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Post by Watchman on Aug 10, 2007 10:46:33 GMT -5
China threatens 'nuclear option' of dollar sales
London Telegraph | August 8, 2007 Ambrose Evans-Pritchard
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.
Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.
Shifts in Chinese policy are often announced through key think tanks and academies.
Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.
It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.
Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.
"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.
He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.
"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.
"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.
The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".
She said foreign control over 44pc of the US national debt had left America acutely vulnerable.
Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.
"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.
A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.
The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.
Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".
Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.
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Post by Watchman on Sept 5, 2007 14:58:06 GMT -5
MYSTERY SPECULATOR BETS ON DISASTER
Who’s sure enough to gamble $4.5 billion on Stock Market taking 40% nosedive?
By Pat Shannan
A huge downside purchase of “put” options by an unknown investor or conglomerate in Europe has both investors and NWO watchers abuzz worldwide. Someone has placed a $4.5 billion bet that within 30 days the European stock market will take at least a 33% nosedive. Such an event would be tantamount to the market crash of 1929.
The two sales are being referred to by market traders as “bin Laden trades” because only an event on the scale of the 9-11 “terrorist” attacks could make these short-sell “put” options valuable.( A “put” option is a bet that a stock will go down. A “call” option is a bet it will go up.)
There are 65,000 pending contracts at $750 in the Standard and Poor Index. This controls 6.5 million shares at $750 or $4.875 billion. The entity or individual offering these sales can make money only if the market drops 30%-50% within 30 days. If the market does not drop, the entity or individual involved stands to lose about $1 billion just for engaging in these contracts. On the other hand, if the prediction is correct, the reward could be over $2 billion.
“The fact that the purchase was made in the European market is insignificant,” said one speculator with decades of experience, “because it could have been done by bank transfer from anywhere in the world. What concerns us is what kind of inside information could this group or individual have. It would have to have far deeper roots than just `insider trader’ knowledge.”
Two theories are being discussed widely within the stock and options markets regarding this enormous and very unusual activity:
A massive terrorist attack is going to take place before September. 21 which will torpedo the markets along with whatever other target is hit or, China, reeling over losing $10 billion in bad loans to the sub-prime mortgage collapse presently taking place, is going to dump U.S. currency in an attempt to topple all of capitalism with a communist financial revolution. Either situation could be catastrophic to the financial world.
The 9-11 attacks were foreshadowed by “put” options placed onAmerican and UnitedAirlines, as reported in the immediate aftermath. According to CBS News, the put ratio for United Airlines was 25 times above normal on September 6.
In the week before September 11, “put” options in United and American Airlines went through a furious and unprecedented spasm of investment. Most of the investments in these put options originated in Germany through the Deutsche Bank. Deutsche Bank had earlier acquired Banker’s Trust, an investment banking firm whose vice chairman in charge of “private client relations” in the late 1990s was A. B. “Buzzy” Krongard.
In March of 2001, Krongard was appointed executive director of the CIA. On September 6-7, when there was no significant news or stock price movement involving United, the Chicago exchange handled 4,744 “put” options for UAL stock, compared with just 396 call options—essentially bets that the price will rise.When the market re-opened on Sept. 17, 2001, American and United, the only two airlines with hijacked planes, saw their stocks plummet by around 40%.
What becomes particularly relevant in the lead-up to 9-11 is the August CIA briefing of President Bush concerning the potential threat of attacks by bin Laden using hijacked planes on certain sites, such as the Pentagon and World Trade Center, and the fact that the CIA had bugging equipment on bin Laden messages and international banking operations. Although apparently no one has claimed the money from the “put” options, questions remain about Krongard and the CIA’s involvement.
“Put” options on Morgan Stanley and Merrill Lynch, two of the World Trade Center’s most prominent occupants, also spiked in the days before 9-11. The 9-11 Investigation Committee made no attempt to pursue this highly sensitive matter. The SEC never made public who these speculators were.
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Post by Watchman on Sept 18, 2007 11:50:20 GMT -5
Prepare for prolonged turmoil, says US Treasury Secretary
London Times | September 18, 2007 Suzy Jagger and Gabriel Rozenberg
Investors should brace themselves for a prolonged period of market turmoil, Henry Paulson, the US Treasury Secretary, said yesterday as he held emergency meetings with the Chancellor and the French Finance Minister.
Mr Paulson flew to London to discuss the financial crisis with Alistair Darling as markets remained in the grip of anxieties over the continuing toll from the global credit squeeze.
Speaking after talks with his counterparts in France and Britain, Mr Paulson insisted that the global economy remained strong despite the seizures in interbank lending, but admitted that the American economy would take a knock from the turmoil.
After meeting Christine Lagarde, the French Finance Minister, Mr Paulson said: �It will take a while to work through the turbulence in capital markets.�
Mr Paulson acknowledged that bad lending practices were to blame for the present financial crisis, which has been triggered by the high number of American homeowners falling into arrears on their mortgages.
However, he added that �the whole world, including the US, has benefited from . . . credit availability�.
Ms Lagarde had called for new rules to prevent a repeat of the credit turmoil, but Mr Paulson argued that �we want to make sure we don't rush to judgments�.
Mr Paulson ruled out an immediate recession, saying that the United States's economy would continue to grow in the second half of the year, despite the country's housing slump.
The Treasury Secretary said that the credit crunch was the result of bad lending practices rather than any problems in the real economy. �We are already seeing modest reductions in the strains in some markets,� he said.
Mr Paulson described his country's economy as �diverse� and �healthy�, with inflation controlled and growth good, and expressed confidence that growth would continue in the second half of the year. He said that the decline in US employment in August, the first drop in four years, had not been a surprise, �given where we are in the economic expansion�.
However, the financial turbulence will �extract some penalty� from the US economy, he said.
Turbulence in capital markets across the globe and the slump in US property prices are expected to force the hand of the US Federal Reserve Bank today to cut interest rates by at least a quarter of a percentage point, to avert the chance of a US recession.
Some analysts believe that the Fed will bow to pressure from financial institutions and make a half-point cut.
Mr Paulson declined to comment on the Fed's meeting, saying that he had �great confidence� in its Chairman, Ben Bernanke.
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Post by Watchman on Sept 19, 2007 11:23:25 GMT -5
China's Ultimatum: Let Us Invade Taiwan Or We'll Dump The Dollar
Financial analyst says China could use huge dollar reserves as blackmail for beefing superpower status
Prison Planet | September 19, 2007 Paul Joseph Watson
The Fed's decision to cut interest rates again is likely to send the dollar tumbling to historic new lows, leading one financial analyst to predict that China's fury at the devaluation of its huge dollar reserves will provoke them into giving the U.S. government a terse ultimatum - let us invade Taiwan unopposed or we'll dump the dollar and bring about economic chaos.
China holds $1.3 trillion of dollar denominated assets and leading Communist Party officials have repeatedly threatened to use what the London Telegraph referred to as "the nuclear option," the liquidation of US treasuries if Washington imposes trade sanctions to force a yuan revaluation, the result of which would be an almost certain and immediate collapse of the dollar.
But according to Greg Zanetti of the Financial Network, an advisor for the McDonalds franchise, China may also be using economic threats as a means of greasing the skids for the unopposed invasion of Taiwan.
"So what is the end game?" writes Zanetti . "Well, there is now conjecture that China may willingly take the huge financial hit from the falling dollar� provided we don't interfere with their claims to Taiwan."
"Their argument would be they acquired Hong Kong peacefully and that the envelopment of Taiwan would just be the finale of a 70 year civil war." "Their gamble would be that Americans would not fall on their swords for Taiwan. Of course, if we agree to such a deal we have (for all intents and purposes) ceded regional hegemony to China. They would be considered the Asian power and we would begin our retreat as a global power."
Under the 1979 Taiwan Relations Act, the United States is mandated to provide support to Taiwan in the event of any hostile trade embargoes or military invasion on behalf of China.
The fact that the U.S. government, with the help of Alan Greenspan, have done their utmost to bring about a slow-paced economic meltdown by continually bad-mouthing the dollar suggests they would want to avoid the rapid decline that would be triggered if the Chinese were to dump their assets.
Though public sentiment in China and the majority of analysts think a Chinese invasion of Taiwan is unlikely , any warming of relations between Taiwan and the U.S. is usually subject to vocal rebuke.
Earlier this year, Chinese government leaders threatened to plan new war games and heighten military readiness in anticipation of any attempt by the U.S. to defend Taiwan should a Chinese invasion occur, or simply if Taiwan declares its independence, after President Bush shook hands with Taiwan's representative to the United States, Joseph Wu.
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Post by Watchman on Oct 24, 2007 13:49:08 GMT -5
Iran breaks with the US dollar
Press TV | October 23, 2007
The Central Bank of Iran says the process of converting the country's dollar reserves to other foreign currencies has been completed.
The process of diversifying Iran's foreign exchange reserves by converting reserves held in dollars to other currencies is almost complete, Fars news agency quoted Tahmasb Mazaheri, President of the Central Bank of Iran, as having told the American publication, The Emerging Market.
He added that the procedure has been carried out in the best possible way and achieved maximum results.
Experts believe Iran has gained huge profits by adopting the measure because of the sharp fall in the value of the US dollar.
Other countries are also said to be taking similar measures for the same reasons. Arab Persian Gulf states, for one, are believed to be holding 30 percent of their foreign exchange reserves in currencies other than the dollar.
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Post by Watchman on Nov 6, 2007 12:39:41 GMT -5
Crash is coming, warns top investor
Jason Dowling and Peter Weekes November 4, 2007
THE man responsible for investing $41 billion of the State's money has warned mum-and-dad investors to prepare for a massive sharemarket crash.
He says a dramatic downturn is inevitable as the rapid rate of investment is unsustainable, and the repercussions of the $300 billion subprime lending crisis in the US are yet to be felt fully.
State Treasury has revealed that Victoria looks set to lose just $1.9 million directly from the subprime fiasco.
But the chief investment officer of the Victorian Funds Management Corporation, Leo de Bever, is taking no chances, telling The Sunday Age that he is managing the risk of further losses "as best as humanly possible" by shifting investments to safer options.
Mr de Bever's comments come after last week's running stoush in Parliament between Opposition Leader Ted Baillieu and Premier John Brumby over Victoria's exposure to the US financial crisis.
Mr Baillieu warned that millions of dollars of taxpayers' money was at risk and accused the Premier of failing to come clean about potential losses.
"We know hospitals and local governments have been exposed, we know there is a level of exposure to the VFMC, and John Brumby won't even provide a basic reporting process," Mr Baillieu told The Sunday Age.
Mr Brumby told Parliament that he had not received any advice regarding the exposure of government investments and agencies to the US subprime market but reiterated that the state had a "wide range of requirements in place" concerning investments.
However, Mr de Bever — who oversees the investment of money from entities including the Royal Children's Hospital, the Royal Women's Hospital, the National Gallery of Victoria, the University of Melbourne and the Transport Accident Commission — described the subprime debacle as being "the least of our concerns". It was the "roaring bull" market that kept him awake at night, he said.
The boom of the past five years could not be sustained and mum-and-dad investors stood to lose if they did not act now.
"Nobody wants to leave the party when markets are doing what they are doing, people want to enjoy it to the fullest … (but) it's time to buckle down."
While market experts suggest moving investments into safer options — such as buying government bonds, gold or shares in consumer staples — could prove prudent, they are not predicting the downturn will be so drastic.
Shane Oliver, chief economist and head of strategic investments at AMP Capital Investors, agreed that after the strong run, the Australian sharemarket was due for a correction, but said, despite the more volatile market and further expected problems in the US financial system, he believed "the conditions are just not there for a crash".
But some key US banks are already in trouble, with reports that regulators are investigating Merrill Lynch for trying to hide the extent of its losses.
And The Guardian newspaper has reported that another British bank, thought to be Barclays, has received an emergency loan from the Bank of England.
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