Wednesday, April 1, 2009

Give me a break!

I used to dream about that I was Queen Elizabeth's mother, I was Brad Pitt's girl friend, I was the best Liver Transplant Doctor in the world, I was the First Lady of USA (Not Mrs. Obama but just as me, Helen. Helen Obama is not so good sound Michelle is better!!). OK, What ever you can dream of, please do dream because it mostly give you good feeling unless you dream like fall to hell.

Wen Jiabao (by the way I do not know how to pronounce this name), the Chinese Premier, he also can dream what ever he wants. The dreaming is no cost it is free of charge........... but,

Give me a break of Wen Jiabao's latest dream. See the following, I should say he has a night mare and a bad dream!!

China leads call to replace dollar
Jim Jones
Published:Mar 31, 2009

WHEN Chinese premier Wen Jiabao addresses the G20 meeting of heads of government in London this week, he will be leading the charge for the dollar to be replaced as the world’s reserve currency.

But whether the others from the Group of 20 leading industrial and developing economies will see things in such stark terms is another matter.

Wen began laying the ground last week when he fretted publicly about the security of the $1-trillion (R9.7-trillion) of reserves that Beijing has tied up in US government-backed securities.

He called on the US to honour its commitments on Treasury bills.
Why? It’s not as if the US has ever defaulted on its bonds, unlike, for example, communist China a short 60 years ago.

But China has 2-trillion socked away in reserves and continues to run trade surpluses that add to those reserves by the day. And that is a problem.

Zhou Xiaochuan, the governor of the People’s Bank of China, set out the party line recently, calling for the US dollar to be replaced by units such as the International Monetary Fund’s Special Drawing Rights. It is, of course, part of Beijing’s strategy to win a greater say for China in the deliberations of the IMF and the World Bank.

But it sidesteps the facts that SDRs are created and backed by deposits and guarantees by IMF members in their own or acceptable currencies and the need for something approaching a world currency to be as convertible and as freely traded as the dollar.

Beijing’s dilemma is it cannot simply sell its US government paper — dumping T-Bills holus bolus would trash the bonds’ prices, cut the dollar value of Beijing’s holdings and hoist US interest rates.

Then bang goes the low-interest recovery programme that might have Americans back buying Chinese products. And bang goes the dollar, which will add to the eventual inflation agony that will almost certainly follow the Obama deficit- funded economic escape strategy.

The same goes for Beijing’s other options — slowing the rate at which it has been buying US Treasuries or dribbling them into the market.

If it wants to sell consumer goods to the US, China has either to finance those purchases by buying US bonds or buy something from the US or somewhere else that will take and spend dollars.

So, if Wen grandstands at the G20 meeting in London, he will be faced by others who realise that world trade flows in both directions.

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