stumbled across this today..oldy but goodie:
Posts Tagged ‘bailout
23
Mar
09
this drum keeps getting louder…
China calls for new reserve currency to replace dollar
By Jamil Anderlini in Beijing
Published: March 23 2009 12:16 | Last updated: March 23 2009 14:22
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
The goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies,” Zhou Xiaochuan, governor of the People’s Bank of China, said in an essay posted in Chinese and English on the central bank’s website.
Although Mr Zhou did not mention the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system.
“The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system,” Mr Zhou wrote.
Analysts said the proposal was a clear indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.
For now, China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars and this is unlikely to change in the near future.
To replace the current system, Mr Zhou suggested expanding the role of Special Drawing Rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that system collapsed in the 1970s.
Today, the value of SDRs is based on a basket of four currencies – US$, Yen, Euro and Pound Sterling – and they are used largely as a unit of account by the IMF and some other international organizations.
“The US dollar is still the most important currency for settling international trade, pricing and payment in the current international monetary system,” Hu Xiaolian, director of the State Administration of Foreign Exchange, which manages the country’s foreign exchange reserves, said at a press conference earlier in the day. “Investing in US Treasury bonds is an important element in China’s forex reserve investment and we will continue this practice.”
China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be widely used in international trade and financial transactions.
Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.
Mr Zhou said the proposal would require “extraordinary political vision and courage” and explicitly acknowledged a debt to the theories of John Maynard Keynes, who made a similar suggestion in the 1940s.
More recently, US economist and Nobel prize winner Joseph Stiglitz, who is visiting China this week, has suggested expanding the role of SDRs to lay the foundation for the creation of a world currency.
In the short term, China expects the IMF to “at least recognize and face up to the risks resulting from the existing system, conduct regular monitoring and assessment and issue timely early warnings,” Mr Zhou’s essay said.
13
Feb
09
ron paul still representin’
06
Feb
09
jim rogers on world currencies
the napkin math on this must roughly equal the premium they made on $100+ barrel oil over last few years…..
http://www.breitbart.com/article.php?id=CNG.21a790b26de73c80e4048954b0b52ce9.9d1&show_article=1
14
Jan
09
pbs’ ascent of money documentary
niall ferguson narrarates. history of money + financial crisis explanations.
http://www.pbs.org/wnet/ascentofmoney/video/watch-full-program-the-ascent-of-money/24/
10
Jan
09
great financial crisis wrap-up
06
Jan
09
funny bailout parody
For Immediate Release:
Statement by Treasury Secretary Henry M. Paulson, Jr., following Congress’s passage of today’s rescue package:
“As we all know, lax writing practices earlier this decade led to irresponsible writing and irresponsible reading. This simply put too many families into books they could not finish. We are seeing the impact on readers and neighborhoods, with 5 million readers now behind on their reading. Some are just walking away from novels they should never have been reading in the first place. What began as a sub-prime reading problem has spread to other, less-risky readers, and contributed to excess inventories.
These troubled novels are now parked, or frozen, on the shelves of libraries, bookstores, and other reading institutions, preventing them from financing readable novels. The inability to determine the worth of these novels has fostered uncertainty about novels in general, and even about the cultural condition of the institutions that own them. The normal buying and selling of nearly all types of literature has become challenged.
The role of the ratings agencies cannot be overlooked in the creation of this crisis. The Pulitzer, Booker and the National Book Foundation continued to award these novels their top ratings, even as unread copies piled up all over America.
These unreadable novels are clogging up our literary system, and undermining the strength of our otherwise sound literary institutions. As a result, Americans’ personal libraries are threatened, and the ability of readers to borrow, and of libraries to lend, has been disrupted.
To restore confidence in our book markets and our literary institutions, we must address the underlying problem – the loss of confidence in our nation’s writers. That collapse in confidence is choking off the flow of ideas that is so vitally important to our literature. When the literary system works as it should, ideas flow to novelists and poets who create novels and poems, ensuring an uninterrupted flow of literature to households and businesses. But stresses in our leading writers have led to the current severe and systemic writers’ block that threatens to undermine access to books for working Americans.
This bill contains a broad set of tools that can be deployed to strengthen writers, large and small, that serve businesses and families. Our writers are varied – from large novelists headquartered in New York, to regional novelists that serve multi-state areas, to community poets and short story writers that are vital to the lives of our citizens and their towns and communities. The challenges our writers face are just as varied – from full-scale writers’ block, to restructuring failed novels, to simply facing a crisis of confidence.
We must implement these new programs with a strategy that allows us to adapt to changing circumstances, and attract the private inspiration which has always made our cultural system so resilient and innovative.
In these difficult times, leadership – and sacrifice – must start at the top. Fed Chairman Ben Bernanke and I are agreed it is imperative we take the bad books out of the system, and slowly work our way through these toxic assets. Yes, it will be painful; it will be difficult; but at times like this, the Government must step in and perform its duty, as reader of last resort.”
I’ve got to say, there were tears in my eyes when Hank took to the podium and read out our statement. But the crisis is not over yet, and there’s more hard work to come. Banks, insurance, cars, steel, books… the contagion just keeps spreading. I probably shouldn’t tell you this, but we’re currently putting the finishing touches to a fifty billion dollar bailout of the imperilled ballroom dancing industry…
Here’s the link to the New York Times version of our statement. They’ve illustrated it with a cartoon by R. O. Blechman, which betrays a typically frivolous New York Times attitude to these serious financial matters.
And here’s a link to the Treasury Department website. They haven’t put up our statement yet, but they’ve put up plenty of previous ones just as good, like this one. And check out the Treasury’s fun stuff, like their great auctions, for stuff like this seized yacht. Tip: I recommend the Florida auctions. Great yachts, furs, SUVs, Bentleys, and Rolls-Royces, all hardly used.
And… hang on in there, ballroom dancers of America. We are riding to the rescue… hold on…
