China eyes switch in reserves away from dollar (Economic problem?)

[FormerRepublican]

"WASHINGTON/SHANGHAI - China indicated on Thursday it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets.

Economists estimate that more that 70 per cent of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves – currently accumulating at about $15bn (€12.4bn) a month – it could put heavy downward pressure on the greenback.

In a brief statement on its website, the government's foreign exchange regulator said one of its targets for 2006 was to "improve the operation and management of foreign exchange reserves and to actively explore more effective ways to utilise reserve assets".

It went on: " to improve the currency structure and asset structure of our foreign exchange reserves, and to continue to expand the investment area of reserves."

http://www.msnbc.msn.com/id/10736596/

So China dumps the dollar, and Iran starts trading oil in Euros. Does this mean the economy is about to tank? Could the countries we've been pushing around be taking financial action against us in retaliation - we, the greatest debtor nation in the world? With George Bush racking up bigger and bigger deficits, while at the same time giving foreign countries who are funding that deficit the same middle finger he gives the rest of us, I predict economic trouble in our future.

[sasha031]

1. Is shrub and company letting all of this happen by design

crash the US economy and the mercenaries and corporate thieves will have a complete take over.

[GreenPartyVoter]

9. Makes you wonder, the way the purposely trash everything in their grasp

[ayeshahaqqiqa]

2. I've been thinking this for a long time

China isn't stupid; sure, we buy a lot of their stuff. But they see economic powerhouses opening up in their own backyards. India, for example, appears to be on an economic upswing. Venezuelia has the oil reserves. US is outsourcing manufacturing jobs and fast becoming a third world country. Why buoy us up? Why not invest in growing and not dying economies?

[HereSince1628]

3. No problem. We print more money and pay China in worthless dollars

At the same time we devalue the dollar until an average American's buying power is right down there with India and China.

Viola! Annual trade imbalance ends as Americans no longer can afford to buy anything. Say good-bye to Walmart's everyday low prices.







.

[kentuck]

5. And that's not a problem ?

inflation. This will be great for minimum wage earners, huh?

[HereSince1628]

7. But, we get to solve the trade imbalance AND bring US wages

in line with producing countries all over the third world! This is a free-traders DREAM!

And it won't be just inflation. It will be HYPERinflation, on an unprecedented scale for the US.

The republicans will be able to drown the American government in a 2 qrt sauce pan!

I guess you didn't think that first post was sarcastic enough, hopefully this one is unmistakable.

[kentuck]

4. Big, big problem !

Probably a worldwide depression.

[thecrow]

6. Time to haul out the old soup kettle

and get ready for a rocky ride.
Buy the non-perishable food while you still can.
Funny, I noticed last night that is what the feds are telling us to do to "prepare for the bird flu pandemic".....maybe not so funny?

[FloridaPat]

8. My worst nightmare is that there will be a big pandemic scare,

the feds come around with shots, and half the population die - the old half to get rid of the SS problem. And the "Democratic" branch to finally get rid of all opposition.

Estimations of Peak Oil people is that half the population on the planet will die of starvation.