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“The U.S. dollar trap”: China is going downward spiral

Jiang Yong

Since China’s central bank to dish out the “super-sovereign currency” after the article, a Nobel laureate in economics, Princeton University professor Paul Krugman (Paul Krugman) has announced a series on this subject and comment on the article, the core content is China single-handedly push their own “dollar trap”, and now do not know how to get rid of the only manufacturers in other countries decided just to throw a question. Krugman in New York in mid-April in an exclusive interview with the media pointed out that China’s investment in the United States the biggest risk for the depreciation of the dollar, China is expected to suffer the ultimate fear of loss of investment by 20% ~ 30%. According to the U.S. Foreign Relations Committee, Setser (Brad Setser), China has accumulated at least 1.5 trillion U.S. dollars of U.S. dollar assets, the RMB exchange rate against the U.S. 30% of the change (this is very possible) means that the about 450 billion U.S. dollars the loss of almost one-tenth of China’s economy. Even more painful is that China’s determination to control the appreciation of the renminbi to force them to buy billions of dollars a month assets. China is like a person from indulging in gambling, betting and no hope of ever-increasing, making it the ultimate losses increasing. People questioned that day in China’s economic elite, “holy”, why is falling into the hands helplessly, “U.S. trap”?
Rely on export-oriented
Without long and short term, there is fear. Looking at the history of the world, it is because a lot of tragedy in ownership for the success of day intoxicated, opinionated and should not listen to different voices, and ultimately bound for the avalanche engulfed by worries.
Looking back at three decades of reform and opening up, behind the huge success, it is not difficult to find, not only in scientific and technological innovation, we have little improvement in the thinking of the concept of innovation is inadequate. Reform and opening up, we play “the advantage”, has been following the East Asian export-oriented mode (by the Japanese and the “Four Little Dragons” proved more successful as a model), a road go black. There are two major export-oriented policy tools: one is through the tariff policy, protection of domestic markets to curb imports; the other is down the national currency exchange rate, in order to promote exports, curb imports.
Due to the rush into the WTO, China’s continued reduction in tariffs at the same time, only more and more dependent on the devaluation of the Renminbi, especially the foreign exchange system reform in 1994, the significant depreciation of the renminbi, China’s export-oriented policies in the performance of the more obvious, cheap labor catch a cheap resources and cheap environment, makes “Made in China” marketing world, bearing the portrait of President of the United States rolling paper, China’s foreign exchange by the scarcity to surplus soon, by the rationing had suddenly become a rare a hot potato.
It is noteworthy that, in Japan and other East Asian countries and regions, through the export-oriented, supporting domestic infant industries to continuously upgrade the quality of local manufacturers, in order to upgrade the industrial structure, in order to improve the status of the international division of labor in the provision of bedding. However, China’s export-oriented exchange is the main task, especially in the East Asian financial crisis, China’s foreign exchange extremely high enthusiasm by raising the export tax rebate increase in exchange, to encourage overseas investment primer Meeting, to be added, so the formation of sustained huge “double surplus “of the international spectacle.
As a result of the introduction of a large number of foreign direct investment, China’s national enterprises to grow and continue to squeeze the space was due to low profits, business is not too much money for R & D and innovation, and therefore more and more firmly nail in the labor-intensive and low technology-intensive, most low-end on top of the international division of labor, processing and manufacturing the prevalence of substance will become China’s actual resource conversion tool for the United States bonds. Once the international market and signs of trouble, first of all, experience the impact of these non-self-brand, non-core technology, without the ability to create high value-added of the Chinese-funded enterprises. China’s export-oriented development has come to an end.
U.S. pressure and induced
US-led international financial order, the international financial turmoil will inevitably become more persistent and normalized. financial monopoly”not only controls the press, but also controls the government”, so the financial monopoly interests and national interests are often the same. The international financial market turbulence, in line with the interests of financial monopoly, the U.S. national interest, because the financial turmoil in the U.S. monopoly capital to provide a transfer of wealth nations, sub-drinking countries an opportunity to profit; financial turbulence in emerging markets and developing countries to force ever-increasing foreign exchange reserves to prevent the attacks on international speculative capital, which will increase U.S. distribution, increase in the United States Mint tax (less than a dollar issue cost one cent); for the increase in dollar reserves, it is necessary to increase the export of U.S. products, not only the United States sustainable use of the international low-cost resources, and the use of the advantages of the status of the domestic market, the country succumbed to pressure from U.S. interests.
The United States continue to pass legislation, additional sector institutions and mechanisms to the name of national security, restrictions on foreign exchange reserves of surplus countries to purchase U.S. assets or advanced high-quality technical equipment. Therefore, emerging markets and developing countries in the ever-increasing foreign exchange reserves at the same time, close to the purchase of U.S. dollar denominated assets can only be so on the one hand, the United States continues to finance deficit spending, on the other hand, for the United States financial institutions, transnational monopoly capital to expand the implementation of the international financial provision of adequate funding.
Under normal market economy conditions, personal and corporate debt to be liquidated after all. However, the higher the accumulation of U.S. debt was not liquidated intended only to keep the issue of new debt is also old. When the accumulated foreign debt load of more than ability of the United States, the depreciation of the dollar on the implementation. Since the disintegration of the Bretton Woods system since the dollar has clearly entered a cyclical depreciation, the depreciation rate on the previous term, usually 30-40%. 70 from the early 20th century after the collapse of the Bretton Woods system, the dollar depreciation will be cyclical, each time the average rate of depreciation of about 30% -40%. Measure of the depreciation of the dollar is not just the euro, Japanese yen and other credit currency, more important is the “real money” – gold (gold and silver currency is not natural, but natural is the gold and silver currency). From the original 35 U.S. dollars / ounce 900-1000 now USD / oz, the real value of China’s foreign exchange reserves has been shrunk. Citigroup has predicted that gold will rise to 2000 U.S. dollars / ounce level. United States authorities to manipulate the depreciation of the dollar, in essence, by reducing the real purchasing power of dollars to implement bilk, the transfer of financial risks and shift the financial crisis. Therefore, as an international reserve currency since that date, accompanied by the risk of moral hazard on the dollar.
China’s trade surplus and capital surplus in the ever-increasing cases, rapidly becoming the world’s foreign exchange reserves. Sustainable use of China’s foreign exchange reserves, and took the opportunity to transfer risk to the Chinese, the crisis shifted the strategic choice of the United States. Sino-US economic strategic dialogue is the strategic choice of the United States provides the best mechanism. Underestimation of the RMB exchange rate and trade surplus, to the United States put pressure on China to handle the best. Through the strategic dialogue, the United States continue to put pressure on China to buy U.S. dollar assets, China this one step at a time into the “trap of dollars.”
If China’s foreign exchange reserves continue to purchase, hold U.S. bonds, the value of dollar will be a gradual depreciation of the “dry”; positive reduction, will immediately hand the assets of a large number of evaporation. Professor Krugman of Princeton University that China’s focus on the purchase of U.S. debt to the neglect of other assets, such as the euro is to blame – very cool discourse; analogy Western officials, the Chinese if the U.S. bond sell-off as “their own feet at open gun “- to do satire.
Over the interests of the sector
Statistics show that since 2004 China has been the holder of U.S. treasury bonds on high-speed growth, from 2004 to 2007 grew threefold, to reach 922 billion U.S. dollars high. Last year, in 2006 only to 2007, China’s growth in the United States bonds held by 66%. In the U.S. sub-loan crisis, the Chinese, as always, keep buying American bonds generous. U.S. sub-loan crisis, in the same boat, China is still overweight passion to keep.
In the “comparative advantage”, the China real commodity, of condensation of cheap labor, cheap resources, low-cost environment, in exchange for piles of green “paper” (U.S. dollars in cash, also known as “green backs”) and electronic symbols (now issued by the overwhelming majority of U.S. electronic symbols), and then use the “concept of dollars” to buy U.S. treasury bonds to support the functioning of the United States Government, to support the U.S. consumer borrowing in support of the United States financial institutions in China to use the money to make more money. U.S. debt snowball, debt, can only be used to issue more U.S. dollars to repay dollar devaluation inevitable. From the collapse of the Bretton Woods system, the dollar devaluation cyclical, China’s foreign exchange reserves continue to shrink in a matter of fact. In the world, including U.S. allies Japan and the United Kingdom irons are cast aside or reduce the case of U.S. dollar bonds, the Chinese are still working tirelessly to increase the hold, now became the largest holder of U.S. treasury bonds. The outbreak of the century the United States financial crisis, the devaluation of U.S. dollar, China’s holdings of U.S. bonds, U.S. dollar assets in the end the number of losses, related departments have been vague, to become a mystery.
In 2003 for the completion of a major national issue, I had the honor of “close” contact with our leaders of the foreign exchange management departments. I took the opportunity to ask a very simple but since that has plagued the topic, that is, “Why China’s foreign exchange reserves to buy used instead of U.S. bonds to buy gold?” Leadership that answers very simply: “Because money does not buy gold.” I was full of doubt, would like to know why not make money? But the leadership was arrogant and that did not answer why not make money to buy gold, but about the “oil dollar” is the concept of the textbook. I in 2005, “the interests of the state sector the impact of major policy decisions” research topics, with a leading financial regulatory authorities to exchange this topic, which led to answer is not to make money to buy gold, even if gold does not appreciate the good we reflect the financial books, as the value of gold in the changing, even if reflected in the book, but when at the close, as well the sale of gold reserves, it is not the earnings. Buy U.S. bonds, because of debt, earnings are due, in spite of the views of scholars in accordance with your actual losses may be, but we have the proceeds of the book, and we buy the more the greater the absolute return, sector performance is also greater. I asked to buy gold, gold revaluation, and the country has not earned it? Xiao said that the leadership of the country can be said to make, but we did not profit.
According to Xinhua News Agency, April 24, 2009 the Secretary of the State Administration of Foreign Exchange of the interview, since 2003, China’s gold reserves increased by 454 tons, at present has reached 1054 tons. This 1054 tons of gold to the current market price converted into U.S. dollars, less than 2% of China’s foreign exchange reserves, much lower than the European Union set the safety level of 15%. It should be noted that China’s gold reserves increased slightly (as opposed to the rapid increase in the huge foreign exchange reserves), is purified by domestic as well as miscellaneous payment transactions, such as the domestic market to achieve, is not (at least not primarily) to use foreign exchange to buy, but not in the international market to buy, not only failed to spread the risk of foreign exchange reserves, and raise the domestic price of gold will not only affect the possession of gold to the people, but also with the people for profits.
Contempt for economic laws, the challenges of economic common sense
In February 2006, China’s foreign exchange reserves reached 853.6 billion U.S. dollars, replacing Japan as the world’s foreign exchange reserves. The central bank senior officials in the China Development Forum on the speech made it clear that “per capita scale, China’s foreign exchange reserves was not high. If China’s 1.3 billion people in terms of per capita in China’s foreign exchange reserves more than 600 U.S. dollars only, less than Japan one-tenth, compared with Singapore also fell far short of. ” Prior to this, international economics, it seems that there is not a scholar, a division of a country’s foreign exchange reserves per capita to measure the country’s foreign exchange reserves of the appropriate standards, when China is the first. Usually today’s international trade is to support the import of foreign exchange reserves as a measure of the time an important indicator of foreign exchange reserves, foreign exchange reserves is generally believed that the amount of the minimum import requirements should not be less than three months as the warning line.
China’s contempt for economic laws and economic common sense, to engage in foreign exchange reserves, “多多益善”, so that in December 2006, China’s foreign exchange reserves on the one trillion U.S. dollars, in the world. To the end of 2008, China’s foreign exchange reserve reached 1.95 trillion U.S. dollars, accounting for the world’s foreign exchange reserves of 40%. Of these, the proportion of dollar-denominated assets as high as 70%, that is, to put the majority of eggs in one basket. Therefore, falling into the hands of “trap dollars,” just as Princeton University professor Paul Krugman has said, is “to blame.”
High foreign exchange reserves, foreign exchange has increased the pressure on the one hand, resulting in the difficulty of financial control is not conducive to the healthy development of China’s economy; On the other hand, will further aggravate trade friction, delegate to handle mercantilism. In addition, the huge foreign exchange reserves reduces the efficiency of the use of funds, resulting in a waste of money. High foreign exchange reserves of foreign exchange reserves also increased costs, increased risk reserves. I did not see that the foreign exchange, “a lot”, how can there be “good benefits”?
World powers for its own interests, an increasing emphasis on independent use of monetary policy, China-related financial and senior officials made it clear that they do not mind the independence of monetary policy, the RMB exchange rate lock, with the Fed’s policy every step. Precisely the Fed monetary policy is the world’s largest operator. March 18, Federal Reserve Chairman Ben Bernanke is finally open HKNPL machine, from the “lied helicopter money”, and further to the market, “transfusion” 1.15 trillion U.S. dollars. Doomed to devaluation of U.S. dollars, China will face greater foreign exchange reserves shrink. Its biggest creditor of the United States commitment – to ensure the safety of dollar assets – is doomed to fail, even though the United States can hold U.S. dollar assets in China to achieve the payment with interest, but the depreciation of the dollar, also by the “The “is not the original” this “paid” interest “is not the original” income. ”
Thus, to see the world, China’s ground-breaking out supranational monetary sovereignty born. SDR (Special Drawing Rights) is the International Monetary Fund (IMF) was founded in 1969, is allocated to the Member States IMF a right to the use of funds. 37149300000 United States for the largest share of SDR members, 6369200000 China located 8. SDR use of U.S. dollars, euros, pounds and yen currencies weighted set of four values (weights were 44%, 34%, 11% and 11%), for the government and international organizations for International Settlements, members It can be used to temporarily balance of international payments. Over the past 40 years, SDR has not been able to expand the fundamental reason is that the major share of SDR by the developed countries to hold, while the developed countries is often hard currency, they do not need the SDR, there is no promotion of SDR was more widely used in market demand. China SDR to SDR or similar nature of the currency to replace the dollar, it is somewhat sounds reasonable. The reason is very simple now, in order to stabilize the financial and stimulate the economy, the Western countries of “collective cheating”, switched on banknote printing machines in the printing of bank notes, the collective international reserve currency devaluation, such as if a “super-sovereign” SDR, what is the use? Therefore, Hong Kong “Oriental Daily News,” March 26, 2009 editorial that, it is proposed to create a new reserve currency, under the wrong side, looking for the wrong people, picked the wrong time. Even liberal economist Zhang Wuchang dare gambling hard, wrote in his blog, “Thomson’s analysis of the financial disaster”, the article said, “willing to bet money, I try, XXX’s recommendations, if successfully launched, the Chinese will be losers in the best in the world. ”
Growing fiscal deficit the United States (accounting for the proportion of GDP: 13.6 percent for 2009, 9.7 percent for 2010) goes far beyond the annual 3 percent warning level, and has become the world’s largest net debtor countries (about the world’s GDP 10%) to the U.S. dollar as the single currency system, the threat is there. The adoption of international economists to study the history of the world economy consolation China: the 20th century, 20 years, more than half of the world’s foreign exchange reserves for France, but in the end to fall into the hands of “trap pounds,” ended in the disastrous outcome. At that time, the management of foreign exchange reserves of the Bank of France is a private body, and not cover all foreign exchange assets in France. The difference is that France, China’s foreign exchange reserves are almost all the nation’s centralized management of foreign exchange is 30 years of reform and opening up a concentrated expression of the achievements. Today, China’s falling into the hands of “trap dollars,” and in “U.S. trap” of being bogged down further, the relevant departments and people should give the public an explanation.

gold is Non-monetary? The lie of U.S

by zhang tingbin
2009-08-08

Main gold bull market is yet to come

In the summer of 2009, some investors began to feel cold in the top of mountain.

Shanghai Stock Index in just over eight months more than doubled. And the outrageous prices up even more, from 3,4-quarter last year, the Center City housing prices fell about 20-30%, the second quarter of this year, a sudden strong counterattacks, another record high, the property market has entered a frantic final period. Shanghai’s housing prices, from 2001 to 3000 yuan, now risen to about 3 million, is already “10 times as large bullest stock”, July 19, I wrote a special “buy a house to deal with inflation is a big trap now buying real estate would be tantamount to self-stack firewood, “warning of risk, try to avoid repetition of mainland residents in Hong Kong after the Asian financial crisis of” negative assets “the tragedy of mistakes.

Need to be clear is that for the general public to enhance the future of increasing inflation expectations, which I agree, but also remind one of the earlier. At the same time, also pointed out that although the future of the stock and property markets are still up some space (the stock market may be larger than the future of space up the property market, and even does not rule out the very substantial increases), but has entered the bubble period, the risk of investment has been large on opportunities.

In that case, there is no investment goods, which not only real anti-inflation, more investment opportunities are much greater than the risk? Yes, this is the kind of gold. Since July 2005 has been a point of view I have not changed, this round of global financial crisis is in the nature of the currency crisis in U.S. credit, that is, the proliferation of credit in dollars to enlarge, extremes meet, the inevitable collapse of the trend, the gold is the best hedge hedge assets. The collapse of U.S. coin big negative is that the gold bull market.

The future wealth of the Chinese people the greatest challenge to defend the U.S. dollar collapse of the knock-on effect, if large dollar collapse, the substantial depreciation of commodity prices, or even 10 dollars for an old new dollars, new dollars will be re-linked and gold, this could be huge wash of the U.S. national debt, the United States can be a traveling light.

If that happens, China will suffer huge losses. External, foreign exchange reserves of 2.3 trillion U.S. dollars will be lost 90%; at home will also be a result of very serious situation.

The face of the substantial depreciation of the old dollar, and even re-link the new gold dollar, China There are three responses: 1, the RMB to the U.S. dollar appreciation against the old, it will core competitiveness of China’s economy a tremendous impact; and then forced to the new U.S. substantial depreciation of the yuan’s international reputation will be damaged; 2, the yuan to follow the old substantial depreciation of the dollar against the commodity, that is a serious price inflation; 3, when the U.S. dollar and gold re-linked the yuan is also linked to gold to protect its international purchasing power.

For China, the first two were disastrous, the correct solution is the third way, is about to add foreign exchange reserves, and the U.S. out of foreign exchange assets in due course, a large number of holdings of gold reserves. Can reduce a major collapse of the future U.S. dollar-denominated assets of the loss of China, at the same time take precautions to prevent future re-linked to the dollar and gold.

Readers may think that, since 1999, gold prices have risen from 252 U.S. dollars an ounce to the current 950 U.S. dollars, up 275 percent, has been up a lot, is not it already have the risk?

In my eyes, the gold price is now roughly equivalent to the last round of A shares when the bull market, by the end of October 2006, ICBC’s listing, the real master up period yet to come. Large as the U.S. the main stage of the collapse of yet to come, but faster, Rogers recently pointed out: the collapse of U.S. large monetary crisis occurred in the 3 years. This time the judge basically the same with me.

Gold can rise high in the end it?

Gold can rise high in the end it? Here to mention three simple methods of calculation: first, in 1980, the international gold price of 850 U.S. dollars an ounce the highest, taking into account the dollar over the past 30 years the name of the devaluation, the price should be around 2250 U.S. dollars; the second, from 1968 to 1980 gold bull market, gold rose 35 U.S. dollars from 850 U.S. dollars, up 24 percent; in 1999 if the current round of the 252 U.S. dollars as a starting point to the same range of estimates, gold will be up to 6000 U.S. dollars, and this round of notes the crisis than the U.S. credit crisis was more thorough and more severe; Third, the total amount of treasury bonds with the countries of the world’s stock of physical gold prices measured 1:1. Global gold stocks to 165,200 tons (What is this concept? 20.5 meters it is a positive cube, the cube is equal to only 5-story building of ordinary residents, we can see its scarcity. Another comparison, the main Olympic stadium — – Bird’s Nest steel volume only reached 42,000 tons, which far exceeds the total weight of the world’s gold stock). To the current gold prices, it is a total of 5.5 trillion U.S. dollars, but only the total U.S. national debt reached 13 trillion U.S. dollars, not to mention the 60 trillion of liabilities of all the people. Global gold with the U.S. national debt reached only 1:1, the price will be more than 2000 U.S. dollars; world bonds with 1:1, it will reach more than 5000 U.S. dollars. In short, the real value of gold is still being seriously underestimated so far, in 2000 dollars, gold is not the risk, the opportunities far outweigh the risks. Countries, financial institutions and the public can be bold Jiancang holdings.

Why even today continues to be a serious underestimate of gold then? This is due to the past more than half a century behind the U.S. and the ubiquitous international金融寡头huge propaganda machine to brainwash the people of the world repeatedly,千百亿times to repeat a lie, a lie – since the dollar from gold in 1971 , then there is no monetary gold properties, gold has been useless; adhere to the true value of gold is the “gold bug” and so on.

In recent years, I have the “honor” branded the “Top Hat.”

U.S. gold VS paranoia paranoia

In the past few years, I have been called China’s famous “golden insects.”

The courage and the mainstream of the monetary and financial expectations, the courage to “collective blindly” go in the opposite direction is to have the courage and the will of the spirit under tremendous pressure, “gold bug” is only one of a small “crown.” I also follow a longer period of time greater crown is “narrow-minded nationalism” in the “golden defend China – Republic of the new 60-year Raiders”, a book, I will be comprehensive, thorough, systematically expounded the truth of the world.

In November 25, 2004, I published “The global economy exacerbated by cracking oil clouds” article, pointing out that: With the birth of the euro, “the entire world economy ice is a huge gap open, it is the side of U.S. dollars, the other side of the euro. the ecological balance of the world economy are being broken, the broken balance from the old to the new balance of the reconstruction, only God knows how tragic human will pay the price. ” Since then, a better understanding of the gold in the world monetary and financial and economic reconstruction of an important ecological status, in July 29, 2005, written press, “experts recommend a large-scale increase in gold reserves in China,” a text to become the first domestic media papers called for a massive increase in gold reserves in China article (The international gold price was only 429 U.S. dollars an ounce).

Since then the dollar as the deepening of the financial order to understand, I increasingly strong U.S. dollar collapse of the monetary and financial order will not be a people’s will the prospect of the arrival, and in early 2006 with “danger and Machine 2006: The United States and China adjustment speed, “the article clearly states: the U.S. economy has been hard to avoid the financial crisis. Of gold in the future reconstruction of the international monetary and financial order in the increasingly central role in the clear.

Thus, in the past 4 years, my best efforts to do everything in its power, has repeatedly suggested that China adhere to the official, financial institutions and civil society to increase large-scale gold, oil and other reserves, firmly opposed to China’s large-scale increase in U.S. treasury bonds to buy dollar-denominated assets, such as, for the collapse of the future prepare for big dollars. At the same time, more and more people began to identify and promote strategic reserves of gold.

That adhere to the mainstream in some westernized almost seems to have a “paranoid”, especially in those who insist on “a unified U.S.” values, I sent two “crown”, one “golden child care providers” ; The second is the “gold bug.” Of course I care about this, no response has been. Today, by Sina weeks column and “to defend the gold in China,” the occasion of the publication, so I replied:

First, the so-called “golden child care providers,” the accused, in fact: 1, such that the counter-argument, which is not the author’s occasional gold, but gold is gold to the value of the entrusted to the Enlightenment is the true wealth of the Chinese people to defend of care. In July 2005, when only a small number of domestic gold business, especially for the very few public sales of gold, it is precisely because we have spared no effort to enlighten, only more and more Chinese people are gradually beginning to recognize the serious underestimation of the gold value, with the market demand is an increasing number of gold sellers. In short, these new gold are the followers of the Enlightenment; 2, if asked, then, how can there be in the gold price is only 429 U.S. dollars an ounce, the international price of gold has not yet started up the main time period highly recommended to start ? And I repeatedly made clear that the international price of gold dollars in 2000 are being seriously underestimated the value of the stage.

Second, for the so-called “gold bug” of the accused. Is even more ridiculous – and because the “gold bug” concept is a lie too black-and-white reversed – that staring eye without fear and blush. Health bug gold how can it? We have heard that Apple, vegetables Health insects, have heard of books, papers can be Health and insects, gold, gold bars, in particular, is the world’s investment in higher-density, quality, the most weight, texture, the most pure, the most noble qualities of the material, in any case is the Health insects to see, but where a pile of sand dollars, when a long period of time will give birth to the insects to paper.

This absurd name, or a lack of common sense at least, or a deliberate smear, motivated. To borrow the logic of their son’s spear attack our very own, they are the real “dollars insects.” They are the “U.S. does not set” unlimited worship, several decades to inculcate the “golden useless” to brainwash the people of the world, that is the real paranoid. Has itself moved in the opposite direction!

Gold for the extreme importance of the Federal Reserve

However, they can not always deceived the people of the world is – they say one thing and do the full 180 degrees of opposite another. Very hypocritical that they not be overstated.

They simply can not answer this rhetorical question: Why is the U.S. Federal Reserve to create the core of its gold assets it (the U.S. Federal Reserve assets accounted for more than 75% proportion)? Why is the world’s two major international trading and reserve currency, has a huge gold reserves (Fed 8 130 tonnes, the EU central banks more than 12,000 tons), while behind the national economic strength of the yen was very strong, only theory temporary borrowing for speculative international speculators to “bring money,” because the Japanese central bank gold reserves of 800 tons it has only a few? Since the properties of gold has lost money, why should the Federal Reserve which 8 130 tons of gold as a “no-sale” assets, even if today’s financial crisis unabated, the Fed has never sold the gold to obtain the funds to rescue the market it?

More intuitive is that the Federal Reserve to leave U.S. treasury notes and in-kind treasury of gold really different attitude.

U.S. Federal Reserve kept the central treasury notes on the location of its headquarters in New York City suburbs, where hundreds of billions of dollars stored in the U.S. dollar notes. China surprised the visitors is that they pass is transmitted by the taxi driver, this is not the underground vault. The first door of the treasury and the general office of the revolving door is no different. The second door, third door is also true, but none more than the front door, back door can not open an organ. The bank mainly relies on the safety of the work in the treasury of 480 monitors and security personnel.

Dollar bills and deal with the “pseudo-treasury” just a normal, compared to defend the United States the real gold on the heavily guarded store, guard.

Gold in the United States, mainly stored in two. One is located in the southern tip of Manhattan Island, New York 24 meters deep under the bed of hard rock of the Treasury, Federal Reserve Bank of New York, where storage of the 60 countries, central banks and international organizations in more than 8.3 thousand tons of gold stored. Belonged to the Federal Reserve Bank’s gold reserves account for only 5%.

New York suburb of treasury bills and the security measures here is quite different entirely. The depths of the rock in the ground there is no door of the treasury, who passed out is a 2.7 meters high and weighs 90 tons of solid steel tube. Outside the steel tube with up to 140 tons of reinforced steel and concrete wall, steel tube has a central 3 meters long narrow passage, just gently manipulate the switches, steel cylinder that can rotate 90 degrees, exposing access for staff access. All of the steel tube system using manual mechanical manipulation. The Federal Reserve in New York this building, but also to prescribe both the safety of dozens of tons of heavy doors, hidden in buildings, it is generally less than the fundamental note, but when an emergency, two doors to complete the closure of 7 seconds, even the only Do not try to climb to all ants. In addition, there are a large number of security personnel inside the building, armed with semi-automatic weapons, at all times to monitor the building inside and outside of every corner. 70% of the guards are “Archery” sharpshooter attacks.

Treatment of foreign gold stored like this, while the United States most of their gold reserves deposited in the more heavily guarded and more mysterious Fort Knox (Knox) barracks. Fort Knox barracks hinterland behind the United States is a strategic rear base for the United States. Here was first built during the First World War, Knox barracks, the expansion in 1932 into a permanent military base, becoming the headquarters of the U.S. armored forces headquarters. The construction of the barracks building a solid square, and with electronics, machinery guards, is said to have only 7 re-grid, a safety door weighing 24 tons, specialized storage of gold and treasures, it is estimated that around Fort Knox 4 570 tons of gold.

The United States the most extreme attention to these kind of gold, the treasures of the United States was founded – “Declaration of Independence,” “U.S. Constitution”, “Magna Carta” Lincoln “in the Gettysburg speech” and so on stored in this manuscript. In other words, the real power of the United States it seems that if the founding fathers of these United States the founding values of the ink is the lifeblood of the United States, then the gold is the source of U.S. economic power – the lifeblood of dollars.

Gold is the root of U.S. currency

In a modern Declaration of the most popular currency – does not set U.S. dollars, gold is no longer possible to currencies, gold useless. However, the most intelligent of the 20th century masters – the origin of socialist Karl Marx’s assertion that: “Currency is a natural gold and silver”, and excellence on behalf of JP Morgan capitalism more straightforward – “Gold is a currency, is” between charge? Or, in Marx and Morgan, the currency occurred in the evolution of how, gold and bank notes, stock and financial derivatives between the relationship between what is in the end?

Have produced anything, development, peak, decline and demise of the process, the U.S. dollar alone can escape this law of nature and the history of it? All these problems need to be a reasonable answer.

In the “gold to defend China’s” one book, through the past 100 years, and even trace the history of the history of monetary analysis, the author proposed a new theory of international currency – “money three-state” and “Four Seasons dollar” theory.

Tri-state means the currency is the currency of the solid, liquid and gaseous, solid-state money is the corresponding value of goods and in kind, the general is the equivalent of gold; liquid gold out of currency is restricted and there is no kind of net direct mortgage credit notes, For example, the U.S. dollar and the yuan now, including asset securitization and bonds; gaseous currency derivatives. Over the past hundred years, the evolution of monetary expansion from solid to liquid, and then expanding to the gas, its root causes is to get rid of after the gold, paper money and the over-expansion caused by India. This is a centuries-old currency from the solid – liquid – gas expansion cycle. When the euro challenge the dollar in 1999, this single dollar reserve currency for international transactions and the system was closed to the bubble expansion, the balloon collapsed rapidly inward, the International Monetary contraction began to reverse the collapse of the cycle of contraction from the gaseous to the liquid, and then contraction of the solid-state, when its contract when the solid-state, that is, the return of the gold standard.

“The U.S. dollar Four Seasons” is a vivid example. Gold is the currency of the roots, notes secured by the gold dollar is the trunk, the rise of great powers in the United States of spring and summer, and then grow from the trunk of numerous leaves – pure dollar credit notes. However, the major powers the United States has entered a cycle of decline, the U.S. dollar as the currency has ushered in a tree fall and winter, the leaves will inevitably decline, and gold trunks and roots to survive in the winter.

In short, in U.S. history until today, gold has always been the root of U.S. currency, which is taken by various means U.S. forces can not defame the prime reasons for the end, the Fed is not afraid to sell the 8130 tons of gold reasons – because it is equivalent to a tree trunk to the leaves and tree trunks to eliminate, it is absolutely impossible!

I am convinced that the answers to these questions, design and realization of the current global monetary and financial order Rothschild is likely to have 100 years ago, already anticipating the secret. But the “Truth and monetary gold” in the past 100 years has been to cover up the layers to become large and complex, the vagaries of modern monetary and financial, “the sea” the deepest secrets of the seabed. In-depth study of the relationship between gold and currency for many years, the truth in my eyes has become increasingly clear.

There is no doubt that U.S. is the largest to date of human society a monetary giant trees. In the growth process, it is almost completely changed the currency of human jungle ecosystem.

U.S. Federal Reserve is the rise of the history of swallowing gold

In the previous era, of course, the currency has a relatively tall forest trees, such as pounds, but more variety of trees, and even some small shrubs, but when the U.S. in the 20th century the process of growth, the original almost disappeared in the jungle, like a giant super-chain business, “Wal-Mart,” the process of forming the closure of many small businesses the same. In the 20th century when the late 90’s, the face of the earth with only a little giant trees, which trees leaves and head of trees very well-developed livelihood of almost all tree can not be separated from a “super tree” of the.

In fact, the growth process of the Federal Reserve, the U.S. dollar as an international super-tree growing process, that is, the process of continuous gold like a whale. In 1895, the United States the best times of crisis, the U.S. official gold at least nine million U.S. dollars only, equivalent to 12.3 tons, it is precisely because the very lack of gold, the U.S. government was NM Rothschild and JP Morgan family grasp the throat, had to sell the gold market and the United States the right to issue debt. By 1907 the shortage of another currency crisis in the gold may not be right to sell the currency to the Rothschild family and Wall Street financial president who in 1913 established the Federal Reserve financial president lock the currency of international distribution rights to such a power in the United States is paramount, Congress, the Government, the public right to know the inner workings of the Federal Reserve, let alone monitored (please detail the process of participation “to defend the gold in China,” Chapter 1-2), and even within the most important of the Federal Reserve meetings are not allowed to be recorded.

Only control the Federal Reserve before the international financial president are well aware of the “gold is money the root of” the true meaning. In fact, from the Federal Reserve after the establishment of the first day, the Fed has become a super “animal swallowing gold.” World War II for its legitimate and effective “swallowing gold” to create the best conditions.

During the war, weapons have been continuously out of the United States, to Europe, to eliminate the soldiers and people, destroying houses and wealth there; and in exchange for an endless stream of gold has been shipped out of Europe, to the United States. In 1913, the United States gold reserves is only 7 000 million (at 20.67 U.S. dollars at that time one ounces, or about 96 tons), and after the First World War, gold reserves increased to an alarming 4.5 billion U.S. dollars (6 172 tons) . U.S. Federal Reserve has become the world’s most powerful central bank. And after the Second World War, but also an increase of 20,200 tons, accounting for the global gold stock 3 / 4! U.S. Federal Reserve has become a veritable behemoth swallowing gold Super. At the same time, the United Kingdom, Germany, France, gold fell sharply, the British gold reserves before the war of 3629 tons by the sharp decline to 261 tons in 1941, Germany and Italy because they are defeated, almost non-existent gold.

Unprecedented in human history, a super-economic and financial hegemony was born. The year end of World War II, the United States not only has superior economic strength, as well as super gold reserves – GDP accounted for 66% of the world, the world’s gold reserves account for 75% of the stock of gold. All the old imperial past had to succumb to it, accepting the capitalist world after the war the United States for the design of the Bretton Woods system, the U.S. dollar since then dominate the world of capitalism.

Dominate the world as seen when the Federal Reserve gold and currency notes, the Federal Reserve and international financiers from the beginning of the smear on the age of gold. They rely on the destruction of the war’s main rival the United States, through the savings of the absolute superiority of the gold reserves, and relying on powerful economic strength of the U.S. dollar on the currency hegemony in the world. But they are not going to sum up this experience, so that after other major countries – such as China to share, but to bury it deeply, and many times to repeat a lie: gold from the useless, out of gold from the stage of history . Such efforts in 1971 – to rid itself of dollars of gold and the ultimate success of all the constraints. And after decades of repeated lies super paranoid to 1000 times, 10,000 times, billion times a trillion times paranoid, trying to speak into the gold of truth.

However, the truth is the truth, is the Federation of luminous gold. Any business when there are extremes meet, the U.S. dollar and gold are the same – the history of U.S. changes its attitudes, review for the gold in hand.

The problem is that the gold dollar was once inseparable comrades-in-arms of the most important, why it does throw of gold? Why are they so out of hatred and gold so strongly?

The answer is that, if they can not shake off the constraints of gold, one the largest in human history, the most greedy and most of the profits there is no way the business model was born. I will be the next in an analysis of Bowen. More in-depth exposition of strict Please refer to the “golden defend China.”

The United States is pushing China to become a non-normal state

http://blog.sina.com.cn/s/blog_46df74db0100eppt.html

Before 1840, a large number of silver into the British Empire of the East India Company, in exchange for the upper classes of society opium of luxury consumer goods, because the Qing the most silver is not bad, but in 1840 the rulers suddenly wake up one day, the empire Financial has been living beyond their means ….. but everything has been late.
2009, a lot of money flowing into Wall Street, or used to buy U.S. Treasury bonds. United States credit guarantee, the Chinese gold important than the confidence to insist on the purchase.
Thus, we see the first round of the Sino-US strategic economic dialogue with —- the world’s largest capitalist countries and the world’s largest socialist country, with the One World, One Dream, and “woe.”

Thus, we see President Obama will not only high-profile evaluation of the strategic dialogue as “the relationship between the United States and China will shape the 21st century.”

U.S. Treasury Secretary big show in Chinese, basketball gifts U.S. President, Timothy Geithner, Vice Premier Wang Qishan and China World Friends Syria, the Americans face to the foot of China.
Americans “over-enthusiasm” is worth considering. Hong Kong’s “Ming Pao Daily News” editorial pointed that “the United States can adjust its policy without shame, Peter, in exchange for the ability of its national interests.”
The first round of the Sino-US strategic economic dialogue with China has been about? China’s commitment to ease it? U.S. history is a letter by Shou country? The Chinese have done it?

Although the theme of the dialogue on “Strengthening confidence, restore economic growth, strengthening the Sino-US economic cooperation.” However, as the world’s most important trading partner, the United States did not recognize China’s “market economy status.” Why did not the United States presented “capitalism” to prove entry to the China? China because it was not “private” enough, it would also like to seize greater benefits more.

In the fight against terrorism, the United States not to abandon support for Tibetan independence, Xinjiang independence organization, Al Qaeda and the positive shift of attention towards the target of China.
On the one hand, the invitation of the United States to actively cooperate with China to participate in the United States counter-terrorism, combating the Taliban, the Taliban in order to divert the hatred started slowly on China for the future set traps to get itself free. On the one hand, actively produced the Islamic Muslim China and the conflict between the two-pronged approach. Publicity through continuous, ongoing uproar, and the distortion of the purpose to cover incitement to peaceful demonstrations, and constantly intensify the relationship between China and Islam, leading Muslim elements to achieve the hatred of China, forgetting the purpose of the United States, the United States from the quagmire of hatred and get rid of .
From the facts, 7.5 terrorist attacks in Xinjiang, China’s relations with the Muslim world tensions. Following the Turkish Prime Minister Recep Tayyip Erdogan accused the Chinese of the Uygur of “genocide”, the International Organization of the Islamic Conference issued a statement accusing China of the disproportionate use of force, resulting in many civilian deaths, and called on China to address the domestic issues of Muslim minorities, fundamental solution. Lebanon’s three Muslim leaders criticized the Iranian government Monday with China’s political, economic, and military customs co-operation in the Xinjiang Uyghur Muslims remain silent on issues. Some members of Congress also questioned Iran’s relations with China, Iran, accused the Government of the election last month to suppress a number of opposition demonstrators, there is no position to criticize China. Maghreb al-Qaeda in North Africa, ordered the local branch of the Chinese people to launch attacks, Muslims in revenge for the Uygurs …… All of this shows that terrorism troubles the United States will lead the Chinese were in force.

In addition, China hopes the United States to relax the high-technology exports to China and to raise the voice of China in the International Monetary Fund and so on, also to no avail.
The United States has almost been all it wants to.

Over the years, China has changed over the past an independent foreign policy, and unswervingly follow the road of pro-American. Sino-US relations, even in the United States offensive weapons sales to Taiwan, the United States bombed the Chinese embassy in Belgrade, the Sino-US plane collision incident and other serious incidents, the Chinese still did not remember its guilty before. 9.11 in the United States terrorist attacks, much-needed moral support of the world, China in the first instance of terrorism in the expression of anger and sympathy for the American people in order to indirectly show that the Chinese mind. In fact, China In order to meet the US-led global system to carry out a deep restructuring, the value of standards from various sources around the West.
It can be said that China’s reform and opening up three decades, the United States marked a deep imprint.
Now, China’s official foreign currency reserve has exceeded two trillion U.S. dollars, Prasad (Eswar Prasad) and Sok Kim (Isaac Sorkin) recently for the Brookings Institution in (Brookings Institution) to write a report, 2 equivalent to one trillion U.S. dollars: New York City, Los Angeles and Boston, all the value of land and property; the Dow Jones industrial average index price by the end of June, when 73% of the total market value; Standard & Poor’s 500 Index total market capitalization at the end of June the 25 %. However, the magnitude of the official foreign currency reserve is increasingly becoming a headache for things Chinese, China will find it virtually impossible to buy any of these assets.
The first round of the Sino-US strategic economic dialogue with China the main results will continue to buy U.S. Treasury bonds. In the long run, China’s economy has been hollowed out of the danger.

As a result of special economic relations, China’s political trap had already been the United States. Such as Taiwan’s domestic problems, it also depends on the United States face. Now in easing cross-strait relations because the United States should continue to use the money in China. Once the U.S. economic recovery, there is a new cross-strait relations variables.

Sino-US countries in the world of the fiery, but also to show the mentality of the complex.

First is China’s friendly against China and the United States fear they approached, especially Russia, Sino-Russian relations on a basis of common interests, and against the United States is the superpower of the cooperation between the two sides of an important political basis for the disappearance of the common struggle against the target will be reduced Sino-Russian strategic relations.
Russia, “The Independent” article on July 29 that the Sino-US strategic dialogue held in Washington to discuss the economic crisis in anti-cooperation, as well as restrictions on Iran and North Korea shared nuclear programs. For the dialogue, the Russian Yuri renowned expert on China. Milutinovic added that the Sino-US relations are committing Russia and China have said that if the damage to relations with the United States, China will not make that concession to Russia. To this end, China refuses to recognize independence of Abkhazia and South Ossetia. Experts speculated that the Russian seizure of the Moscow market Chergizovok Chinese goods, and in the Region of Khabarovsk and Primorsky Territory is a step up efforts to combat smuggling activities in Moscow as a response to Beijing.
Moscow at the moment the United States has extended an olive branch to U.S. Assistant Secretary of State to Mr Gordon said that the Macedonian government oban Russia does not rule out the possibility of joining NATO.

Russia into NATO, and Western military alliance, now seems unlikely, but long-term strategy from the USA and China, China must be prepared.
Followed by China’s special relationship with the United States is bound to hurt the traditional friendly relations. China has been the representative of a developing country itself, China has a special interest in countries such as North Korea, Iran, Sudan, Myanmar and other countries, has great trust in China, the United States will reduce the heat of their territory in China’s political weight, affect its national interests. Moreover, China seems to forget new friends old friends, especially the United States along with China’s restrictions on Iran and North Korea’s nuclear program, so that an old friend of chilling, have to leave.

China to pay a price in this trouble in Xinjiang have been very prominent. In addition to Russia, expressed a distinct profile to support China’s position, most countries in the world to have this embarrassing silence. Western countries can be understood silent, like Pakistan, Myanmar, Sudan, Iran and other friendly countries of China’s silent, the information disclosed by no means unusual, and its exposure to China’s foreign policy embarrassment of a tendon, it is worth to reflect on!
As for Russia, Brazil and India, hope that the rise of world powers, the rivalry is in private with the Chinese, or Chinese joke.

China and the United States to help one another, China must first take care of the concerns of the United States, historical experience shows that obstruct the development of Sino-US relations has three ghosts, one ideological factors, and the other is China threat theory, three factors are the values. And the United States, China and the United States there is always the possibility of conflict, the United States to contain China’s rise at certain times of the calls or even very strong.
A recent example is a close neighbor of the United States and China deepen the alliance between India and return to Southeast Asia, and signed a long-term ASEAN hesitates and Friendship Treaty, the United States in the ambiguous attitude of the South China Sea issue, hobnobbing with Mongolia to strengthen and Japan, South Korea and Australia alliance formed in China surrounding the encirclement of a strong. According to media reports, Obama planned to meet in the second half and the Dalai Lama Kadeer. Kadeer is likely to replace the aging Dalai Lama to become the new U.S. pawn.

China and the United States together, the Chinese have to take care of the concerns of the world, therefore, whether it is ago that China and Russia to seek a “multi-polar world”, or the United States willingly into the hub, in the United States under the leadership of the “multi-partner world” have a share of China seems to have not made up his mind, it will be a very difficult choice. 100% To be sure, the United States in the United States will not allow another world outside the core, and multi-polar world, the pursuit of equality is also of great power diplomacy is contrary to the concept of the United States.

China has its own national interests, completely follow the road to take the United States, in terms of international politics or domestic political perspective, not reality. It is impossible for China to the United States, to offend the world. Such as too risky, China needs a lot of lessons learned.

America’s friends do not. America’s friends do is to prepare a price.
I have been unable to find a precise word to describe the current Sino-US relations: the U.S. president, the secretary of state, finance ministers, a large number of references in the Chinese philosophers do not know the famous saying of Mencius, to closer relations with China, not bad money in China, the United States almost to the credit history of mankind and not height.
President Obama, perhaps, is the evaluation of high-profile United States and China will shape the 21st century “relationship.”

Historical experience shows that the fate of a country at the mercy of another country, even if another country is a credit on the United States, gambling is ridiculous.
Perhaps the Chinese into the United States is a non-normal state, China will be the world’s marginalized, and then ……
I hope that the telling of lies.

When China prepares its « Great Escape » from the dollar-trap for the end of summer 2009

When China prepares its « Great Escape » from the dollar-trap for the end of summer 2009

- Excerpt GEAB N°34 (April 16, 2009) -

LEAP/E2020 believes that the next stage of the crisis will result from a Chinese dream. Indeed, what on earth can China be dreaming of, caught – if we listen to Washington – in the “dollar trap” of its USD 1,400-billion worth of USD-denominated assets? If we believe US leaders and their scores of media experts, China is only dreaming of remaining a prisoner, and even intensifying the severity of its prison conditions by always buying more US Treasuries and Dollars.

In fact, everyone knows what prisoners dream of. They dream of escaping of course, of getting away from prison. Therefore, LEAP/E2020 has no doubt that Beijing is constantly striving to find the means of disposing, as quickly as possible, of the mountain of « toxic » assets which US T-Bonds and Dollars have become, keeping the wealth of 1,300 billion Chinese citizens prisoner.

In any good escape story, the prisoners do not spend their time making announcements that they are preparing to get away. In fact, on the contrary, they tend to avoid arousing their guards’ vigilance. According to our team, the Chinese declaration of March 24th asking for the replacement of the US dollar by an international reserve currency was both a “testing of the waters” and a warning: a direct poll to make an assessment of the forces at work (within the G20 in particular) when it comes to moving to a post-Dollar era (1), and a constructive and destructive (depending of the reaction to the previous idea) warning sent to the various global players. A responsible player (and Beijing is one) must send discreet signals to the other players likely to follow or help “planning the job”. The preparation (2) and implementation of a « Great Escape » (3) requires the collaboration of several partners and no one who would have been willing to co-operate must end up in trouble because he was not informed (4).

Two estimates of Chinese Foreign Asset Growth (USD billion) – Sources: Central Bank of China / Brad Setser, 01/2009
In any event, thanks to the Central Bank of China’s “testing of the waters”, Chinese authorities have the following four beliefs confirmed:

1. A large part of the other members of the G20 are clearly in favour of a quick shift (5) to a post-Dollar era, in particular Russia, India, South Africa, Argentina, Brazil… therefore Beijing will not be alone when the time for a “Great leap forward ” (6) comes. On the contrary, China will be accompanied by a significant part of Latin America, Africa and Asia. The recent Yuan swap deals agreed with some of these countries is already paving the way in this direction (7).

2. The United States and the United Kingdom are refusing to consider any move in the direction of a post-Dollar era. Timothy Geithner’s blunder, when he considered discussing the Chinese proposal, was quickly corrected by US political leaders, but it revealed an interesting situation for Beijing. Geithner is Wall Street’s man in Obama’s team, and his blunder suggests that the financial Anglo-Saxon community would in fact be quite open to discussing any move likely to maintain their financial privileges, even if it means the end of the “Dollar era”. The « Dollar wall » is not so solid when it leans on « Wall Street ». Financial players have little attachment to a particular territory (this characteristic dates back to long before our current globalised system). In contrast, Washington still does not want to hear anything about the replacement of the US Dollar as global reserve currency, preferring to listen to and believe in soothing experts’ talk instead (8). We know what the result was in the case of subprime loans, the financial bubble, Wall Street’s banks, AIG, TARP, the recession, and so on.

3. The Europeans (except UK) are their usual selves, unable to make any really firm decision with regard to their former US protector (9). They are successful in resisting Washington’s orders, but they are not able to impose an agenda that would displease the United States. Nevertheless, thanks to their multilateral nature and numerous relays, it is obvious that, once the end of the « Dollar-era » has become irreversible, they would bring all their know-how and lobbying capacity to bear the creation of a new international currency, independent of any particular country. That is the reason why China launched the idea that the SDR (10) could be an alternative to the Dollar, proving that it was open to other suggestions than the Yuan (key condition for European support in the future).

4. Beijing is resorting to increasingly clear and bold announcements, always gradual, sometimes even followed by vague denials, coming from less important sources but soon widely circulated by the international financial media. It is thus increasing its freedom of speech (and of action, as, when it comes to monetary issues, what is said can be a lethal weapon or a soothing remedy) without significantly affecting the value of US Treasuries or the Dollar.

This last aspect is indeed the ultimate requirement of the Chinese government: to avoid by any means a collapse in the value of US Treasuries and the Dollar before it has escaped the « Dollar trap ». LEAP/E2020 believes that, in the coming months, China will reveal the exact meaning of this requirement. Is it a goal or a necessity? If it is a goal, then Washington, London and the international financial media are right: Beijing will follow in Washington’s footsteps, merely trying to enhance its influence on US decisions. On the contrary, if it is a necessity, then our team is right and Chinese leaders will strive to sell off their US-Treasuries and Dollars at the best « possible » price, choosing the best « possible » moment, avoiding creating turmoil likely to lower the value of these assets for as long as « possible » (of course, China has been thinking about all the « possibilities » before launching its « escape » plan). But, in contrast to the first option, once all “possibilities” have expired, Chinese leaders will all of a sudden contribute to accelerate the end of the Dollar-era; or, more likely, they will calmly announce that for a number of reasons beyond their control (11), they can no longer continue to play the role of US imbalances’ stabilizers.

Chinese US asset purchases vs. Chinese estimated reserve per category of US assets (green: Treasuries and deposits / Blue: Government Sponsored Enterprises (Fannie Mae, Freddy Mac, etc) / Yellow: Corporate bonds/equities / Red: Annualized estimated reserv
Our anticipation, in this regard, is based on a number of developing trends which, in the last few months, have been confirming our analyses. Since the end of 2008, the Chinese government has undertaken to dispose of 50 to 100 billion USD worth of USD-denominated assets every month. Taking advantage of record-low prices in a large number of assets useful to the Chinese economy (minerals, farmland, energy, EU or Asian corporate shares – not US ones, this is not a minor detail), Beijing « went shopping » in line with its first requirement, making the best of its USD-denominated assets, i.e. exchanging them for non US assets, thus allowing it to go forward on the way to the “Great Escape”.

We would like to emphasise on just how fast this process is taking place. Despite the lack of transparency in the methods used (a precondition to prevent a collapse of US Dollar and Treasuries before the moment chosen by Beijing), a remarkable study has been conducted by Brad W. Setser and Arpana Pandey, published in January 2009 by the Council on Foreign Relations, which was an evaluation of Chinese foreign exchange reserves estimated to total around USD 2,300 billion at the end of 2008 (i.e. more than 50 percent of China’s GDP (12)), of which there were 1,700 billion worth of USD-denominated assets (900 billion in Treasuries, around 550 billion in GSE bonds (Fannie Mae, Freddie Mac…), close to 200 billion in corporate assets and 40 billion in short-term deposits). The author of the study comes to the logical conclusion that Beijing has no further interest in adding to this huge amount of assets, increasingly at risk because of the financial and economic decisions made by the US in addressing the crisis (13), now at risk of loss, and for which, in future, funds will no longer be available due to collapsing trade surpluses and the lack of inward flows of foreign investment.

Top: Chinese foreign exchange reserves and share of US assets / Bottom: Idem as a % – Source : BCA Research, 12/2008
Very logically, Beijing is now disposing of these huge surplus exchange reserves which keep Chinese leaders prisoners of US decisions with no further advantage for their country, as remarkably described by Rachel Zembia in an article published by RGE Monitor on 02/21/2009: loan credits to ASEAN countries (14), swap agreements, green light for 400 Chinese enterprises to trade in Yuan with Asian countries (15), loan credits to African states and Russia, long-term special oil rates negotiated with Persian Gulf states, loan credits to oil companies in Brazil and Abu Dhabi, purchase of European and Japanese company shares (no US shares, strangely…), etc. The author emphasizes the fact that these agreements would include guarantees for Chinese companies to have access to these resources. Contrary to appearances, what is really at stake in these deals is Beijing’s discreet disposal of its US Treasuries and Dollars in exchange for assets that the country needs, moreover available at record-low prices at a time when US Treasuries and Dollars still have some value.

With regard to US Treasuries, China has largely stopped buying them (purchases decreased by USD 146 billion in the first quarter of 2009 compared to the same period last year, representing an increase of only USD 7.7 billion! (16)) and only then purchasing short term (three month) Treasuries (17)!

Between the fact that it has nearly put a complete end to its purchase of US Treasuries and that it is accelerating the pace of its« global shopping » for more than USD 50 billion per month (swap agreements included), it appears that, between the end of 2008 and the end of summer 2009, China will have disposed of nearly 600 billion worth of USD-denominated assets, and it will have failed to purchase between USD 500 and USD 1,000 billion worth of US Treasuries that the Obama administration has begun to issue to finance its extravagant borrowings. LEAP/E2020 estimates that these two amounts added together give a clear idea of Beijing’s impact on the « Dollar-era » at the end of summer 2009, at the end of the US fiscal year. China’s disposals and failed purchases of US Treasuries alone will then represent a shortfall of between USD 1,100 billion and USD 1,600 billion in the United States’ financial needs. Ben Bernanke will be compelled to print Dollars in a (vain) effort to prevent his country from defaulting on its debt.

US monetary base – Source : Réserve fédérale US, 03/2009
In the knowledge that each time Bernanke declares that the Fed will purchase its own US Treasuries, they lose 10 percent in one day, i.e. USD 140 billion compared to other international currencies, Chinese leaders will certainly find it acceptable to sacrifice USD 400 or 500 billion.

LEAP/E2020 believes that, at this stage, they will consider that they made the best « possible » use of their USD-denominated assets. Then, they would better be among those who push the « button » – or who do not try to prevent it. The second phase of China’s “Great Escape” out of the Dollar will then begin, depending on the behavior of the other key players. Either the Yuan takes its place as international reserve currency along with the Euro, Yen, Ruble, Real, or a process creating a new international reserve currency based on a basket of these currencies will begin. The Dollar will then be out of the race and the G20 reduced to a G18 (without the United States and the United Kingdom, but with Japan no longer able to escape the Chinese sphere of influence). Otherwise, the process of global geopolitical dislocation, described in GEAB N°32, will be underway, based on economic blocks, each of them trading in their own specific reserve currency.

———
Notes:

(1) The corridors at the London G20 Summit were full of discussions about a post-Dollar era. The feedback we got from our own initiative (the Open Letter to the G20 leaders) already proves it. So the declaration of the Central Bank of China on the same day was certainly at the centre of all the serious conversations (not those covered by the media) during and after the London Summit.

(2) Beijing has recently launched a think-tank dedicated to the global economic crisis intended to help Chinese leaders with their decisions. Regardless of the increasing traffic observed since the end of 2008 on LEAP/E2020’s websites coming from China (and Japan too, including spontaneous translations of our public announcements on a variety of websites and blogs), this initiative clearly suggests that China now wishes to distance itself from US and UK analyses which represented, until then, 90 percent of Chinese experts’ sources. Source: ChinaDaily, 03/21/2009

(3) The movie of the same name, based on a true story, shows nothing else. In real life, the lack of meticulous preparation would doom the escape to partial failure.

(4) The main players are perfectly aware that capital is now flowing out of the US at the precise moment when the country’s huge public borrowing requirements substantially increase the need for foreign capital. In January 2009, the net amount of capital that left the US was USD 150-billion. Source: US Department of Treasury, 03/16/2009

(5) In this case, our researchers are talking months, not years (like the experts, who « concede » that there is a problem of status with the Dollar, would like to believe), because the size of the out-of-control US deficits represent a major threat in the short-term for the entire monetary system.

(6) China’s great political leap, which took place in the 1950s, entailed many disastrous collateral effects (millions of people died of the resulting hunger), but no one can tell whether or not the political leadership of the Chinese communist party is ready to take this kind of risk in the event its own survival and/or the country’s internal stability are at stake. European and American analysts pretend to know what Chinese leaders have in mind, because they have a tendency to think of them in their own image. According to our team, the post-Dollar era (if executed in an organized manner, by means of a new international reserve currency based on a basket of currencies, or chaotically by means of a sudden and non-negotiated end to the Dollar era) marks first of all a post-European era (or post-Western, if we estimate that there is an American specificity as far as core values are concerned), and that such an era has surprises in store for Europe- and West-centered people. Those who doubt it should read these remarks from a Chinese central banker on China’s « superior system advantage ». Source: MarketWatch, 04/26/2009

(7) After South Korea, Malaysia and Indonesia, it was the turn of Argentina to sign a swap agreement with China for a USD 14.5-billion equivalent in their currency, thus allowing each country’s businesses to bypass the US Dollar in trade and strengthening the Yuan’s position as international exchange currency outside Asia. Source: AustralianNews, 04/01/2009

(8) This Los Angeles Times article, dated 04/03/2009, is one of the broadest-minded on this subject! But, it is a fact that China is far closer to Sunset Boulevard than to the Beltway.

(9) We say « former protector » because, as the last NATO summit again proved, Europeans and Americans no longer agree at all on the nature of current threats. The war in Afghanistan is becoming a US war only and the Europeans are mostly preoccupied by the reorganization of their strategic relationship with Moscow. In short, the Alliance (with France a member again, as our team announced when Nicolas Sarkozy was elected) is now nothing more than a senior club in need of common goals other than spending some time together and pretending that everyone gets on as well as they did 60 years ago. Unfortunately, « old age is a shipwreck » as Charles De Gaulle used to say.

(10) The idea is unrealistic. Indeed, SDR were killed by the US around 40 years ago. To have any chance of success, a brand new currency must be created (especially as, called« Special Drawing Rights », it would be very unlikely to enhance its reputation outside the strict circle of monetary experts).

(11) For which they will hold the US responsible: extravagant deficits, incapacity to stimulate economy… the reasons will be many at the end of summer 2009.

(12) On this subject, our team emphasizes that, contrary to the suggestions contained in Chinese leaders’ recent enthusiastic speeches suggest, China’s economic situation will not significantly improve this year. Between collapsing exports, an exploding housing bubble and soaring unemployment, Chinese GDP will remain stable in 2009 (or increase 2 to 3 percent maximum). This situation will strengthen Beijing’s intention to turn its back on all the strategies which led it into this situation for which the scapegoat is obvious. Sources: Financial Times, 04/13/2009; Chinaview, 04/02/2009; New York Times, 04/02/2009; ChinaDaily, 03/19/2009

(13) For instance, the AAA rating of the United States is a complete farce, as this article published in SeekingAlpha on 30/03/2009 explains. The whole country, companies, households, public services, are acquiring junk-bond status… but the federal government is still rated AAA! Rating agencies (all of whom are American) have well deserved the USD 400 billion they were paid by the federal government to help them in assessing the value of USD 1,000 billion worth of toxic assets that it is about to purchase from the banks. Assets which, of course, were rated AAA two years ago by the same agencies. But Beijing, as well as the rest of the world, has now fully understood the fraud. Source: BusinessInsider, 04/07/2009

(14) Source: MarketWatch, 04/12/2009

(15) Source: ChinaDaily, 04/12/2009

(16) Source: ChinaDaily, 04/11/2009

(17) As Brad Setser indicates, in 2008, China absorbed nearly half the foreign purchases of US Treasuries.

Lundi 27 Juillet 2009

The statistics data of China’s economic growth number in the first half of 2009 is not real?

Author: PEI Ming
date :2009-7-30

2009 in the first half of China’s GDP growth figures have been announced: the first quarter grew 6.1% in the second quarter rose by 7.9% in the same period last year. According to this trend continue, China will clearly meet or exceed the full year 2009 growth target of 8% . Everyone wants to know that this figure is true it? Whether at home or abroad, there are millions of people have some doubts, but can not find ways to confirm.

There is a very interesting way to verify: National Bureau of Statistics released figures for GDP growth in real growth, that is, after deducting inflation, economic growth. At the same time, it also announced a nominal growth, that is not deducted from the economic growth of inflation.

It is interesting to note the first quarter of this year on behalf of China’s GDP growth rate of only 3.5%, only 3.3% in the second quarter. This means that the first quarter of China’s deflation of around 3% in the second quarter of the deflation of 4-5%. Rate of deflation so much it really?

Strange happened: in June this year, consumer price index (CPI) fell by only 1.7 percent over the same period last year, this is already the largest year-on-year decline this year has been. Producer Price Index (PPI) was a large decline, year-on-year in March this year, down 6% in June were down 7.8 percent year-on-year. But do not forget that economic growth in the services sector is also an important component of, and that in accordance with relevant state departments , the revitalization of the service sector in our country the key to stimulating domestic demand. Services sector, the inflation rate then what is it like?

Unfortunately, the National Bureau of Statistics did not publish a unified national price index of service industry, let us extract 36 large and medium-sized cities in China, a number of key services and products based on the price. First of all, rent, rent large and medium cities in the same period last year will remain basically unchanged during the first half of this year – can hardly be blamed, the real estate prices in the circumstances, how could rent fall? Followed by transport, the first half of the road freight transport costs, taxi fares have not changed the same period last year, a slight decline in bus fares (less than 1% drop). Followed by water, electricity and gas, electricity prices in the first half of the residents will remain basically unchanged, but the large and medium cities rose water, gas costs are rising, or about a few percentage points – so, utility prices are rising. Followed by the communication costs, all over the fixed telephone, mobile phone charges are not much changed, and according to relevant statistics, large and medium-sized cities is to increase the broadband charges. Finally, health care and education, too many types of charges, I sampled a few rough categories, did not find examples of the decline. Therefore, the overall view, the first half of this year, the service industry should be the overall price level stable, rising slightly, or may be about 1%.

Finally, we must point out that China’s real estate prices, whether housing or commercial buildings, are up first half of this year, at least not decline. Although the national real estate has never been included in the scope of inflation statistics, but in considering the nominal GDP and real GDP, the difference must be taken into account.

In accordance with the National Bureau of Statistics, GDP in China’s tertiary industry which occupy about 40% of the total of the first and second industries occupy about 60%. Of course, the tertiary industry, including the wholesale and retail trade and real estate, after excluding these two industries, services to occupy China’s GDP, there are still 25-30%. Now our conclusion is simple: to occupy the Chinese economy 25 — 30% of the service industry, its product prices by about 1%; occupy 6-8% of China’s economy the real estate industry (in this case refers only to real estate development, excluding the industrial chain), their products prices 5-10%. GDP in the remaining 60-70% of consumer goods, industrial products and fixed investment (excluding real estate) to be embodied, in which the prices of consumer goods fell by 1.7% year-on-year, industrial prices fell 7.8%.

Now please answer the question: China’s GDP statistics implied inside the 3 percent the first quarter of the second quarter of the deflation and deflation of 4-5%, may be true? My answer is: almost impossible.

Of course, here there is a possibility that the industrial production in the first half of this year to occupy a great proportion of the total GDP and growth of the contribution of all great, so the decline in prices of industrial goods deflation is also very big contribution. But with the National Bureau of Statistics and other departments concerned that the contradictions – Please note time and again that the state departments concerned, a strong first half of this year GDP growth is a major factor in “strong demand”, but strong growth in retail sales of consumer goods. Moreover, if the first half of industrial production really made so many contributions, why electricity consumption would result?

No matter how that that barrier.

Conclusion: the first half of 2009 the number of China’s economic growth is not worth refuting.

Reference: National Bureau of Statistics from the National People’s Bank of China National Development and Reform Commission and the disclosure of the data.

The Collapse of Demand! The Case of China

Posted by Alan Alexandroff on January 21st, 2009 in China

We know, or at least think we do, that world demand is ‘collapsing’. We’ve seen emerging power currencies fall significantly; equity markets deflate; and governments planning and then announcing fiscal stimulus packages. But assessing the state of the BRICSAM economies is not easy. None is more difficult to gauge than China. It remains a rather daunting task to get a handle on the growth/lack of growth of the Chinese economy.
When I was last in China in December, it was impossible to get a ‘read’ on where growth was; or was going. Could one identify growing domestic demand in China? Was this domestic demand beginning to sop up the ‘over capacity’ of China’s export driven economy. Though the government is not being particularly forthright, I’d look to folks like Michael Pettis to provide a picture of the current course of China’s economy. Michael teaches finance at Peking University’s Guanghua School of Management and manages a blog (identified on the right navigation bar at Rising BRICSAM) – China Financial Markets. Michael has apparently worked for many years on Wall Street for various IBs (now mostly departed) and seems to have focused in those days primarily on Latin America.
So is there significant China growth and how have the Government’s policy measures encouraged, or not, domestic demand? Why, relates to an analysis that Michael has related over the past few weeks on his blog posts. First, there is Michael’s examination of how China needs to adjust to avoid a major economic implosion. Besides the blog, you can find Michael’s analysis in the most recent (January/February) Far Eastern Economic Review (unfortunately the online FEER.com appears to be by subscription only) – the article is entitled “China’s Great Demand Challenge.”
The essence of Michael’s argument is that China stands today in something of the same place, and with the same impact, as the United States held in the global economy in the period prior to and in the Great Depression. China, like the US was back in the 20s, is a huge exporter with significant industrial overcapacity and a large current account surplus. Michael suggests – pessimistically – that US policy then (and potentially China’s policy today) accounted for the severity of the economic collapse and the sustained economic depression of the 30s. In the US case, the country had serious industrial overcapacity that it failed to adjust; further the US failed to expand enough fiscally to compensate for the severe domestic and foreign decline in demand; and the US found itself with a severe monetary contraction – the collapse of banks and a sharp contraction of lending. Authorities in the US case failed to loosen monetary policy swiftly enough, or adequately to counteract the monetary contraction in the collapse of financial institutions.
As Michael summarizes about that earlier global economic crisis, “But as the US continued investing in and increasing capacity, without increasing domestic demand quickly enough, it was inevitable that something had to adjust.” With that scenario in mind, Michael suggests that either China has to increase domestic consumption dramatically, or it has to cut back domestic production. The worrisome conclusion for Michael is that it appears policy makers in China and export-driven states elsewhere in Asia are moving in the US direction of the 1920’s – attempting in particular to defend “its ability to export overcapacity.” As for Chinese fiscal stimulus, he concludes that the Government efforts have been “too feeble to matter much.” Demand creation is not happening in the trade-surplus economies including China. For Pettis the answer to the current global imbalances are a coordinated fiscal response – trade deficit countries like the US should expand moderately to reduce the time of adjustment; and the trade surplus countries must stimulate domestic demand. In China’s case, and given the relative difficulty of stimulating domestic demand (the structure of China’s economy is largely export-targeted), and given the size of the surplus to its GDP, China must be given 3 or 4 years to achieve success.
This leads to an examination of current trade and economic growth trends. In a number of earlier posts – ”Is the US trade deficit sustainable? Is China’s trade surplus?;” and, “As deficit countries contract, Can surplus countries be far behind,” – Michael provides some data that suggest growing trouble. December trade figures identify that exports are off 2.8 per cent, imports are off 21.3 per cent from a year ago. It appears that Chinese consumption is dropping rapidly. Chinese business confidence, measured by the business confidence index, has plunged, falling to a level not seen since 2001. In the same January/February FEER issue, Stephen Green, who runs China research for Standard China Bank in Shanghai, in an article (”Lies, Damned Lies and Chinese Statistics,” pages 14-18), after a lengthy review of the available data suggests that the Chinese economy will grow 6.8 per cent in 2009 and then reach 8 per cent in 2010.
Well, China seems to be still growing. Good news, no. Well possibly, no. The Chinese data suggest: first implicitly that narrow decline in Chinese exports suggests that China continues to press the export button. Further there is little to suggest that Chinese domestic consumption is ‘gearing up.’ Chinese domestic consumption remains a serious problem in an economy where a seamless transition from exports to domestic production is unlikely. Indeed the government’s decision in November to begin offering partial rebates of value-added taxes for thousands of goods produced for export only add to the sense that China will resist cutting back on export production. As Michael was quoted recently in Businessweek (January 12, 2009),”So far, China is acting like it thinks it can export its way out of the problem. I am very, very worried.”
One Response to “The Collapse of Demand! The Case of China”
Alan Alexandroff Says:
February 2nd, 2009 at 2:03 pm
The following are comments on China’s economic policy by a colleague who felt uncomfortable identifying themselves.
“(1) Unreasonable decision-making process: Several interest groups are manipulating China’s political decision-making process. Few just economists, including Mr. Larry Lang,have already reminded the authority that the most efficient way to encourage domestic demand is to increase income rather than invest in infrastructure. The direct way of using 4 trillion stimulus package is to hand it out to the whole population, like Tai Wang did. Alternatively, it should be used in raising the educational level, health care coverage and real estate purchasing power. The right way is there, but why did the authority refuse to identify? Interest groups never take to the heart the sufferings of average people. The 900 million rural people live inferior lives, they are very eager to consume almost any goods and service if they are able to pay. Everyday, there are many tragedies trigger from poverty. In this case, the industrial capacity is not excessive. Rather, it is insufficient to meet the genuine demand of the huge population. The problem is that average people are too poor to buy the products. Export-orientation policy did take effect in the early stage of reform and opening, but today, a package plan of expanding domestic demand are needed. We should be alerted that it is infeasible to cut back domestic production because this will cause huge unemployment which doomed to lead to social conflicts.
(2)Mediocre persons managing state affairs: Most of the talented and moral elites have already migrated overseas due to many reasons, leaving those banal people running this country. How could you expect them to be foresighted, innovative, or readily accept good advice? I am even more pessimistic.
All in all, it is all about regime and institutions. I don’t think that “China must be given 3 or 4 years to achieve success” if without the reform on current regime. No doubt, China is facing great challenges when standing in the historical crossroad.”

Gigantic volume of money is being laid for China’s economic trap !!!!

Author: 8868

Date :2009-8-1 20:55:00
To deal with economic crisis, there are three major theories in the history has been all the rage: first the Keynesian theory of effective demand – Keynesian; Second, Friedman’s quantity theory of money – money is; Third, Laffer’s supply-side theory.

China, after the international financial crisis can be described as a three-pronged approach the theory of the three great masters of the use of all brought together and created an unprecedented crisis in the policy response, and the 200-year history of confrontation with the economic crisis dwarfs the the western countries .

There is no doubt that acts of the Chinese government’s policy has been a great success in the national economy experienced a decline in short-term to stabilize after, has picked up is not a problem. However, China’s economy to continue along the track of the current move forward, in particular, is to continue the implementation of easy monetary policy can be successful out of the crisis and achieve economic recovery it? The answer is not so simple.

In the current economic policy is to invest 4 trillion, a currency run, one aspect of tax cuts and subsidies to sales. On the surface, is most markedly money. It is clear that China’s currency to increase the number of schools of thought on how much money, how much economic growth there is a policy that is currently the most popular idea of the Government. However, with a substantial increase in money supply, the risk index is also a sharp increase in the volume of money days are laid for China’s economic trap! China’s economy faces the risk is as follows:

1. A lot of money invested in the United States began to use dollars to buy additional bonds, if China does not follow the increase in U.S. money supply, China will become the biggest victims. We have strongly advocated increasing the monetary approach to the delivery of the currency against the United States. At that time, China has already fallen into a state of deflation, a moderate increase of the money invested has been a rapid decline in the needs of society and enterprises operating rate, and expand employment. But at the time, we put great emphasis on the limits of the currency can only be a modest inflation, it must be moderate. But now the situation, a lot of money put in the field of investment has led to excess liquidity, and then continue to loose it, lagging behind the overall inflation will be greatly exceeded our expectations.

2. China’s economic structure, there is a clear and serious structural imbalances, a lot of money invested and there is no flow in accordance with the intention of the designers of the real economy and the weak links in a serious shortage of operating rate of the sector, but to the area of investment focus on the property market and the stock market madness. Structural imbalance distorted the national economy and become the stock and property markets to absorb the tremendous mobility of the reservoir, in which case, one side is overrun liquidity reserves, on the other hand, based on the real economy is still a lack of liquidity . If we continue the implementation of easy monetary policy, trying to money off the spread of liquidity to the real economy part of the most marginalized, the final result may be the mobility of the stock and property markets overflow reservoir Levees Broke, in the two cities after the maximum rushed by profit-taking a large number of liquidity as the currency will be submerged as the flood of China’s economy can not be controlled by the advent of hyper-inflation will be; the maximum If the two cities, it means that must continue to inject more liquidity of the currency, so that the two cities endless rise, it becomes a real hand can not close the game, and the Chinese economy will be the arrival of a nightmare.

3. China’s economy is not the biggest problem can increase security, but can transition to an innovation-oriented country issues. In the post-crisis era, the world economy will be significant changes in the re-shuffle in the world will be split into two major categories of economies, a class of products is founded on the sale of intellectual innovation-based economy, and the other is betrayed by the physical product resources, products, and categories of products the expense of the environment to seek economies of survival. If China can not enter the ranks of innovative countries, the difference will be the wrong step in the journey of a thousand miles! China will never become an advanced economy workers. China to focus on, if only to stimulate the economy at the expense of education, science and technology upgrade will enable us to be relieved at the same time lose the future.

4. Distribution of national income to the concentration of high-income earners, so that China’s economy find it difficult to move the high mass consumption stage, if not resolved the issue of allocation of the imbalance, the currency will still be running the majority fall into the hands of high-income earners, and their hands will have a considerable monetary portion of the flow of sediment in the banks or overseas, the Chinese economy will still be weak domestic demand continues, can not become a strong driving force for economic growth. If we do not solve the imbalance in the distribution, only the amount of money spent days to pull the economy is not fundamentally solve the problem of excess production capacity, but can not solve the luxury of total consumption in the market is much higher than the issue of structural imbalance, the Chinese economy will stop a large number of mass consumption in the economic development of the threshold stage.

5. A lot of money put into China’s banks into the credit risk. Take all the credit in the hand is not dangerous, it seems to see is the increase of economic activity, and dangerous in 2023 after a fault but a chain would be more than a thousand, tens of thousands of enlarge the magnification, the consequences will be catastrophic, and the consequences when it is in manufacturing is difficult to be found. Sub-loan crisis in the United States evolved into a disaster because it is because the consequences of behavior and are not synchronized, so perfect and the United States is extremely large there is no early warning system to detect. Is the United States, China would also like to repeat the mistakes it? China’s days of running the existing volume of currency risk, far more than the U.S. sub-loans, can not have any broken links in the chain, once broken, the entire national economy will pick up over. If this does not alert enough, China’s financial crisis, China’s economy will bring very heavy blow.