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Sunday, November 28, 2010

QE2, China, Russia quit dollar

They all warned us.

Hey folks

When the Fed announced that they were thinking about and planning to go for another round, dubbed QE2, the WORLD said, "Don't do it." Even Obama, travelling around the Global was met with, "What are you stupid, get out of here." Of course, not in so many words. But the World made it plain and clear to Obama, that his Economic Plans were not working and they wanted NOTHING to do with ANY of them. They came right out and said, don't do QE2.

So what did the Fed do? QE2. They printed another $600 Billion Dollars and threw it into the Market via buying Treasury debt. So? Is it working? You tell me? According to the NY Times - Is the Fed’s Plan Working? Look Abroad By PAUL J. LIM
HOW will you know whether the Federal Reserve’s plan to reinvigorate the economy by buying Treasury debt is working?

Simple: Look at how foreign stocks are behaving. Based on their performance last week, the Fed could be running into a problem.

Although one goal of the Fed’s $600 billion monetary stimulus is to restore confidence in domestic stocks — in the hope of bolstering consumer confidence and spending here at home — the real canary in the coal mine for the central bank’s plan is the performance of overseas equities.

Why? Market strategists say they believe that the Fed’s effort, its second foray into quantitative easing, known as QE2, will have several consequences, some of them apparently unintended. For starters, by keeping market interest rates low through buying intermediate-term Treasuries, the Fed hopes to prompt risk-taking among investors.

But risk-taking doesn’t stop at America’s shores, and since anticipation of QE2 began building, investors have bid up risky emerging-market stocks more than domestic equities. Since Aug. 31, the Morgan Stanley Capital International Emerging Markets Index has surged more than 13 percent. That strong rally is a sign that the Fed’s efforts packed initial punch, because it encouraged investors to take on risk.

Low interest rates also reduce demand for the dollar, though it has been rising quite recently. Over the longer haul, a falling dollar would lower the cost of American goods sold abroad, increasing exports and, ultimately, job creation.

But a declining dollar would also “encourage U.S.-based investors to favor overseas investments,” said Jeffrey N. Kleintop, chief market strategist at LPL Financial in Boston. That’s because when the dollar sinks against other currencies, investors who put money to work abroad can profit on the currency exchange.

Since Aug. 31, the MSCI EAFE index of foreign stocks in developed markets has gained 5.9 percent. But despite the dollar’s strength in November, the weakening of the currency in September and October nearly doubled those gains: 10.1 percent for Americans investing abroad.
Now add with that, THIS. China Daily - China, Russia quit dollar By Su Qiang and Li Xiaokun (China Daily) Updated: 2010-11-24 08:02
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.
Translation folks, since Obama hasn't a clue, they are protecting themselves. They can see the Greatest Country on the Face of the planet implode, and they want to be in a position to profit from it in the long run, not be taken down with it. Not to mention, the world is anticipating even further American declines and disarray of the once Great Nation. A shell of itself. An opportunity that the World can not pass up. Read the rest of this.
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.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.

Putin has called for boosting sales of natural resources - Russia's main export - to China, but price has proven to be a sticking point.

Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia's energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.

Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.

Wen's trip follows Russian President Dmitry Medvedev's three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the largest energy consumer.

Wen said at the press conference that the partnership between Beijing and Moscow has "reached an unprecedented level" and pledged the two countries will "never become each other's enemy".

Over the past year, "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level," Wen said, adding the two nations are now more confident and determined to defend their mutual interests.

"China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power," he said.
As we get weaker, Russia gets stronger. Iran acquires a Nuclear Bomb, China, North Korea, and others are getting in motion. As America gets weaker, the World becomes more dangerous. I told you Putin wants it all back. He want the Motherland back. He is getting it, while our President signs away our Rights and Power. Destroys our Economy, and hinders our Freedom.
"The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries."

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.
Folks, just look around. All this money spent. What's better? Seriously? Where is the "recovery?" Where are the Home Sales, Jobs, Financial Recovery? Where is the Security? Where is our World Standing? We are further and further in Debt, with nothing to gain. We have a Leadership that seemingly doesn't really care about anything other than their agenda. The World is reacting to it. We MUST stop this before it becomes too late.
Peter

Sources:
NY Times - Is the Fed’s Plan Working? Look Abroad
China Daily -
China, Russia quit dollar

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