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Gingersnap
11-24-2010, 10:25 AM
China, Russia quit dollar

By Su Qiang and Li Xiaokun (China Daily)
Updated: 2010-11-24 08:02



http://i54.tinypic.com/219ynpc.jpg
Premier Wen Jiabao shakes hands with his Russian counterpart Vladimir Putin on a visit to St. Petersburg on Tuesday.ALEXEY DRUZHININ / AFP


St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

China Daily (http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm)

Molon Labe
11-24-2010, 12:29 PM
uh oh.

Zathras
11-24-2010, 12:35 PM
Not a surprise. Thanks to the Obumbler's actions and QE2, the US Dollar will soon be the weakest currency in the world per J.P. Morgan

lacarnut
11-24-2010, 12:37 PM
We can never pay the trillions we owe the Chinese. So, tell them to hump a rock cause we are thinking about defaulting on the debt. As a result, we could not borrow from them; we could not live beyond our own means and importing their cheap crap would take a big hit. Let's play hardball with these fuckers and see who blinks first.

Rebel Yell
11-24-2010, 12:43 PM
We can never pay the trillions we owe the Chinese. So, tell them to hump a rock cause we are thinking about defaulting on the debt. As a result, we could not borrow from them; we could not live beyond our own means and importing their cheap crap would take a big hit. Let's play hardball with these fuckers and see who blinks first.

We still have the upper hand in any negotiation with China. The U.S. populations buying power outweighs any debt our government owes the Chinese.

Molon Labe
11-24-2010, 01:28 PM
The problem with this is that these two guys have taken the one giant step that means they are serious. Up till now it's been only talk. If the dollar starts to collapse, then it won't matter too much to the average American about how much "buying power" they have, when food prices double.

hampshirebrit
11-24-2010, 03:20 PM
uh oh.

No kidding. This is very not good news.

Molon Labe
11-24-2010, 03:35 PM
No kidding. This is very not good news.


In the scheme of actual effect right now, it's a minor thing. But what if this is the beginning of an avalanche?

It may signal that the two nations that are on equal par with us militarily, one of which is outpacing us economically, don't really give a rats ass what we think much anymore and may want to chart a new course.

hampshirebrit
11-24-2010, 03:45 PM
In the scheme of actual effect right now, it's a minor thing. But what if this is the beginning of an avalanche?



All it will take is for some of the oil producers to decide to trade off-dollar and it will get very bad indeed. There's your avalanche right there.

lacarnut
11-24-2010, 05:06 PM
I don't see this as a big deal. If the Chinese and Russian want to use coconuts or rocks as currency between the two countries, let them have at it. The dollar is king among currencies. It may decrease in value and that is what the Chinese are afraid of. Uncle Ben printing more dollars monetizes the debt which in turn reduces the value of the dollar. That means Americans and the Chinese get screwed. They are holding a shit pot full of dollars. So, they will buy and invest in American companies like GM.

lacarnut
11-24-2010, 05:19 PM
All it will take is for some of the oil producers to decide to trade off-dollar and it will get very bad indeed. There's your avalanche right there.

I think we have a few aces in the hole also. We are the bread basket of the world. Countries in the M.E., etc. that want to play Freddie Fuck around with the US might find themselves low on food stuffs. A currency war would not be in their best interest.

Kay
11-24-2010, 06:52 PM
Did y'all see The Donald on Fox & Friends this morning. He said again he is seriously thinking of running for President. He railed about how our international trade policies are doing us in, and got on a tear about South Korea thinking we should spend billions protecting them, but they won't sign a decent trade agreement on our terms.

I'm starting to think Trump just might make a good POTUS. He was making a lot of sense in what he was saying. He'd certainly could do a better job of anyone else I see on the horizon when it comes to the business end of getting the economy back going. And when we maintain our economic edge, the military and diplomatic edge will follow. He talks alot about how we should be dealing with China, and he is making sense.

hampshirebrit
11-24-2010, 06:59 PM
I think we have a few aces in the hole also. We are the bread basket of the world. Countries in the M.E., etc. that want to play Freddie Fuck around with the US might find themselves low on food stuffs. A currency war would not be in their best interest.

Hope you're right. I still think that energy is the key driver of everything else, including and especially food production.

If oil trading abandons the dollar, the consequences will be catastrophic.

Big Guy
11-24-2010, 07:13 PM
Hope you're right. I still think that energy is the key driver of everything else, including and especially food production.

If oil trading abandons the dollar, the consequences will be catastrophic.

Hit the nail on the head.

Madisonian
11-24-2010, 07:16 PM
If worldwide confidence in the dollar collapses, the world wide economy will go with it.
If this were to happen, the US and the North American continent are in the best shape to withstand it.
Yes it would really suck and yes there would be massive hardships for possibly decades, but with the resources of North America and our relationship with Canada and yes, even Mexico, there is nothing we could not provide for ourselves if the SHTF.
The Chinese are not so lucky.

China's trade pattern in agricultural commodities follows its comparative advantage: it tends to import land-intensive commodities (soybeans, cotton, barley, rubber, and oils made from soybeans and palm kernels), and it exports labor-intensive commodities (fish, fruits, vegetables, and processed agricultural goods). China is also a major exporter of corn in most years.

In 2008, China's agricultural imports totaled an estimated US$57 billion and its agricultural exports totaled US$29 billion. The value of China's agricultural imports rose sharply in 2008 due to sharply higher oilseed prices and a surge of pork imports to alleviate a temporary shortfall in domestic supplies. Grain exports were cut back in 2008 as authorities sought to cool rising domestic prices, and other food exports were affected by safety concerns in Japan and other countries.

Historically, the United States has supplied a significant (although varying) portion of China's imports of soybeans, cotton, and wheat. Bilateral agricultural trade in 2008 consisted of US$12.2 billion in U.S. exports to China, and US$3.4 billion in imports from China. The United States is a net exporter of bulk commodities (primarily soybeans and cotton) to China. The leading markets for China's agricultural exports are Japan, the United States, Hong Kong, and South Korea. The United States imports fish and shellfish, juices, garlic, mushrooms, and various processed foods and food ingredients from China.
USDA Electronic Outlook, 2005

China needs markets for its finished goods and with a world wide economic collapse, where would that be?

SaintLouieWoman
11-24-2010, 10:27 PM
Not a surprise. Thanks to the Obumbler's actions and QE2, the US Dollar will soon be the weakest currency in the world per J.P. Morgan

This reminds me of a line from a poem by T.S. Elliot (originally from St Louis), "not with a bang but a whimper". They're defeating us economically without firing a shot. It's a very sad day for America. Obama should go down as one of our worst, weakest presidents. God only knows what will happen in the next 2 years, til we get him out of office.

lacarnut
11-24-2010, 11:16 PM
Did y'all see The Donald on Fox & Friends this morning. He said again he is seriously thinking of running for President. He railed about how our international trade policies are doing us in, and got on a tear about South Korea thinking we should spend billions protecting them, but they won't sign a decent trade agreement on our terms.

I'm starting to think Trump just might make a good POTUS. He was making a lot of sense in what he was saying. He'd certainly could do a better job of anyone else I see on the horizon when it comes to the business end of getting the economy back going. And when we maintain our economic edge, the military and diplomatic edge will follow. He talks alot about how we should be dealing with China, and he is making sense.

The US trade reps are too stupid to play hard ball. We allow countries to import anything here and they in turn either impose high tariffs or deny our goods into their country. I don't like Trump because he lent his name to hotel developers that went bust. Investors that bought condos/apartments lost their ass in Mexico. He is also being sued in Panama by investors there. He is a shady character in my opinion. He does have a few good ideas about trade though. It is time to quit being a damn wimp and show some backbone. Tell the South Korean politicians that we want payment for our troops protecting your ass or we will pull them out. I am with Gator on this. We need to quit protecting every two bit country in the world. We can not afford it anymore.

lacarnut
11-24-2010, 11:33 PM
Hope you're right. I still think that energy is the key driver of everything else, including and especially food production.

If oil trading abandons the dollar, the consequences will be catastrophic.

China and Russia do not export any oil to the US that I am aware of. We import more oil from Canada, Mexico and Venezuela than from the M.E. and Nigeria. So, it is in the best interest of our neighbors to the north and south to deal in King Dollar. Even Hugo is not that crazy to ditch the dollar cause he has billions of investments dollars tied up in this country.

FYI, only 15% of our oil comes from the M.E. They cut their own throats if we reduce our imports and we jack up the price of wheat, corn, cotton and other agricultural products to those countries that want to play games. Americans are a hardy bunch and we could adapt to a 15% cut in energy consumption. Rationing in the 40's during the War, and the oil embargo was just a walk in the park for those old enough to remember those days. Plus, we make a tiny, little hint that we will default on the trillions that we owe the Chinese and others and they will get religion very fast.

Odysseus
11-25-2010, 11:50 AM
This is bad, but not that bad. The critical takeaway is that it's only for bilateral trade between China and Russia. It means that they are increasing their trade to the point where they are going to be converting currencies directly, rather than going through a third currency. This is actually fairly common in bilateral trade agreements, especially between nations that share common borders, but it is troubling as well. First, greater cooperation between Russia and China is not in our best interest. Also, the elimination of the dollar as the exchange medium between Russia and China means that one of the two currencies (and I'm betting on the Remminbi) is now stable enough for both sides to agree to a direct exchange rate, but neither is floated or convertible to other currencies, except at highly unfavorable rates (the ruble has never been trusted outside of Russia). It also means that the dollar has weakened to the point where it isn't necessarily a no-brainer as the currency of choice. This matters, because most of the dollars in circulation are outside of the US. It has been the de-facto reserve currency globally since the British Pound took it in the shorts after WWII. A run on the dollar, combined with QE2 and the current debt levels means inflation, lots of it, possibly up there with Wiemar Germany, although that will only happen if Obama not only screws the pooch, but invites it home to meet the folks and then proposes to it, but I wouldn't put it past him.

On the plus side, DU's comments (http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4627154) about this demonstrate some seriously entertaining cluenessless:


Ozymanithrax (1000+ posts) Wed Nov-24-10 01:37 AM
Response to Original message
2. So much for the empire... n/t


tsuki (1000+ posts) Wed Nov-24-10 01:43 AM
Response to Reply #2
5. I think we are an ex-pire. nt.


txlibdem (1000+ posts) Wed Nov-24-10 02:23 AM
Response to Original message
8. This is the best thing that could ever happen

The US Dollar should not be used in any transaction not originating in the USA. I encourage all nations to follow Russia and China's example -- dump the dollar. There should be a pseudo-currency as the official currency of international trade. The dollar is unstable and any nation that relies on it has already faced the terrible consequences. Get out of the Dollar and work to devise an independent currency that will not give any nation undue influence over international trade.


Hydra (1000+ posts) Wed Nov-24-10 01:54 PM
Response to Reply #18
20. One of my teachers hammered this point home once

"Superpowers do not import most of their needs. They produce everything they need and export extensively."

That means there are 2 near superpowers and us(not exactly superpower anymore).



SpiralHawk (1000+ posts) Thu Nov-25-10 04:28 AM
Response to Reply #23
24. "Pluto opposite USA Venus and Jupiter." - Ronald Reagan's Dead Republicon Astrologer *

Edited on Wed Nov-24-10 12:14 PM by SpiralHawk
"Just perfect. Right on schedule. We republicon darkside occultists have been expecting this to happen. We set the wheels in motion over our 8 idiotic years of FeebleMindedness, FAIL & Plunder under the 'leadership' of our beloved Republicon Chickenhawks: Commander AWOL Bush and Dickie 'Five-Military-Deferments' Cheney. The Planets have spoken. Now we can pile the blame ALL on Obama and the Libs. Bwaaa ha ha ha ha. Snark. Smirk."

- - Ronald Reagan's Dead Republicon Astrologer *
http://www.openminds.tv/wp-content/uploads/reagan-timemag-astrology.jpg


OTOH, this guy gets it:


northzax (1000+ posts) Thu Nov-25-10 04:28 AM
Response to Reply #23
26. in other words

Russia doesn't sell much to China, and will return 100% of the Remminbi to China in purchases, it's not good for anything else. no one else will take it, since there are no exchange rates on the open market. and China will end up with a pile of Roubles, not good for much except buying stuff in Russia (and parts of Eastern Europe where the currency will simply be returned to Russia in energy purchases.) until China floats the Remminbi, it's not good for anything but bilateral exchanges with countries that run a trade deficit with Beijing.

I'm assuming that he's one of us? If not, he's got his head on straight. The others deserve to be impoverished.

AmPat
11-25-2010, 05:11 PM
Thanks for nothing DIMoCRAPS. OTOH, what, other than weapons and vodka does Russia bring to the table? When has China ever taken the bottom position in a trade deal? Something's fishy here.

Odysseus
11-25-2010, 09:31 PM
Thanks for nothing DIMoCRAPS. OTOH, what, other than weapons and vodka does Russia bring to the table? When has China ever taken the bottom position in a trade deal? Something's fishy here.

Russia exports oil and weapons technology, two things that China needs.