the real war

[a.k.a.]

"Members of the Organisation

of Petroleum Exporting Countries have cut the proportion of deposits held in dollars from 75 per cent in the third

quarter of 2001 to 61.5 per cent.

Middle Eastern central banks have reportedly switched reserves from dollars

to euros and sterling to avoid incurring losses as the dollar has fallen and prepare for a shift away from pricing

oil exports in dollars alone.

Private Middle East investors are believed to be worried about the prospect of

US-held assets being frozen as part of the war on terror, leading to accelerated dollar-selling after the

re-election of President George W. Bush."
...
"Opec officials say the cartel is trying to protect its

purchasing power per barrel, as Europe is its largest trading partner. Opec imports from Europe rose 29 per cent

between 2001 and 2003 while those from the US fell by 14 per cent, according to Morgan Stanley, the US investment

bank."

http://news.ft.com/cms/s/67f88f7c-47...00e2511c8.html

Meanwhile, the

"London Economist" which is usually pro-American (most of its readers being US citizens) recently published this

flaming editorial:

"The requirements of a reserve currency are a large economy, open and deep financial

markets, low inflation and confidence in the value of the currency. At current exchange rates the euro area's

economy is not that much smaller than America's; the euro area is also the world's biggest exporter; and since the

creation of the single currency, European financial markets have become deeper and more liquid. It is true that the

euro area has had slower real GDP growth than America. But in dollar terms the euro area's economic weight has

actually grown relative to America's over the past five years.

Where the dollar has failed is as a store of

value. Since 1960 the dollar has fallen by around two-thirds against the euro (using Germany's currency as a proxy

before 1999) and the yen (see chart 1). The euro area, unlike America, is a net creditor. Never before has the

guardian of the world's main reserve currency been its biggest net debtor. And a debtor may be tempted to use

devaluation to reduce its external deficit—hardly a desirable property for a reserve currency.

Those bearish

on the dollar are asking why investors will want to hold the assets of a country that has, by its own actions,

jeopardised its reserve-currency position. And, they point out, without the intervention of central banks, which

have been huge net buyers of dollars, the dollar would already be lower. If those same central banks were to begin

to sell some of their $2.3 trillion dollar assets, then there would be a risk of a collapse in the dollar. However

you look at it, America is likely to find it increasingly hard to finance its huge current-account

deficit."

http://www.economist.com/finance/dis...ory_id=3445928

To

simplify... Europe and the big OPEC countries are predominately investor nations. China and East Asia are

predominately producer countries. The US is predominately a consumer country.
At this juncture China and

East Asia are happy to see the US go further into debt because this is stimulating the growth of their economies.

Europe and the Middle East are frustrated because this diminishes the value of their US holdings. Now it appears

they are contemplating some radical divestment.
For now, I think the worst they can do is fuss and moan. The

key player appears to be China, which accounts for the biggest share of the US’s balance of payments deficits.

China’s currency is currently pegged against the dollar, and it’s playing it conservative by not selling it’s

currency on the international markets.
If, for any reason, China decided to peg its currency against the

Euro (or even the Yen) shopping at Wal-Mart would be like shopping at Lord & Taylors overnight.

I tend to

bore people when I start talking economics. But this seems like a very tense situation to me.

[Surreal]

boring not at all....

In

your opinion what are the chances of the dollar decreasing in such away to make wal-mart priced goods a luxury? What

will happen to the millions of american family already in 30grand debt? Will any one bail us out? IS this why we are

trading with china so much? What will the DJIA, NASDAQ 100, and S@P look like in a few

decades?

What about investing? Should I buy gold (not at 440 Per once!!!), or other precious metals? What about

reality? And foriegn investmetns. I hear the China's version of monster.com is have its IPO soon. Good ideal?



Just would like to others opinions

[a.k.a.]

boring not at

all....

In your opinion what are the chances of the dollar decreasing in such away to make wal-mart priced

goods a luxury?

For the time being, there’s been a momentary halt to the dollar’s record breaking 8

month slide. Mostly because European bankers stepped in to buy Treasury notes. But I don’t think anybody expects it

to stay at current levels. A further drop is almost inevitable. Whether this is going to be a smooth slide or a

savage dive depends on what investment bankers decide to do with their holdings. I’m sure none of them want to see a

replay of the 1997 Asian currency crisis. But currency trading is highly speculative and there’s always the

possibility of a snowball effect. Once a panic sets in, nobody’s going to want to be left holding the bag. And,

unlike the Asian crisis, there are far too many dollars in far too many hands for a handful of central banks to step

in and stop the meltdown.
As far as US consumer prices go, the question is whether Asian currencies will

continue to match the dollar’s slide. Japan’s recovery is stalling and China is aggressively trying to penetrate

more markets. So it’s very unlikely that Wal-Mart prices will rise at the same rate as gas prices. I was just trying

to illustrate the vulnerability of the US economy against a world that is increasingly aligning itself more and more

against us.

What will happen to the millions of american family already in 30grand

debt?

Consumer debt is most vulnerable to economic recession. (You can’t pay your bills if you

can’t get a job.) If interest rates rise (which they almost certainly will) we’re likely to see more money go into

savings and less into investment. This may slow the dollar’s slide but it will exacerbate the debt problem.
The

government will no doubt step in to save banks that are having liquidity problems. But I’m pretty sure that indebted

families are on their own.

Will any one bail us out?

I don’t see how anybody can

literally bail us out. But foreign banks have been keeping the dollar afloat for some time. They have no choice as

long as dollars remain the dominant reserve currency.
The point is that many countries are frustrated at how

this is holding back their own economies and I have a feeling that the EC, in particular, is trying to find an

alternative to dollar hegemony. If they ever do, I’m sure they’ll drop us like a hot

potato.

IS this why we are trading with china so much?

Chinese working conditions

are brutal, their corporate structures are very lean, and their productive capacity is growing by leaps and bounds.

So they’re in a position to undercut most competitors in low end manufacture. (Their weakness is technological

underdevelopment.)

What will the DJIA, NASDAQ 100, and S@P look like in a

few decades?

I have no idea.

What about investing? Should I buy gold (not at 440

Per once!!!), or other precious metals? What about reality? And foriegn investmetns. I hear the China's version of

monster.com is have its IPO soon. Good ideal?

Hah! My “investments” consist of a nice piece of

land in Utah and an old pickup/trailer. I recently dug a well and I’m looking towards a home, greenhouse, wind

turbines and that nicer piece of land (with a pond) next door.
If all goes well, I’ll be able to drop right

out of the grid by the time I’m 55.
I don’t follow the stock market (This is like a part time job if you hope to

make any significant money as a small investor.) but I do think that Lenovo’s recent purchase of IBM PC is something

to keep your eyes on. This represents China’s biggest venture into the international scene. The personal computer

market is highly competitive and very cutthroat. But then again so are Chinese corporations.
Just five

years ago American business magazines were talking about penetrating the vast, untapped Chinese computer market. Now

Lenovo controls 3/4 of that market and is poised to penetrate us.
It’ll be a very different world if they pull

it off.

Just would like to others opinions

Me too.

[Surreal]

mmm wow. dont know what to

say... currently I am just an observer of econimics.

I would hate to live in a inner city community. L.A. NYC I

bet that could turn nearly into anarchy.

I knew this who China thing was a bad idea. The america uppers, (as in

presidents, CEOs, ect.), take the quick way to earn a buck. Make 600 million in three years but loose 15 billion in

8. I would like to scream at these weak minded men.

As a human with only 80 years of lifespan I somthimes think

if I had the opportunity to screw a nation and make enough money to start my own island country I would. But, being

great is more of a priority. These men are not great men, just weak men.

Besides is not China communist? WTF

are we doing with communist anyway?

I hope I will have the ability to achieve my life goals. One of which is to

be successful in the business world. (been planing for a few years )



a.k.a. I really like your

investments. Those are proberly the best one can make. I tell myself I would like to be complety able to go off the

grid some day. It would be really alwsome if someone started a community with those thoughts in mind. It should be

spred out. Perhaps just a loose-nit half state size group of poeple able to go off the grid. My biggest problem I

see is food production. I can stock a life time of caned goods but that would defently get bland in a decade.



Being 22 years old I have the next 40 years to contend with. I have about $11,000 working in the stock market. I

own an beat up car and about $6000 in liqued assests. SO I only have a few years to gain success to fund my

'investments'. Not an easy task. If I work hard and harder yet, I will be the few in my peer group to be able to

live realively out of anarcies way.

LOL........