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July 6 (Bloomberg) -- It’s not a job Barack Obama signed up for, but it’s his nonetheless: Bond salesman-in-chief.
Such is the lot of a U.S. president overseeing an historic increase in debt issuance. Cartoonists are busily churning out depictions of Obama, who partly nationalized automakers, standing on a car lot hawking Detroit’s clunkers. It’s time to begin picturing Obama shilling bonds few may soon want.
His best customers? Asians, of course. Asia already holds about $4.5 trillion of currency reserves, most of them denominated in U.S. dollars. It’s a product of Asia’s “savings glut,” of which the cash-strapped U.S. remains a major beneficiary. That is, if Asians don’t pull the plug.
The trouble is that the U.S. seems to be taking Asia’s money for granted. That’s a grave mistake for a White House that needs to offload record amounts of debt to fund a $787 billion stimulus package -- not to mention spending plans yet to be announced. Assuming Asia’s perpetual devotion is a mistake.
It’s no coincidence that China is pushing for a new international currency at a time when it wants to diversify its almost $2 trillion of reserves. Such mutterings from Venezuela are one thing. They’re quite another coming from the biggest foreign holder of Treasuries, with about $764 billion.
“It would be important for the U.S. not to take its position for granted,” World Bank President Robert Zoellick said last week. “My guess is what you will see over time, just as the euro has developed over time, you may have some other currencies develop as an alternative.”
Not that the yuan is ready for prime time. Besides, say analysts like Marc Chandler of Brown Brothers Harriman & Co. in New York, China’s desire for the yuan to become a global invoicing currency doesn’t outweigh its need to maintain control and help exporters. Ultimately, China’s ambitions are hemmed in by the realities of a currency that still isn’t convertible.
China speaks out of both sides of its mouth on the issue. One day, a top official says China wants an alternative to the dollar. The next, someone like Vice Foreign Minister He Yafei tells reporters that “we hope that as the main reserve currency the U.S. dollar will be stable” and that he’s “not aware” of China pushing to put the subject on the agenda of the Group of Eight’s agenda this week.
The other BRICs nations -- the acronym refers to Brazil, Russia, India and China -- all have made noises about the dollar’s stability. Some more than others, of course, yet their concerns have been well reported.
Replacing the Dollar
Replacing the dollar as a long-term goal is fine. Doing it while the global financial system the dollar anchors is in tatters is ill-advised. Not surprisingly, folks in Washington are worried about a sudden move against the currency.
It hardly seems a coincidence that while Managing Director Dominique Strauss-Kahn has called China’s yuan “substantially undervalued,” the International Monetary Fund has toned down criticism over the disconnect from economic fundamentals. The softer rhetoric removes a sticking point between China and the IMF, as Asia’s second-largest economy seeks a larger role at the lender and the fund tries to increase China’s contributions.
Could the quid pro quo be that China avoid pulling the rug out from under the dollar? It’s possible. Still, Obama and Treasury Secretary Timothy Geithner shouldn’t assume Asia’s continued support. Not with the Federal Reserve holding interest rates near zero and untold waves of fresh debt flowing into uncertain markets. Rumblings about the U.S. losing its triple AAA credit rating have further raised the stakes.
Blame All Around
Granted, Asia deserves some of the blame here. Over the past decade, the region was the site of a currency-reserve arms race. While the clear winner in this game of monetary one- upmanship is China, economies like Taiwan and South Korea are holding more dollars than they would like.
It’s become the world’s biggest Ponzi scheme, really. The dollar isn’t crashing because those invested in it are propping it up and adding to their holdings. After all, the magnitude of Asia’s foreign-exchange holdings means it can’t dump the dollar without shooting its economies in the foot.
Asia should indeed be plotting how to reduce its dollar holdings. Those trillions of dollars would be better used in Asia to pay for better roads, bridges, airports and power grids and improved education and health care.
Until then, the U.S. needs to reassure Asians they won’t suffer massive losses on their dollar holdings. It can start by circulating a credible exit strategy from today’s massive stimulus efforts.
The White House also needs to convince Asia that devaluing the dollar at some point to boost U.S. exports isn’t on the table. Obama and Geithner should plan to increase financial diplomacy efforts, traveling to Asia often.
Asia has a $4.5 trillion dollar decision to make, and it’s up to the U.S. to help the region make the right one. Taking Asia’s money for granted would be a disastrous way to go.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at firstname.lastname@example.org
“once a standing army is established, in any country, the people lose their liberty.”
“Military men are dumb, stupid animals to be used as pawns for foreign policy.”
“If you are an ordinary person, then you can prepare yourself for war by moving to the countryside and building a farm, but you must take guns with you, as the hordes of starving will be roaming. Also, even though the elite will have their safe havens and specialist shelters, they must be just as careful during the war as the ordinary civilians, because their shelters can still be compromised.”
"We don't let them have ideas. Why would we let them have guns?" Joseph Stalin
The people who cast the votes decide nothing. The people who count the votes decide everything.
Governments keep a lot of secrets from their people . . .
Why aren't the people in return allowed to keep secrets
from the government?
PHILIP ZIMMERMAN, DER SPIEGEL
“Some call it Communism, I call it Judaism.”
Rabbi Stephen Weiss
“Anti-Communism is Anti-Semitism.”
Jewish Voice, July - August 1941
Taxing People is Punishing Success
There's the rich, the poor, and the tax payers...also known as the middle class. Robert Kiyosaki
The Tax you pay is The Bill for Staying Stupid
“The modern banking system manufactures money out of nothing. The process is, perhaps, the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and un-mint the modern ledger-entry currency.” Major L L B Angus
The few who understand the system will either be so interested in its profits or so dependent on its favours that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests.
The Rothschild Bros
"Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers.
This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world.
By dividing the voters through the political party system, we can get them to expend their energies in fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned and so successfully accomplished."
USA Banker's Magazine, August 25 1924
Cutting Tax Rates stimulates Economic Growth creates more Profit , more Jobs and therefore The Treasury ends up with more Tax Money
Taxation is legalized Theft
"The Objective of the Bank is not the control of a conflict , it's the control of the debt that a conflict produces . The real value of a conflict , the true value is in the debt that it creates . You control the debt , you control everything . this is THE VERY ESSENCE OF THE BANKING INDUSTRY , to make us all , whether we be nations or individuals , SLAVES TO DEBT " An UNKNOWN Banker
Patriotism is the last refuge... to which the scoundrel clings .... Steal a little and they throw you in jail ..steal a lot and they make you king ....
"Corporations are stealing billions in tax breaks, while the confused, screwed citizenry turn on each other. International corporations have no national allegiance, they care only for profit." Robert Reich
There is NO political answer to a spiritual problem!
Political Correctness is a Political Stand Point that does not allow Political Opposition , This is actually The Definition of Dictatorship
The modern definition of racist is someone who is winning an argument with a liberal
When People lose everything and have nothing left to lose , They Lose It !
Your Greatest Teacher is Your Last Mistake
The one who Controls the Education System , Controls Perception UNKNOWN
"The world will not be destroyed by those who do evil, but by those who watch them without doing anything."
Albert EinsteinIn The Left Nothing is Right & in The Right nothing is Left
Freedom is not Free
Don't Steal The Government Hates The Competition
"Buy The Rumor , Sell The Fact " Peter Schiff
You can love your Country and not your Government
" The Government Works for ME , I do not answer to them They Answer to ME "
"Tyranny will Come to Your Door in a Uniform "
"The Government is not The Solution to our Problems , The Government is The Problem "
"The price good men pay for indifference to public affairs is to be ruled by evil men." Plato
The world is a tragedy to those that feel, and a comedy to those that think...Beppe Grillo
"The people should not fear the government for it is the government who should fear the people" UNKNOWN
"If You are looking for solutions to the world's problems , look in the Mirror , You Are The Solution , You have the power as a human being on this planet " UNKNOWN
"They don't control us , We empower them " UNKNOWN
"Serial Killers do on a Small Scale What Governments do on a large one..."
Serial Killer Richard Ramirez
"When the people fear their government, there is tyranny; when the government fears the people, there is liberty."
Schools manufacture people who think that they're smart but they're not.
Education is what you learn after you leave School
" Schools were designed to create employees for the big corporations."
"If a law is unjust, a man is not only right to disobey, he is obligated to do so" Thomas Jefferson
Dissent is the highest form of patriotism
“True education makes you feel stupid. It makes you realize you have so much more to learn.” Robert Kiyosaki
"One day your life will flash before your eyes. Make sure it's worth watching." - Gerard Way
"Aspire not to have More but to be More "
The losers in life think they have all the answers. They can’t learn because they’re too busy telling everyone what they know.
Robert T. Kiyosaki
"Failure is simply the opportunity to begin again. -This time more intelligently." Henry Ford
What You Own Owns You
If you expect the government to solve your problems, you have a problem. Robert Kiyosaki
"Those who give up their liberty for more security neither deserve liberty nor security." Benjamin Franklin
"None are more hopelessly enslaved than those who falsely believe they are free.” - Johann Wolfgang von Goethe
"Always trust someone who is seeking the truth , never trust someone who found it" Jordan Maxwell
Be The Change you want to see in The World
Failure inspires winners but defeats losers
“If you are planning for a year, sow rice; if you are planning for a decade, plant trees; if you are planning for a lifetime, educate people” A Chinese Proverb
"First they came for the Socialists, and I did not speak out--
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out--
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out--
Because I was not a Jew.
Then they came for me--and there was no one left to speak for me." UNKNOWN
Let me tell you why you're here. You're here because you know something. What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?
Morpheus The Matrix 1999