Where is the US economy headed?

Miller, Why don't you try dead, then report back to us how it is.

Miller: CI's told us the same tale, over and over again for at least 5 or more years.


And what "tale" is that, Miller?

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last Updated: 9:54am BST 08/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Blog - Dollar to collapse?
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

...I repeat myself.

cicerone imposter wrote:

...I repeat myself.

I told you so!

cicerone imposter wrote:

Miller: CI's told us the same tale, over and over again for at least 5 or more years.


And what "tale" is that, Miller?

If you don't know what you're saying, how can we help you?

Miller wrote:

cicerone imposter wrote:

Miller: CI's told us the same tale, over and over again for at least 5 or more years.


And what "tale" is that, Miller?

If you don't know what you're saying, how can we help you?

Would you stop playing childish games and let the forum know what you are talking about?

Roxxxanne wrote:

Miller wrote:

cicerone imposter wrote:

Miller: CI's told us the same tale, over and over again for at least 5 or more years.


And what "tale" is that, Miller?

If you don't know what you're saying, how can we help you?

Would you stop playing childish games and let the forum know what you are talking about?

I, obviously, have nothing to talk about, the DOW is down 387. I'm now stepping out of my basement window.

dyslexia wrote:

I, obviously, have nothing to talk about, the DOW is down 387. I'm now stepping out of my basement window.

Just heard that something just happened in France, so now we get the consequences...

Just heard that something just happened in France, so now we get the consequences...

Stocks tumble as French bank reacts to home loan worries
By Jeremy W. Peters

Thursday, August 9, 2007
U.S. Stocks dropped sharply as soon as trading opened Thursday after a French bank, BNP Paribas, suspended operations of three of its funds in the wake of turmoil in the American market for home loans and the European Central Bank and the Federal Reserve injected cash into the financial system because of tightening credit markets.

The Dow Jones industrial average fell more than 200 points, or 1.5 percent, while the Standard & Poor's 500-stock index and the Nasdaq composite index were down just as much. Stocks remained volatile through the morning, and at 11:15 a.m., the Dow was down about 120 points. The S.&P. 500 was off by about 1 percent, while the Nasdaq had recovered most of its losses.

Asked at a news conference this morning whether he thought the turmoil in the subprime lending market could put a chill on credit in the broader economy, President George W. Bush said, "The fundamentals of our economy are strong," adding, "I'm told there is enough liquidity to enable the system to correct."

The latest upheaval on Wall Street came after a sell-off in Europe, which was prompted after BNP, the largest publicly traded bank in France, became the latest European lender to announce problems linked to the worsening credit market in the United States, where several large companies have already announced losses.

A German central bank meeting was under way to discuss details of a rescue package for the lender IKB, another victim of exposure to the crisis in subprime lending.

Jonathan Mullen, a spokesman for BNP, said that the credit squeeze in the United States had made it impossible to calculate the value of the underlying assets of the funds and that the bank was obliged by market conditions to halt holders of the funds from cashing out or new investors from buying shares in the funds.

"It's quite exceptional to suspend funds, and it means that people can't buy in or sell out of the funds," Mullen said. "But we hope this is going to be temporary and that the market will come back."
(i didn't know that bankers operate on HOPE hbg)


Mullen said that about one-third of the funds were exposed to subprime loans but that those investments were in high quality parts of that market. "We've seen no degradation in the quality of these assets, none of which have been put on watch for a downgrade," Mullen said. "This is just a technical problem about liquidity."

With banks pulling back on lending over all, the European Central Bank lent more than $130 billion overnight at a rate of 4 percent to inject cash into the financial system, and the Federal Reserve added $24 billion in temporary reserves to the United States banking system.

A key question is whether some European lenders know the full extent of their exposure to the subprime lending crisis. Only last week, BNP's chief executive, Baudouin Prot, said the bank's exposure to subprime woes was "absolutely negligible."

BNP shares fell more than 5 percent in early trading, but Mullen reiterated that the bank itself had almost no exposure to the subprime crisis. He said the funds are held by BNP clients (too bad for those clients ; i guess they needed to be taught a lesson : BUYER BEWARE OF SUB-PRIME LOAN INVESTMENTS !)