Wednesday, May 06, 2009

US Dollar Collapse and Inflation: China Says Global Easing Policies Risk Devaluation. TNR.v, RMK.v, FVI.v, OK.v, ASM.v,, BTT.v, KTN.v, EPZ.v,

Do not panic, but we are close. Hello! Look who is talking now. After Jim Rogers and Warren Buffet, guys who are holding the deck sound very suspicious. Did they finally get it? What were they thinking before - that they were buying this?
The biggest secret kept from the public about Swine Flu is that it has already spread all over the world. According to medical reports Flu virus could stay as long as ten days on banknotes and be passed along with them. What they forget to mention is that banknotes are mutating under the heavy exposure and now these banknotes could be already spread all over the world.

Chinese are sounding Alarm, what is next? Will they put all bucks in quarantine from their reserves? We do not know for sure. In trading it is called to talk the book, but why damage their own trade? Chinese are supposed to hold the largest amount of US Treasuries. Do not count that they are stupid, we will be surprised one day and it looks like very soon. Signs are all over the place: they are buying Copper for strategic reserves, Gold for currency reserves and settling trade with Hong Kong in local currency. We were always not at ease with the fact that communist China is holding keys from Financial Health of the US Corp. Now when US consumers, which are still leveraged in debts up to the eyeballs, can not buy any more all those Chinese goods and Auto sales in China surpassed those in USA, should we be really worried?

We are raising our Crash Alert to Pandemic level and recommend to check your wallets whether you have any mutated bucks already. In any case precaution is recommended: Do not kiss any Pigs, animals or otherwise. Stay healthy and wise.
P.S. "Big consolidation" in polite Chinese - means Treasury Bubble Crash, higher real rates and Inflation.

"China Says Global Easing Policies Risk Devaluation

By Sandy Hendry
May 6 (Bloomberg) -- Global central banks risk inflation, currency devaluation and a “big consolidation” in bond markets by pumping cash into their economies, the People’s Bank of China said in its quarterly monetary policy report.
The Federal Reserve and the Bank of England this year started quantitative easing, or printing money to buy government bonds, a policy that the Bank of Japan pioneered to revive its economy at the start of the decade. The European Central Bank’s 22-member board, which meets tomorrow, is split on whether it should buy financial assets to tackle its recession.
A policy mistake made by some major central bank may bring inflation risks to the whole world,” China’s central bank said in the report today. “As more and more economies are adopting unconventional monetary policies, such as quantitative easing, major currencies’ devaluation risks may rise.”
Chinese Premier Wen Jiabao expressed concern in March that the dollar will weaken, eroding the value of China’s holdings of Treasuries, as the U.S. borrows unprecedented amounts to spend its way out of recession. China’s Treasury holdings climbed 52 percent in 2008 and stood at about $744 billion as of the end of February, according to U.S. government data.
In the medium and long term, as the financial markets stabilize and economies gradually recover, increasing inflation expectations, rising interest rates and central bank’s liquidity-absorbing operations may cause a ‘big’ consolidation in bond prices,” the central bank’s statement said.
Federal Reserve Chairman Ben S. Bernanke told the congressional Joint Economic Committee yesterday that inflation will “remain low” even as a recovery gets underway because businesses will be slow to build back production and payrolls.
ECB council member Athanasios Orphanides yesterday said the financial crisis needs “drastic” measures. Orphanides and fellow member George Provopoulos from Greece have indicated they may support cutting the target rate to less than 1 percent and buying debt to pump money into the economy.
ECB Executive Board member Lorenzo Bini Smaghi said on April 28 that policy makers should be “wary of the possible side-effects” of unconventional measures.
The euro may rise against the dollar because ECB policy makers will probably decide against introducing so-called quantitative easing when they meet May 7, Bank of Tokyo- Mitsubishi UFJ Ltd. said.
“The failure to move to quantitative easing in the near term should help support the euro, especially against the dollar, given the Federal Reserve’s contrasting aggressive monetary easing approach,” Lee Hardman, a foreign-exchange strategist in London at Bank of Tokyo, wrote in a note yesterday.
To contact the reporter on this story: Sandy Hendry in Hong Kong at Last Updated: May 6, 2009 07:21 EDT"
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