T Nation

China Starts Dumping the Dollar

http://www.foxbusiness.com/markets/2010/08/16/cavuto-euro-tops-dollar-beijing/

Cavuto: Euro Tops Dollar in Beijing Now

Now that we’ve got the silver, who needs your copper?

Here’s the deal.

A penny for your … Fears.

Because don’t look now, but I think China fears holding too many of our pennies.

China is now the second biggest economy on earth and guess which currency is the country’s second favorite?

Our dollar.

The euro the currency tops for Beijing now.

Yu Yongding dinging the dollar at a big money conference. The former Bank of China big wig insists it’s nothing personal, just business. And I guess not much good long-term business to be gained being solely married to our dollar, so “euro we go,” or at least “they go.”

And all this on the very same day we heard officially what we’ve long taken as a given, at least anecdotally … Japan’s latest weak GDP figures have pushed it to third among economic giants.

So China, with nearly two and a half trillion bucks in foreign exchange reserves is exchanging a lot of dollars for a lot of “anything but” dollars.

Yong-ding says it’s just about being prudent and diversifying.

But i am telling you, the implications for the us couldn’t be more terrifying.

Here’s why…We are piling up debt faster than me ice cream at a dairy queen closeout sale.

And we have comfortably believed the Chinese would happily buy that debt. After all, we figured, where else would they go?

Today they just told us.

And to add insult to financial injury, they’re lecturing us now about getting our spending act together.

Get ready. This is gonna get bad.

I agree. China’s played this whole financial mess pretty damned well IMVHO. That’s one of the few perks of having an Party oligarchy/politburo style leadership—when they’re shrewd and effective. Less inertia-- they get things done pretty damn quick. When they’re not, things crash even faster and harder.

As for me…
I’m buying the dollar.

The above is commentary looking through a rear view mirror.

The future of the Euro does not look good.

The dollar will ultimately win out over everything, period. Why else is everyone so interested in sucking it up?

China remains as the wild card though, they have extreme clout based on sheer numbers of people and their broad base of influence. Nothing that we don’t already know, I don’t trust the mofo’s.

BG