Nov. 26 (Bloomberg) -- China’s foreign-exchange reserves face a “triple whammy” as inflation, oversupply and the “inevitable” decline of the dollar threaten to erode the value of its holdings of U.S. Treasuries, said Yu Yongding, a former adviser to the Chinese central bank.
China needs to divert its trade and investment surpluses away from U.S. debt if it is unable to reduce them, Yu, a member of the central bank’s monetary policy committee from 2004 to 2006, said in a speech in Melbourne last night. The nation, with the world’s largest foreign-exchange reserves of $2.3 trillion, is the U.S.’s biggest creditor, holding $798.9 billion of Treasuries as of September.
“Capital losses -- let alone obtaining decent returns -- seem inevitable,” said Yu, a member of the Chinese Academy of Social Sciences. “There is no question whatsoever that the U.S. dollar will go south, which started in April 2002 and, after a short interval, restarted in March 2009.”
This is baaaaaaaaaaaaaaaaaaad!
So what do ya think? I think China is going to abandon the dollar as fast as it can.
My guess is that if you have any holdings in dollars, or in the bank, well, um, if it were me, I would GET IT THE HELL OUT!!!!
ArabianMoney.Net
Yes, dear reader, the recession is over. Welcome back to the Depression.Alas, it’s the work of a DEPRESSION – de-leveraging, busting up, working out loans, defaulting on debt…going chapters 11 and 7.
Just a few months ago, it was 1 in 6 mortgage owners who were underwater. Now it is 1 in 4. Um, this is bad...too.
Half of banks' losses may be unknown: IMF chief
“There are still some important losses that have not been unveiled. It’s possible that 50 percent (of bank losses) are still hidden in their balance sheets. The proportion is greater in Europe than in the United States.”>
-Dominique Strauss-Kahn, International Monetary Fund’s chief
Today’s WTF quote comes to us from France, where the head of the IMF is worried about losses hidden on banks balance sheets. This is due in large part to the suspension of Mark-to-Market and the current accounting principles of Mark-to-Make Believe.
Reuters:
“Half of the losses suffered by banks could still be hidden in their balance sheets, more so in Europe than in the United States, the International Monetary Fund’s chief, Dominique Strauss-Kahn, was quoted as saying on Tuesday.
In an interview with French newspaper Le Figaro, Strauss-Kahn also said the IMF thought the euro currency was probably a bit too strong.
“There are still some important losses that have not been unveiled,” Strauss-Kahn was quoted as saying in response to a question on banks, according to excerpts of the interview that were sent to media ahead of publication on Wednesday.”
ah. . . um . . . this. . . I'm pretty sure this is real bad. It can not get any worse can it??? I mean . . . well . . . let's keep reading. . .
Actually it's alot worse. First of all you have to ask yourself why the 50% in losses are still being hidden. Their being hidden because because that half of the losses are the junk that is not worth a dime, in fact it's worthless and they are trying to make it seem like it's going to be worth something someday.
The losses that they have shown are literally the good stuff, if they showed the stuff they are hiding it would tell everybody that said bank is truly insolvent. Two, the stuff they are showing isn't valued right. At the start of this year, the govt. made it okay again to Mark to Make believe instead of Mark to Market. That means that said bank or institution can say said financial instrument is worth this or that. When in reality Mark to Market would have those instruments worth penny on the dollar
instead of dollar on the dollar or more. So whatever losses and "recovery" they are showing is just make believe to stop the bleeding.
We still haven't got hit from the Commercial loans, the Prime borrowers of mortgages are defaulting and the work out loans that the govt. has praised is re-defaulting.
We haven't cured the problem, we have just papered over it with printing of money (swamping treasuries for toxic assets for short/long term) and letting some of the large banks and institutions just lie about their finances. The fed is in a serious problem, if they raise interest rates it will destroy the recovery and make whatever assets on the books of the banks become less.
If they keep the rates low or zero essentially, it devalues the dollar and in essence will cause inflation if not hyperinflation (it hasn't been felt yet because banks aren't lending out money). So you have 50% of assets not being realized and the other 50% may have a large percentage that is Mark to Make believe.
What you have is still at least a 75% problem of toxic assets not being realized, and the govt. covering it up by inflating the money supply.
