’t come as a shock to anyone they’d already said they wanted to (reduce their dollar holdings),” Nash said. “It’s something (the central bank) will do gradually.”

China, which is the largest foreign holder of U.S. Treasuries, has shaken the dollar in recent weeks by suggesting that a greater share of global reserves should be denominated in Special Drawing Rights - a quasi currency issued by the IMF.

But since U.S. Treasury Secretary Timothy Geithner travelled to Beijing for meetings at the start of this month, the suggestions from Beijing have become less strident.

Moscow - as well as Beijing - has repeatedly criticized the dominance of the U.S. dollar in the global economy, saying a new supranational currency is needed to promote stability.

Russian President Dmitry Medvedev said recently that Moscow could mimic moves by China and Brazil, which have sought to raise the status of their currencies through swaps arrangements with one another.

Central bank Web site: ???? ??????

In the face of massive, long-term inflation/depreciating value of the USD (relative to other currencies and commodities) that last autumn's panic hasn't managed to mask... The beginnings of a death spiral are here.

Central bank monetising debt on a massive scale (due to lack of demand for the enormous sums of debt issued, the sums purchased by the fed aren't accidental or engineered for QE - and yes it is monetised. There's no way the fed will ever liquidise those assets. Hello massive inflation of sorts.), huge foreign debts, depreciating currency and precisely zero possibility of economic 'growth' coming to the rescue... Not a pretty picture.

Some of the major foreign holders of bonds are starting to blink and sell their positions. China has been talking this game the loudest and the longest, but here's Russia with a clear policy statement.

Is this the end of the last, great bubble? The US treasury market?

tisonlyi · 06-10-2009, 10:19 AM

and today's auction of $19bn of 10 year bonds has gone down like a lead balloon.

That would be because investors are confident in the green shoots, right? /snark

Commentary i'm reading is talking of blood in the water.

Tully Mars · 06-10-2009, 12:46 PM

There was a guy on the Daily show last night, Peter Schiff (?), and he was talking about the dangers of such things as impending hyper inflation. Stewart showed a clip of this guy getting laughed at on shows just a few years ago where he expressed concerns about the housing market and something he called a "credit crisis." There's a quick part of the clip where he says the credit situation is doomed and pretty soon a lot of people aren't going to be able to afford the homes they already bought mortgages on. Ben Stein's on the a split screen and he says "that's just not true" while shaking his head like Schiff's an idiot. Now I think Stein's a fairly smart fellow but clearly he was wrong about this, as were many others.

The fact he was right before doesn't mean he's right now. But I don't think anyone's laughing at him now. Personally I find it rather alarming the amount the US owes other countries. Not to mention the countries we owe it to. Combine that with the fact the US really doesn't manufacture much of anything anymore and I think it might be just a matter of time before we're in serious trouble. Trouble that makes last fall look like happy fun time for investors.

tisonlyi · 06-10-2009, 02:07 PM

Stein's only smart within the bubble, he's a touch of an idiot to anything that requires independent thought.

That pro-ID film he made was simply awful. Totally, completely, utterly awful. Darwin necessarily leads to Hitler.

Idiot.

Schiff: He's not the only one talking about hyperinflation, and it is a VERY real possibility.

You start with a historically weak currency and add recession, massive debt and a central bank engaging the printer on a massive scale.

That adds up to the pure and historic method for fiat currency destruction through hyperinflation.

(The Fed talks about this not being monetized debt, but i'd like to see them even intimate that they're going to liquidate any of their positions)

Tully Mars · 06-10-2009, 02:51 PM

Stein made a pro ID film? Darwin necessarily leads to Hitler?

Ok then. New opinion of Stein noted.

Yeah, I don't see how the US gets out of this unharmed. Just don't see it. I hate to be one of those "the sky is falling" people but man does this seem like a good time to own physical property. Gold and other metals et el.

tisonlyi · 06-10-2009, 04:51 PM

The dollar is being wilfully pushed to ridiculous levels of inflation.

Real inflation has been up around 10% for 10 years or a touch more, and the recent printing exercises - even with the massive fall in house prices that'll accelerate as the interest rates rise for mortgages - will push commodities up and therefore everyday inflation up massively.

Nasty stuff, and the pound is heavily exposed to it as well.

("Expelled" was Stein's Anti Evolution/Pro ID movie. Total nonsense.)

Charlatan · 06-10-2009, 05:13 PM

Expelled

Hektore · 06-10-2009, 05:19 PM

I forget where I heard it from now, but somewhere I heard it theorized that the folks in charge were intentionally trying to devalue the dollar, in an effort to pay down the debt at what is in effect a lower cost to the US.

Now that I say it out I think it may have been Glenn Beck who said it, so it's probably nonsense, although in a twisted way (if you ignore all the other shit that it brings with it) it would work in a technical sense I suppose.

ASU2003 · 06-11-2009, 01:42 AM

Quote:

Originally Posted by Hektore

I forget where I heard it from now, but somewhere I heard it theorized that the folks in charge were intentionally trying to devalue the dollar, in an effort to pay down the debt at what is in effect a lower cost to the US.

Now that I say it out I think it may have been Glenn Beck who said it, so it's probably nonsense, although in a twisted way (if you ignore all the other shit that it brings with it) it would work in a technical sense I suppose.

For some reason, it seems like there is an international war going on between a bunch of countries, groups, and people and nobody knows about it.

There is some shady things going on with our monetary policy and value of the dollar. I'm not making 10% more each year, and am unwilling to pay certain prices for products ($20,000 for a car, they used to cost $10,000...$300k for a house worth $100k)

Tully Mars · 06-11-2009, 01:54 AM

Somethings seems to be going on, who if anyone is controlling it is beyond me.

Expelled- Wow, had no idea.

tisonlyi · 06-11-2009, 06:00 AM

Well folks, it seems like today's auction is going to be very, very 'interesting'.

tisonlyi · 06-11-2009, 12:33 PM

Suddenly there's a mass of foreign central bank interest in 30 year bonds @4.7%. Which is very, VERY odd.

Even without the extreme situation we find ourself in now, there's the clearly increasing price of oil over the next few years to stoke some large inflationary fires as well as commodity demand all over the world for the real long term that just screams of 4.7% being ridiculous.

Bizarre.

06-10-2009, 10:19 AM	#2 (permalink)
tisonlyi Nothing	and today's auction of $19bn of 10 year bonds has gone down like a lead balloon. That would be because investors are confident in the green shoots, right? /snark Commentary i'm reading is talking of blood in the water. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

06-10-2009, 12:46 PM	#3 (permalink)
Tully Mars Living in a Warmer Insanity Super Moderator Location: Yucatan, Mexico	There was a guy on the Daily show last night, Peter Schiff (?), and he was talking about the dangers of such things as impending hyper inflation. Stewart showed a clip of this guy getting laughed at on shows just a few years ago where he expressed concerns about the housing market and something he called a "credit crisis." There's a quick part of the clip where he says the credit situation is doomed and pretty soon a lot of people aren't going to be able to afford the homes they already bought mortgages on. Ben Stein's on the a split screen and he says "that's just not true" while shaking his head like Schiff's an idiot. Now I think Stein's a fairly smart fellow but clearly he was wrong about this, as were many others. The fact he was right before doesn't mean he's right now. But I don't think anyone's laughing at him now. Personally I find it rather alarming the amount the US owes other countries. Not to mention the countries we owe it to. Combine that with the fact the US really doesn't manufacture much of anything anymore and I think it might be just a matter of time before we're in serious trouble. Trouble that makes last fall look like happy fun time for investors. __________________ I used to drink to drown my sorrows, but the damned things have learned how to swim- Frida Kahlo Vice President Starkizzer Fan Club

06-10-2009, 02:07 PM	#4 (permalink)
tisonlyi Nothing	Stein's only smart within the bubble, he's a touch of an idiot to anything that requires independent thought. That pro-ID film he made was simply awful. Totally, completely, utterly awful. Darwin necessarily leads to Hitler. Idiot. Schiff: He's not the only one talking about hyperinflation, and it is a VERY real possibility. You start with a historically weak currency and add recession, massive debt and a central bank engaging the printer on a massive scale. That adds up to the pure and historic method for fiat currency destruction through hyperinflation. (The Fed talks about this not being monetized debt, but i'd like to see them even intimate that they're going to liquidate any of their positions) __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

06-10-2009, 02:51 PM	#5 (permalink)
Tully Mars Living in a Warmer Insanity Super Moderator Location: Yucatan, Mexico	Stein made a pro ID film? Darwin necessarily leads to Hitler? Ok then. New opinion of Stein noted. Yeah, I don't see how the US gets out of this unharmed. Just don't see it. I hate to be one of those "the sky is falling" people but man does this seem like a good time to own physical property. Gold and other metals et el. __________________ I used to drink to drown my sorrows, but the damned things have learned how to swim- Frida Kahlo Vice President Starkizzer Fan Club

06-10-2009, 04:51 PM	#6 (permalink)
tisonlyi Nothing	The dollar is being wilfully pushed to ridiculous levels of inflation. Real inflation has been up around 10% for 10 years or a touch more, and the recent printing exercises - even with the massive fall in house prices that'll accelerate as the interest rates rise for mortgages - will push commodities up and therefore everyday inflation up massively. Nasty stuff, and the pound is heavily exposed to it as well. ("Expelled" was Stein's Anti Evolution/Pro ID movie. Total nonsense.) __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}-- Last edited by tisonlyi; 06-10-2009 at 04:53 PM..

06-10-2009, 05:13 PM	#7 (permalink)
Charlatan Getting it. Super Moderator Location: Lion City	Expelled __________________ "My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars." - Old Man Luedecke

06-10-2009, 05:19 PM	#8 (permalink)
Hektore Junkie Location: Greater Harrisburg Area	I forget where I heard it from now, but somewhere I heard it theorized that the folks in charge were intentionally trying to devalue the dollar, in an effort to pay down the debt at what is in effect a lower cost to the US. Now that I say it out I think it may have been Glenn Beck who said it, so it's probably nonsense, although in a twisted way (if you ignore all the other shit that it brings with it) it would work in a technical sense I suppose. __________________ The advantage law is the best law in rugby, because it lets you ignore all the others for the good of the game.

06-11-2009, 01:54 AM	#10 (permalink)
Tully Mars Living in a Warmer Insanity Super Moderator Location: Yucatan, Mexico	Somethings seems to be going on, who if anyone is controlling it is beyond me. Expelled- Wow, had no idea. __________________ I used to drink to drown my sorrows, but the damned things have learned how to swim- Frida Kahlo Vice President Starkizzer Fan Club

06-11-2009, 06:00 AM	#11 (permalink)
tisonlyi Nothing	Well folks, it seems like today's auction is going to be very, very 'interesting'. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--

06-11-2009, 12:33 PM	#12 (permalink)
tisonlyi Nothing	Suddenly there's a mass of foreign central bank interest in 30 year bonds @4.7%. Which is very, VERY odd. Even without the extreme situation we find ourself in now, there's the clearly increasing price of oil over the next few years to stoke some large inflationary fires as well as commodity demand all over the world for the real long term that just screams of 4.7% being ridiculous. Bizarre. __________________ "I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--