Frontrunning: March 3
Submitted by Tyler Durden on 03/03/2011 08:06 -0500
•Why the Dollar's Reign Is Near an End (WSJ)
•Take a bow Hatzius: John Taylor takes apart Goldman's economic "achemists and quacks" (Bloomberg) - This is what happens when you sellout to the propaganda machine
•William Cohan joins the tinfoil hat brigade - A Conspiracy With a Silver Lining (NYT)
•Gaddafi strikes oil areas, Arabs weigh peace plan (Reuters)
•No criminal charges ever: Officials Disagree on Penalties for Mortgage Mess (NYT)
•Bernanke Sees 200,000 Hit to Jobs from Budget Cuts (Reuters)
•It's Taps For the Still Weakening Dollar (RCM)
•Asia Moves to Shore Up Strategic Oil Reserves (FT)
•Beijing home sales slump in February (China Daily)
•ECB Set to Deliver Inflation Warning (WSJ)
•Obama "outraged" by attack in Germany (Reuters)
•Europe Must Plan a Reform, Not a Pact (FT)
•Merkel names ally as new defence minister (FT)
•Congress Approves Temporary Budget Bill, Avoids Shutdown (BusinessWeek)
•Gross Says Treasury Yields Too Low as Fed Approaches End of Asset Buying (Bloomberg)
•Mukherjee Signals Higher Oil May Spur India Subsidy, Risk Deficit-Cut Plan (Bloomberg)
European economic highlights:
•Euro-Zone PMI Composite for February 58.2 - lower than expected. Consensus 58.4. Previous 58.4.
•Euro-Zone PMI Services for February 56.8 - lower than expected. Consensus 57.2. Previous 57.2.
•Euro-Zone GDP for Q4 0.3% q/q 2.0% y/y – in line with expectations. Consensus 0.3% q/q 2.0% y/y. Previous 0.3% q/q 2.0% y/y.
•Euro-Zone Retail Sales for January 0.4% m/m 0.7% y/y - higher than expected. Consensus 0.3% m/m 0.0% y/y. Previous -0.6% m/m -0.9% y/y.
•Germany Retail Sales for January 1.4% m/m 2.6% y/y - higher than expected. Consensus 0.5% m/m 1.7% y/y. Previous -0.3% m/m -1.3% y/y.
•Germany PMI Services for February 58.6 - lower than expected. Consensus 59.5. Previous 59.5.
•France PMI Services for February 59.7 - lower than expected. Consensus 60.8. Previous 60.8.
•Italy PMI Services for February 53.1 - higher than expected. Consensus 51.1. Previous 49.9.
•Italy PPI for January 1.1% m/m 5.2% y/y - higher than expected. Consensus 0.9% m/m 4.6% y/y. Previous 0.6% m/m 4.6% y/y.
•UK PMI Services 52.6 - lower than expected. Consensus 53.7. Previous 54.5.
•ECB Announces Interest Rates. Consensus 1.00%. Previous 1.00%.
Thursday, March 3, 2011
Texaco dumped 18b gallons of toxicwaste and 17m gallons oil into Amazon waterways
(CNN) -- A judge in Ecuador this week awarded $8.64 billion to Ecuadorian residents of the Amazon who had sued Chevron for years of crude oil pollution, but both sides said Tuesday they will appeal the verdict.
Chevron charges the verdict against them is the "product of fraud," and the plaintiffs say the size of the award is too small in comparison to what would be needed to do a real cleanup.
Luis Yanza, speaking for the residents' group the Assembly of those Affected by Chevron, said at a news conference that the ruling was "historic" and a "collective victory." However, he said, "Eight billion dollars doesn't represent a significant amount to repair the environmental damages."
The judgment against Chevron is the latest in 18 years of litigation between the Amazon residents and Texaco, which was later purchased by Chevron. It was decided in a courtroom in the Amazon by Judge Nicolas Zambrano.
For its part, Chevron said it will also appeal.
"The Ecuadorian court's judgment is illegitimate and unenforceable," said Chevron, in a press release Monday. "It is the product of fraud and is contrary to the legitimate scientific evidence."
Both sides have until Friday to file their appeals.
Despite the pending appeal, one of the local leaders, Humberto Piaguaje, called the judgment a victory for the population that lives in the oil-producing area in northern Ecuador.
"The judge did justice and has seen reality," he said. "We know that this is only one part of our fight and we will continue until there is justice and the damage is healed. The world should know that what happened in the Amazon and our fight for life, for justice."
The case, Aguinda v. ChevronTexaco, was originally filed in New York in 1993 on behalf of 30,000 inhabitants of Ecuador's Amazon region. The suit was eventually transferred to the Ecuadorian court and Ecuadorian jurisdiction.
The lawsuit alleges that Texaco used a variety of substandard production practices in Ecuador that resulted in pollution that decimated several indigenous groups in the area, according to a fact sheet provided by the Amazon Defense Coalition.
According to the group, Chevron has admitted that Texaco dumped more than 18 billion gallons of toxic waste into Amazon waterways, abandoned more than 900 waste pits, burned millions of cubic meters of gases with no controls and spilled more than 17 million gallons of oil due to pipeline ruptures.
Cancer and other health problems were reported at higher rates in the area, the group says.
Chevron charges the verdict against them is the "product of fraud," and the plaintiffs say the size of the award is too small in comparison to what would be needed to do a real cleanup.
Luis Yanza, speaking for the residents' group the Assembly of those Affected by Chevron, said at a news conference that the ruling was "historic" and a "collective victory." However, he said, "Eight billion dollars doesn't represent a significant amount to repair the environmental damages."
The judgment against Chevron is the latest in 18 years of litigation between the Amazon residents and Texaco, which was later purchased by Chevron. It was decided in a courtroom in the Amazon by Judge Nicolas Zambrano.
For its part, Chevron said it will also appeal.
"The Ecuadorian court's judgment is illegitimate and unenforceable," said Chevron, in a press release Monday. "It is the product of fraud and is contrary to the legitimate scientific evidence."
Both sides have until Friday to file their appeals.
Despite the pending appeal, one of the local leaders, Humberto Piaguaje, called the judgment a victory for the population that lives in the oil-producing area in northern Ecuador.
"The judge did justice and has seen reality," he said. "We know that this is only one part of our fight and we will continue until there is justice and the damage is healed. The world should know that what happened in the Amazon and our fight for life, for justice."
The case, Aguinda v. ChevronTexaco, was originally filed in New York in 1993 on behalf of 30,000 inhabitants of Ecuador's Amazon region. The suit was eventually transferred to the Ecuadorian court and Ecuadorian jurisdiction.
The lawsuit alleges that Texaco used a variety of substandard production practices in Ecuador that resulted in pollution that decimated several indigenous groups in the area, according to a fact sheet provided by the Amazon Defense Coalition.
According to the group, Chevron has admitted that Texaco dumped more than 18 billion gallons of toxic waste into Amazon waterways, abandoned more than 900 waste pits, burned millions of cubic meters of gases with no controls and spilled more than 17 million gallons of oil due to pipeline ruptures.
Cancer and other health problems were reported at higher rates in the area, the group says.
Chavez: U.S. distorting situation in Libya ‘to justify an invasion’
Chavez: U.S. distorting situation in Libya ‘to justify an invasion’
Catherine E. Shoichet,
CNN
March 2, 2011
Venezuelan President Hugo Chavez claims U.S. criticism of Libyan leader Moammar Gadhafi has a clear aim: military invasion.
“Let’s not get carried away by the drums of war, because the United States, I am sure that they are exaggerating and distorting things to justify an invasion,” Chavez said Monday, according to Venezuelan state media.
At a Monday meeting of the U.N. Human Rights Council in Geneva, Switzerland, U.S. Secretary of State Hillary Clinton said the United States was exploring “all possible options,” and that “nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.”
Asked at a news conference Monday whether the United States planned an imminent military response in Libya, Clinton said, “No.”
Speaking Monday in the Venezuelan capital, Caracas, Chavez proposed sending an international committee to Libya to mediate and help develop a peaceful solution to unrest in the North African country.
"Instead of sending Marines and tanks and planes, why don't we send a goodwill commission to try to help so that they do not continue killing in Libya? They are our brothers," he said in a speech televised on the government-run network.
Chavez and Gadhafi have a close relationship, having bonded partly over shared opposition to U.S. global influence.
At a lavish Tripoli celebration commemorating 40 years of Gadhafi's leadership in 2009, the two leaders sat side by side during a two-hour military parade. That same year, a new football stadium in Benghazi, Libya, was named after the Venezuelan leader.
As rumors swirled about Gadhafi and his whereabouts last week, some suggested that he may be en route to Venezuela. Those reports proved to be false; the Libyan leader later spoke publicly in Tripoli.
But the close ties between the two leaders remain strong. On Monday, Chavez said Gadhafi "has been my friend and our friend for a long time" in remarks broadcast on Venezuelan state television.
"We must be cautious. We know what our policy is: We do not support invasions or massacres or anything, no matter who does it. But there is no doubt that, regarding Libya, a campaign of lies is being woven -- the same that has been woven about Venezuela for a long time," he said.
The U.N. Security Council over the weekend voted for tough restrictions and possible war crimes charges against the Libyan regime.
The Security Council measures -- which include an arms embargo, an asset freeze and travel bans for Gadhafi and members of his family and associates -- also referred the situation unfolding in Libya to the International Criminal Court.
White House press secretary Jay Carney said Monday that the U.S. government was considering the possibility of imposing a no-fly zone over Libya.
"Col. Gadhafi and those around him must be held accountable for these acts, which violate international legal obligations and common decency. Through their actions, they have lost the legitimacy to govern," Clinton said Monday.
"And the people of Libya have made themselves clear: It is time for Gadhafi to go, now, without further violence or delay."
Catherine E. Shoichet,
CNN
March 2, 2011
Venezuelan President Hugo Chavez claims U.S. criticism of Libyan leader Moammar Gadhafi has a clear aim: military invasion.
“Let’s not get carried away by the drums of war, because the United States, I am sure that they are exaggerating and distorting things to justify an invasion,” Chavez said Monday, according to Venezuelan state media.
At a Monday meeting of the U.N. Human Rights Council in Geneva, Switzerland, U.S. Secretary of State Hillary Clinton said the United States was exploring “all possible options,” and that “nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.”
Asked at a news conference Monday whether the United States planned an imminent military response in Libya, Clinton said, “No.”
Speaking Monday in the Venezuelan capital, Caracas, Chavez proposed sending an international committee to Libya to mediate and help develop a peaceful solution to unrest in the North African country.
"Instead of sending Marines and tanks and planes, why don't we send a goodwill commission to try to help so that they do not continue killing in Libya? They are our brothers," he said in a speech televised on the government-run network.
Chavez and Gadhafi have a close relationship, having bonded partly over shared opposition to U.S. global influence.
At a lavish Tripoli celebration commemorating 40 years of Gadhafi's leadership in 2009, the two leaders sat side by side during a two-hour military parade. That same year, a new football stadium in Benghazi, Libya, was named after the Venezuelan leader.
As rumors swirled about Gadhafi and his whereabouts last week, some suggested that he may be en route to Venezuela. Those reports proved to be false; the Libyan leader later spoke publicly in Tripoli.
But the close ties between the two leaders remain strong. On Monday, Chavez said Gadhafi "has been my friend and our friend for a long time" in remarks broadcast on Venezuelan state television.
"We must be cautious. We know what our policy is: We do not support invasions or massacres or anything, no matter who does it. But there is no doubt that, regarding Libya, a campaign of lies is being woven -- the same that has been woven about Venezuela for a long time," he said.
The U.N. Security Council over the weekend voted for tough restrictions and possible war crimes charges against the Libyan regime.
The Security Council measures -- which include an arms embargo, an asset freeze and travel bans for Gadhafi and members of his family and associates -- also referred the situation unfolding in Libya to the International Criminal Court.
White House press secretary Jay Carney said Monday that the U.S. government was considering the possibility of imposing a no-fly zone over Libya.
"Col. Gadhafi and those around him must be held accountable for these acts, which violate international legal obligations and common decency. Through their actions, they have lost the legitimacy to govern," Clinton said Monday.
"And the people of Libya have made themselves clear: It is time for Gadhafi to go, now, without further violence or delay."
US Mint is cutting back on allocations of American Silver Eagles
Bill Haynes, President of CMI Gold & Silver, one of the largest dealers in the United States informed King World News today that the US Mint is cutting back on allocations of American Silver Eagles and this is resulting in higher premiums. Haynes told KWN in a phone interview, “Today the US Mint notified its eleven authorized purchasers that their allotments are being reduced and as a result the authorized purchasers increased their premiums to the dealers.”
Bill Haynes continues:
“Eric, the Mint sold about 10 million ounces of American Silver Eagles so far this year, 6.4 million in January and about half that in February. The Mint had no problem producing those record quantities, but now the US Mint is cutting allocations to its authorized distributors. There is a glitch somewhere but we just don’t know what it is.”
King World News also contacted the US Mint today to get a direct comment from them regarding a story that they had suspended production of Silver Amercan Eagles. As it turns out this information which was taken off of the US Mint’s website is over a year old. In a telephone interview with King World News Michael White of the US Mint stated, “This language was on our web site over a year ago when we did not produce American Eagle Silver Uncirculated Coins. The site will be updated shortly.”
We will have to wait and see what the update is from the US Mint, but we do know that Bill Haynes, a veteran of nearly four decades in the gold and silver business has confirmed a reduction in allotments of Silver American Eagles and an increase in premiums.
Bill Haynes continues:
“Eric, the Mint sold about 10 million ounces of American Silver Eagles so far this year, 6.4 million in January and about half that in February. The Mint had no problem producing those record quantities, but now the US Mint is cutting allocations to its authorized distributors. There is a glitch somewhere but we just don’t know what it is.”
King World News also contacted the US Mint today to get a direct comment from them regarding a story that they had suspended production of Silver Amercan Eagles. As it turns out this information which was taken off of the US Mint’s website is over a year old. In a telephone interview with King World News Michael White of the US Mint stated, “This language was on our web site over a year ago when we did not produce American Eagle Silver Uncirculated Coins. The site will be updated shortly.”
We will have to wait and see what the update is from the US Mint, but we do know that Bill Haynes, a veteran of nearly four decades in the gold and silver business has confirmed a reduction in allotments of Silver American Eagles and an increase in premiums.
Ron Paul: Fall of the Federal Empire
Ron Paul: Fall of the Federal Empire
7 hours ago - FOXBusiness 8:43
1083 views
Congressman Ron Paul, (R-Texas), on Bernanke?s testimony on the Hill and what the future will be for the Arabs in the Middle East.
http://finance.yahoo.com/video/economy-18773128/ron-paul-fall-of-the-federal-empire-24394905
7 hours ago - FOXBusiness 8:43
1083 views
Congressman Ron Paul, (R-Texas), on Bernanke?s testimony on the Hill and what the future will be for the Arabs in the Middle East.
http://finance.yahoo.com/video/economy-18773128/ron-paul-fall-of-the-federal-empire-24394905
Board Member of Goldman Sachs and Procter & Gamble Charged in Insider Trading Scheme
Board Member of Goldman Sachs and Procter & Gamble Charged in Insider Trading Scheme
FOR IMMEDIATE RELEASE
2011-53
Washington, D.C., March 1, 2011 – The Securities and Exchange Commission today announced insider trading charges against a Westport, Conn.-based business consultant who has served on the boards of directors at Goldman Sachs and Procter & Gamble for illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside information about the quarterly earnings at both firms as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.
The SEC’s Division of Enforcement alleges that Rajat K. Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards. Rajaratnam used the inside information to trade on behalf of some of Galleon’s hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the firms. The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with Rajaratnam.
FOR IMMEDIATE RELEASE
2011-53
Washington, D.C., March 1, 2011 – The Securities and Exchange Commission today announced insider trading charges against a Westport, Conn.-based business consultant who has served on the boards of directors at Goldman Sachs and Procter & Gamble for illegally tipping Galleon Management founder and hedge fund manager Raj Rajaratnam with inside information about the quarterly earnings at both firms as well as an impending $5 billion investment by Berkshire Hathaway in Goldman.
The SEC’s Division of Enforcement alleges that Rajat K. Gupta, a friend and business associate of Rajaratnam, provided him with confidential information learned during board calls and in other aspects of his duties on the Goldman and P&G boards. Rajaratnam used the inside information to trade on behalf of some of Galleon’s hedge funds, or shared the information with others at his firm who then traded on it ahead of public announcements by the firms. The insider trading by Rajaratnam and others generated more than $18 million in illicit profits and loss avoidance. Gupta was at the time a direct or indirect investor in at least some of these Galleon hedge funds, and had other potentially lucrative business interests with Rajaratnam.
Gates: Libyan no-fly zone would mean widespread air strikes
Gates: Libyan no-fly zone would mean widespread air strikes
By John T. Bennett - 03/02/11 02:41 PM ET
Defense Secretary Robert Gates on Wednesday said the U.S. military could establish a no-fly zone over Libya, but he cautioned that doing so would first require widespread air strikes across that nation.
“If it’s ordered, we can do it,” Gates told the House Appropriations's Defense subcommittee.
But establishing control of Libyan air space would “start with attacks to destroy” Libyan air defense systems. That kind of assault would require more U.S. military aircraft than “you would find on a single aircraft carrier.”
With so many fighter jets involved in other conflicts, the needed additional jets would have to be redeployed.
Gates told the panel that U.S. military involvement in Libya would require Congress to approve a use-of-force measure.
Adm. Michael Mullen, Joint Chiefs chairman, reiterated on Wednesday that U.S. security officials have still been unable to confirm that Libyan military jets fired on opposition members.
White House press secretary Jay Carney and Secretary of State Hillary Clinton in separate appearances on Wednesday said all options remain on the table.
The White House on Wednesday insisted that there were no inconsistencies in administration policy when it comes to the no-fly zone.
"The fact that the no-fly zone idea is complex does not mean it's not on the table," Carney said. "We have not ruled any options out."
This story was posted at 11:42 a.m. and updated at 2:41 p.m.
By John T. Bennett - 03/02/11 02:41 PM ET
Defense Secretary Robert Gates on Wednesday said the U.S. military could establish a no-fly zone over Libya, but he cautioned that doing so would first require widespread air strikes across that nation.
“If it’s ordered, we can do it,” Gates told the House Appropriations's Defense subcommittee.
But establishing control of Libyan air space would “start with attacks to destroy” Libyan air defense systems. That kind of assault would require more U.S. military aircraft than “you would find on a single aircraft carrier.”
With so many fighter jets involved in other conflicts, the needed additional jets would have to be redeployed.
Gates told the panel that U.S. military involvement in Libya would require Congress to approve a use-of-force measure.
Adm. Michael Mullen, Joint Chiefs chairman, reiterated on Wednesday that U.S. security officials have still been unable to confirm that Libyan military jets fired on opposition members.
White House press secretary Jay Carney and Secretary of State Hillary Clinton in separate appearances on Wednesday said all options remain on the table.
The White House on Wednesday insisted that there were no inconsistencies in administration policy when it comes to the no-fly zone.
"The fact that the no-fly zone idea is complex does not mean it's not on the table," Carney said. "We have not ruled any options out."
This story was posted at 11:42 a.m. and updated at 2:41 p.m.
China "Attacks The Dollar"
China "Attacks The Dollar" - Moves To Further Cement Renminbi Reserve Currency StatusSubmitted by Tyler Durden on 03/02/2011 20:24 -0500
In a surprising turn of events, today's biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People's Bank of China. Reuters provides a simple translation and summary of the announcement: "China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily." To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.
A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.
And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel "China Attacked the Dollar" (google translated):
The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars. Beijing shakes America's claim to represent the key currency - with serious consequences for the U.S..
The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.
This will respond to the growing importance of the yuan as a global reserve currency. "The market demand for cross-border use of the yuan rises," said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.
Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.
Currently, the People's Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People's Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur - and not on supply and demand-based exchange rate.
Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.
The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.
In a surprising turn of events, today's biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People's Bank of China. Reuters provides a simple translation and summary of the announcement: "China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency's international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily." To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.
A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.
And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel "China Attacked the Dollar" (google translated):
The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars. Beijing shakes America's claim to represent the key currency - with serious consequences for the U.S..
The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.
This will respond to the growing importance of the yuan as a global reserve currency. "The market demand for cross-border use of the yuan rises," said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.
Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.
Currently, the People's Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People's Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur - and not on supply and demand-based exchange rate.
Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.
The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.
Subscribe to:
Posts (Atom)