Japan and China Start Cashing Out
An old Chinese Yuan Note That is No Longer Used
The following news item was of interest:
Japan and China lead flight from the dollar
Telegraph (UK) – Oct 16, 2007
Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields.
Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. “These numbers are absolutely stunning,” said Marc Ostwald, an economist at Insinger de Beaufort.
Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.
Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. “Woe betide US Treasuries if inflation does not remain benign,” he said.
The release comes a day after the IMF warned that the dollar was still overvalued and likely to face “some depreciation in the medium term”.
The dollar’s short-lived rally over recent days stopped abruptly on the data, increasing pressure on US Treasury Secretary Hank Paulson to shore up Washington’s “strong dollar” rhetoric at the G7 summit this week.
The Greenback has already fallen below parity against the Canadian Loonie for the first time since 1976 and has touched record lows against a global basket. It closed at $2.032 against the pound…
The US requires $70bn a month in capital inflows to cover its current account deficit, but the key sources of finance are drying up one by one.
BNP Paribas said America has relied on “hot money” from abroad to cover 25pc to 30pc of the US short-term credit and commercial paper market over the last two years.
This flow is now in danger after the seizure in parts of the market over the summer and after the Federal Reserve’s half point rate cut, which has shaved the US yield advantage over other countries.
Ian Stannard, a Paribas currency analyst, said the data was “extremely negative” for the dollar. “It exceeds the worst fears. It is not just foreigners who are selling US assets. Americans are turning their back as well,” he said.
Central banks in Singapore, Korea, Taiwan, and Vietnam have all begun to cut purchases of US bonds, or signalled an intent to do so. In effect, they are giving up trying to hold down their currencies because the policy is starting to set off inflation.
The Treasury data would have been even worse if it had not been for $60bn of inflows from hedge funds based in Britain and the Caymans, which needed to cover US positions at the height of the credit crunch.
Comments by COGwriter:
The US dollar has been dropping against most major currencies and precious metals (gold, platinum, etc.) have been rising.
While there will be rallies for the dollar, the long-term trend for it is not good as more and more are beginning to realize.
Japan and China, while also expected to have their own problems, biblically are expected to prosper even after the USA is no more.
Several articles of possible interest may include:
China, Its Biblical Past and Future, Part 1: Genesis and Chinese Characters This article provides information showing that the Chinese peoples must have known about various accounts in the Book of Genesis up until their dispersion after the Tower of Babel.
China, Its Biblical Past and Future, Part 2: The Sabbath and Some of God’s Witness in China When did Christianity first come to China? And is there early evidence that they observed the seventh day sabbath?
China, Its Biblical Past and Future, Part 3: China in Prophecy What is Ahead for China? What will happen to nearly all the Chinese?
Japan, Its Biblical Past and Future, Part 1: Any Witness? This is a draft of an in-process article about Japan. Have they had any witness?
Japan, Its Biblical Past and Future, Part 2: Prophecy Japan in prophecy. What is prophesied for Japan. Will God save the Japanese?
Modern Nations and God’s Ancient Plan Many peoples are mentioned in the Bible. And other than the fact that the modern nation of Israel represents the ancient kingdom of Judah, do you know who any of these people are now?
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