China and Brazil: Dump the Dollar

Posted by: Dexter Roberts on May 19, 2009

It is just the latest sign that China and other developing nations are increasingly ready to challenge the currency status quo. Just before beginning his three-day visit to China, Brazilian president Luiz Inacio Lula da Silva raised waves when he said he planned to continue discussions with Chinese leaders about the possibility of dumping the dollar in trade between the two countries. Instead, the Chinese Yuan and Brazilian Real would be used for transactions, significantly lowering costs for the two nations, he said. His call was echoed by a Brazilian central bank official Tuesday, who said the two countries bank governors were likely to meet soon to push forward the proposal.

Following his meetings with Chinese president Hu Jintao and premier Wen Jiabao Tuesday, the second day of his visit, both Lula and his Chinese counterparts were mum on whether any progress had been made on the currency issue. But even a raft of announced financial agreements between the two nations—biggest news was China’s plan to lend $10 billion to Brazil’s Petrobras, while getting in exchange a guaranteed supply of Brazilian oil to the tune of 200,000 barrels a day for the next ten years—hasn’t generated as much interest as the possibility of this potential latest assault on the dollar.

And while economists say the likelihood of a real competitive alternative to the supremacy of the dollar remains far off, that doesn’t mean that agreements like the one being bruited between China and Brazil won’t emerge sooner. China for its part has already made clear its dissatisfaction with the currency situation. The first blast came on March 13 when China’s premier took a swipe at the U.S. “We have lent a huge amount of money to the United States,” Wen said at a press conference in Beijing’s Great Hall of the People. “I am a little bit worried. I request the U.S. to maintain its good credit, to honor its promises, and to guarantee the safety of China’s assets.” China, of course, has built up the world’s largest foreign reserves, totaling $1.95 trillion, with some two-thirds of that held in U.S. assets, mainly Treasuries.

That was followed by a March 23 call by China’s top central banker Zhou Xiaochuan to dump the U.S. dollar in favor of what he called a new “super-sovereign reserve currency.” The goal, Zhou wrote, is to “create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run.”

Brazil and China must build a “more just and fair international order,” the Brazilian president wrote in a commentary published in the official China Daily on Tuesday. Brazil and China have a “shared responsibility to help bring about the fundamental reforms in global governance that the world so urgently needs,” he wrote without mentioning the currency issue. Stay tuned for the next broadside aimed at the U.S. dollar.

Reader Comments

DanTe

May 19, 2009 11:38 AM

Eh. The same "da sky is fall'n, da sky is fall'n" has been spun to death already - in the 80's when Japan was all the rage. Nothing happened than, nothing will happen now. If China dumps the dollar, which currency will she peg her yuan to? And who in their right mind listens to South Americans anyway?

fmarc

May 19, 2009 12:03 PM

Funny. What guarantees the dollar is the American Constitution, hence a political, institutional stability. I don't want to sound impolite, but China and Brazil hardly qualify for such stability. Wait for a coup in Brazil or an insurrection in China and you will see a massive shift back to the loved/hated dollar. Anyway, do we gain anything as being the international reference currency? Probably short term gains, we can bully some foreign markets and nations and long term losses as it makes us less observant of financial orthodoxy, like spending the money we made, not the money we will (might) make.

Rob

May 19, 2009 12:29 PM

The very reason why the US has such stability is due to the dollar being the reserve currency mostly.

What people don't seem to understand is that if the situation deteriorates so badly in the US, the foreign creditors will not be able to afford to purchase US debt and may even sell Us debt, not by choice but by necessity to prevent their own government collapse. This means that the US will get hit hard whether it likes it or not. People in third world countries are used to a level of poverty. In post-bretton-woods US poverty does not exist. Even the poorest inner cities there is a massive amount of obesity. The US has to higher latin americans to do the work for them now, that is the consequence of this financial system and it is more fragile than people assume (2008 should have come as a warning to all).

Alfred

May 19, 2009 12:34 PM

US losing its hegemony.

BS

May 19, 2009 12:39 PM

Chipping away at the dollar is a long term initiative. They're not going to dump the dollar anytime soon. The real question or "worry" is what happens in the future when emerging markets become stronger as the world becomes multi-polar.

Rinaldho

May 19, 2009 12:49 PM

It is a good thing for other countries to de-dollarize their trade.

Numbers

May 19, 2009 12:59 PM

When two nations are trading and each country is willing to accept a designated currency no body can stop that. It may be beneficial to each because they do not need to purchase dollars which often add more expenses and remove uncertainty of dollar fluctuations. The way we print dollars and with the foreign debt we have accumulated, I can't blame these countries for doing so.

Wang

May 19, 2009 1:05 PM

China and Brazil must cooperate more in areas of common concern.

nikko

May 19, 2009 1:07 PM

Having the US dollar as the world reserve asset has kept the dollar artificially high, considering the balance of payments. This has led to a situation where we import nearly everything we need to live. There is a realistic value of the dollar that has been steadily falling. This is tied to our balance of payments. When market forces have their way, the dollar will collapse. Then we will be helpless, unable to produce the things we need to live. Creditors, like China, will loose too. It is in everyone’s interest to gracefully move to a system that does not tie any one nation to the worlds reserve asset.

Do people think a dollar collapse is far fetched? Why did we bail out our banks this last fall? Who was holding that money that was destined to disappear without a guaranteed government bailout?

The Artful Dodger

May 19, 2009 1:09 PM

China is a demographic and industrial accident almost hungry to demonstrate its self destruction to the world. You can't walk around in any big city there without a mask. There is worker unrest daily. 50 million peasants drift in and out of cities weekly. And the quality of their products is a worldwide joke. So I should worry why?

guy3d

May 19, 2009 1:28 PM

A reasonable justification for the irresponsibleness of the American institution. Wake up America..the world does not revolve around the US anymore..it is not balanced the way it was when the world was unipolar(US dominance)..we all know when it is bi-polar..things will be balanced and the world is in harmony.

tim

May 19, 2009 2:04 PM

What the US needs to develop is a hemispheric energy policy. It makes far more sense to focus on trade with S. America, instead of relying on the middle east and funding terrorist organization. let Europe and other nations pay the costs of protecting Mideastern oil. China has seen this and now has a guaranteed source of oil.

Washington continues to be years if not decades behind any long terms energy strategy that is not based on making corporate interests stronger at the expense of the country.

gerardo A

May 19, 2009 2:04 PM

Brazil's economy's is in better shape than US.
The US is brankrupt!

Hugo van Randwyck

May 19, 2009 2:13 PM

Why are China and Brazil using the dollar anyway - makes more sense to use their own currencies. If the goods don't pass through America, why do they need to use the dollar? America isn't the middleman for their trade, they trade directly.

CompEng

May 19, 2009 2:14 PM

I agree with Nikko that the fall of the dollar is extremely likely. I think our major concern should be that it occur at a managed rate that allows domestic production to fill in for the imports that will start to become more expensive. It would also be nice to see more domestic jobs in non trickle-down occupations.

david

May 19, 2009 2:19 PM

Let them, its a free world. And for those countries that want to change things they can step up and provide all the money that the US used to provide. Its time for us to take care of number one and forget about the rest of the world for a while....

kuei

May 19, 2009 2:23 PM

It seems the same people underestimating China today are the same that underestimated china 15 years ago.
When China blasted the american dollar on Mar 13 they did so as an effort to make the US seem weak and inferior to the rest of the world. Specifically to China. China IS the superpower and they want everyone to know who will be calling the shots in the near future. And the worst part about this is americans gave the Chinese all the tools they needed to defeat us by buying nothing but Chinese junk at wal mart.
Wake up people. This is just the beginning. There is no more pavement on this road and it's gonna get real bumpy. Hope you all didn't deplete your Y2K survival supplies. Americans are too stupid to win this war.

Roland

May 19, 2009 2:39 PM

Dump the dollar and exchange it for ... what? Currencies are based on trust. People around the world trust the US Govt. more than they trust their own. The dollar will remain the "least worst" currency for awhile.

Market

May 19, 2009 2:42 PM

The fall of US and the raise of China

Benjamin

May 19, 2009 2:47 PM

More than $2 Trillion has been spent propping up the US economy and it was all fiat money which is going to lead to horrendous inflation. Couple that with the fact that we go further and further down the net importer trail and it is only a matter of time before the world is going to bail on the dollar as the reserve currency. Other currencies may not appear to be better but one has to be deaf, dumb and blind not to see what is coming in the next 40 years.

DieHard

May 19, 2009 2:50 PM

American dollar would be nothing but a toilet paper if its removed as a reserve currency. Finally, Americans would have to actually earn what they consume.

T. Varadaraj

May 19, 2009 2:55 PM

Even though it's loosened over the last few years, the Chinese accumulated dollars by pegging their own currency to it. Even today, instead of allowing it to float, Chines currency is traded in a range. It will never find it's true value, unlike the dollar.

The dollar is the most honest currency in the world. That is why it will be the medium of financial transactions for some time.

Smith

May 19, 2009 3:16 PM

It's trade between China and Brazil. They can do any thing if they want it.
US capitalism is losing.

Sang

May 19, 2009 3:28 PM

Kuei, maybe your stupid but Americans havent lost any real war..especially an economic war. Remember USSR?

Sang

May 19, 2009 3:28 PM

Kuei, maybe your stupid but Americans havent lost any real war..especially an economic war. Remember USSR?

Sang

May 19, 2009 3:28 PM

Kuei, maybe your stupid but Americans havent lost any real war..especially an economic war. Remember USSR?

Sang

May 19, 2009 3:28 PM

Kuei, maybe your stupid but Americans havent lost any real war..especially an economic war. Remember USSR?

bob

May 19, 2009 3:31 PM

Who cares.
I want the dollar to fall,
Makes the US workers, which are the most productive and resourceful in the world cheaper and more affordable.

The truth of the matter is that if China devalues the US dollar, no one will just buy their crap. They will have to do fair trade aggreements, which is what they are trying to avoid by pegging ther Yuan to the dollar.

The US will never have the poverty of the rest of the world, becasue it has most of the resources and skills it needs in the country.

Even if the US dollar get's devalued, the US can just produce dollars to pay of debt, even if it leads to inflation.

The Money Masters

May 19, 2009 3:39 PM

Kuei... the real superpower is the Federal Reserve, not china or any other nation... go to google, look up "the money masters" and learn who controls what and when and how...then you will understand and learn.

Mike

May 19, 2009 4:12 PM

Question..

China is lending $10 bil to Petrobras for guarantee access to 200,000 barrels of oil per day.

Does China pay the market price or slightly less? Or does it pay a lot less?

Market

May 19, 2009 4:15 PM

Fall of US and Rise of china

Pari

May 19, 2009 4:22 PM

Its in Chinese interest to have a strong US dollar atleast when they had invested over trillion in US treasuries.

Brazil

May 19, 2009 4:35 PM

President Lula is a smart man and he always chooses his allies very carefully. Here is a man who didn't go to the best schools, who was taunted as being only a union leader, and than went on to become president of our country. He did that by choosing his allies carefully than and he is proceeding by choosing his allies carefully now. China has become Brazil's largest trading partner as of March of this year. Brazil has made money selling to China over the past few years; from medium size airplanes to iron ore to beef to soy to coffee and now oil. We need funding and China has 2 trillion dollars worth of foreign cash reserves and a willingness to provide funding. We have been cooperating closely for two consecutive governments already, so the writing should have been on the walls.

Joe

May 19, 2009 4:37 PM

I am curious who is going to buy all the US Debt.

We have added $1.1T since Sept 2008 and are looking at adding another $1-2T in the next 12 months.

Demand will wane at some point...

Ami

May 19, 2009 4:53 PM

Some of you posters confuse Nationalism with Stability... Open your eyes and your minds...

why are all the haters out in force now? 8 bad years of a president?? Really???? Wow, I thought people in the rest of the world were a little more clued in... Smell some blood and ya'all gang up, soon as the US is good and solid again, then ya'all will be right back on the band wagon with your hands out again... PATHETIC...

Gonna buy myself and island and get away from the cattle-mentality...

Zak

May 19, 2009 4:56 PM

If you owe creditors 3 million dollars you're creditors own you....If you owe them trillions of dollars you own them! Who exactly is going to buy the dollars that China plans to dump anyway?? And what is China going to do when the dollar is 'worthless' and the yuan isn't?? It can kiss it's massive trade surpluses goodbye!

Juan Pablo Gallardo

May 19, 2009 5:26 PM

Cool, lets ask china to use the real and whenever brazil banrkupts again, china will have to use their reals for firing up their chimneys.

Marcus

May 19, 2009 5:29 PM

Unfortunately, I must agree with Kuei!

nikko

May 19, 2009 5:45 PM

I don’t suspect China has any ulterior motives for the US. What they do want is to start getting the respect that other modern nations have been getting. They are no longer a slum dog and they don’t want to be treated like one. China came to like being able to grow their economy by selling to us artificially cheap. And we have come to like buying things artificially cheap. So now we are in a trap together with no easy way out. I don’t think it is productive of either one to make accusations, because the sinking of one is the sinking of the other.

nikko

May 19, 2009 5:45 PM

I don’t suspect China has any ulterior motives for the US. What they do want is to start getting the respect that other modern nations have been getting. They are no longer a slum dog and they don’t want to be treated like one. China came to like being able to grow their economy by selling to us artificially cheap. And we have come to like buying things artificially cheap. So now we are in a trap together with no easy way out. I don’t think it is productive of either one to make accusations, because the sinking of one is the sinking of the other.

Condolisa

May 19, 2009 5:52 PM

US will never lose power. Not this time.
cross reactions

George PS

May 19, 2009 6:03 PM

It's a silly game da Silva is playing to show his solidarity with his socialist comrade, China--the game in which Brazil is pegged to lose every time. Chinese intentionally keep their currency, renminbi, undervalued by about 20% relative to American dollar through currency manipulation. So every time Brazil gets paid by Chinese for its natural resources in Chinese currency, Brazil is cheated 20% of the dollar value of the export.

Of course, Brazil can turn around and use the Chinese currency to buy 20% more Chinese manufactured goods than the dollar can buy, which is exactly what Chinese want to see: Brazil, the importer of Chinese manufactured goods, not exporter of cheap manufactured goods. Brazil with its large population of low-wage labor force could potentially become an exporter of cheap goods to North America and the rest of the world, but with cheap Chinese goods flooding into its market, Brazil will never make it, which is what Chinese is counting on with the deal.

John

May 19, 2009 6:04 PM

When OPEC countries start accepting Chinese Yuan for oil, it's game over for US dollar. This is the beginning of the end.

Rob

May 19, 2009 6:04 PM

The reason the US$ is used in world trade is that it is (was?) viewed as a trustworthy and stable reference. If you were to negotiate a huge multi-year trade deal with Brazil or China would you trust their political stability and hence the value of their currency for 10+ years? Traditionally not. You might find a new government a few years down the road that significantly devalues the currency or worst...The fact that these issues are surfacing clearly shows how much damage our wonderful financial institutions have wreaked not only on Americans and American businesses but on our very image in the world.

Rob

May 19, 2009 6:04 PM

The reason the US$ is used in world trade is that it is (was?) viewed as a trustworthy and stable reference. If you were to negotiate a huge multi-year trade deal with Brazil or China would you trust their political stability and hence the value of their currency for 10+ years? Traditionally not. You might find a new government a few years down the road that significantly devalues the currency or worst...The fact that these issues are surfacing clearly shows how much damage our wonderful financial institutions have wreaked not only on Americans and American businesses but on our very image in the world.

John

May 19, 2009 6:05 PM

When OPEC countries start accepting Chinese Yuan for oil, it's game over for US dollar. This is the beginning of the end.

Dr Makayonina

May 19, 2009 6:09 PM

The Obama is taking good care of the dollar. Soon it will be much better because the Obama is printing new dollars so everyone can quit worrying and be happy. More dollars means everything costs more but everybody has more money so everybody is happy and noone has to worry.

John

May 19, 2009 6:10 PM

When OPEC countries start accepting Chinese Yuan for oil, it's game over for US dollar. This is the beginning of the end.

Chen

May 19, 2009 6:17 PM

I hope president Hu takes president Lula's offer to use our respective currencies to trade with each other. I will refrain from dissing the United States because that would mean lowering myself to the level of some Americans.

Jack

May 19, 2009 6:20 PM

Ben Bernanke is destroying the dollar by printing like a mad man to save his Wall Street buddies. No wonder the Chinese and Brazilians are ditching it.

guy3d

May 19, 2009 6:30 PM

It's ok that the US is heading the path of Great Britain..that is only the natural cycle of all great civilizations. There is nothing one person can do..since the US citizens became complacent and do not work as hard as a couple of generations ago. In order for the US to continue leading..it must get rid of lazy citizens and embrace hard working citizens..but why would people immigrate to America when they have a better life in their native countries.

Rogger Aardvark

May 19, 2009 6:49 PM

For decades we financed our lifestyle on the backs of other countries. It looks like many of us will have to downgrade.

Bob Brown

May 19, 2009 7:20 PM

Kuei - please do your beloved China and the rest of the world a favor and go jump off a bridge. Dumbass.

Jebus

May 19, 2009 8:03 PM

"Even the poorest inner cities there is a massive amount of obesity."

Obesity is as much a disease of poverty as tuberculosis once was. It results from diet and more specifically a high sugar diet resulting from highly processed foods and fast foods.

Read Michael Pollan.

As for Bric, brac, and ack, ack, ack ... it doesn't matter. We are in the early stages of global collapse and it can't be avoided. The party's over. Hug your small children as they have a lot to thank you for.

johndoe

May 19, 2009 8:27 PM

everyone here seems to forget something about china's so called power. China's ENTIRE economy and currency is based on US debt. China might posture and make statements but there is nothing they can do. If worse comes to worse, the U.S will dump the dollar and adapt a new currency (like whats already starting in NAFTA). The US doesnt have to do anything, they have China by neck, US is the biggest consumer of thier goods, thier prosperity depends on our debt.

So bottom line is, US can say "forget it" and all that US debt china is holding would become worthless....meaning thier currency, economy, and industries would be destroyed overnight.

Dont think so? Its already happend to china with the EURO, china was holding debt of several European countries before they adopted the Euro..after they adopted the euro, all that debt china held was worthless. Why do you think they started buying US debt...its in thier best intrest to keep us going, if not they will be the first ones to feel that down fall.

johndoe

May 19, 2009 8:31 PM

And I can prove what im saying is true. Dont bielive me? study the Asian markets and the US markets. They mimic the US market almost exactly. why? because thier markets are permenately tied to ours.

china will never dump the us debt, otherwise thier currency would be worthless. Its the only reason why they have any kind of buying power, and its reflected in the market.

@Dante

May 19, 2009 8:41 PM

And why should China peg its money to dollar, especially since the US is going down?

Ken

May 19, 2009 9:59 PM

It's funny reading these opinions. If you are not an American your comments tend to be "So long US, your grave is waiting". The comments from the Americans seem to be, "nothing is going to change".

Your questions should be, will the multi polar world all you non Americans hope and desire for, be as stable as the world you now enjoy becasue of the US? Personally I say give the world what they want, let China take over. Then you can get your poisoned toothpaste, poisoned baby formula, poisoned drywall, we'll quit buying from all of the world, and keep our 14.3 trillion economy (bigger than the next 5 nations combined 2008 International Monetary Fund) in our own borders, or with Canada and Europe. If we are importing everything and making nothing, imagine what that 14.3 trillion would be if we start making and buying from ourselves.

Jon

May 19, 2009 10:31 PM

China and Brazil and other countries are getting stronger.

This is good for China, Brazil, and the United States.

Who care about China?

May 19, 2009 10:36 PM

China wants to dominate the world in the future and this is its way of doing it. The USA and other countries can see thru it. China is trying to assert control over Asia and its international water...Don't ever believe in the Communists...

Tom

May 19, 2009 10:42 PM

What America needs to do is to immediately DROP the policies which are fueling our economic demise. Do not nationalize the banks. Do not nationalize the auto industry. Do not nationalize health care. The old Soviet Union did that. China does it. How good was the USSR's economy? It fell appart. Why would anyone in their right mind even consider such failed and stupid economic policies? We need to get back on track America. Only then will our currency be worth a damn.

ergas

May 19, 2009 10:46 PM

When Americans work we pay our bills. That is our promise to each other and to our debtors. Our first bill paid is income tax. Americans are running out of jobs; no jobs, no income tax, no payments to our debtors, at home or internationaly. we cannot be the world's only consumer. companys should be measured by its customers not its share holders. We don't have any customers. at home or abroad.

J Wright

May 19, 2009 10:52 PM

hmmm... sounds like a Tom Clancy novel.

SENA

May 19, 2009 10:55 PM

We need to dump the Dollar
We need to dump the crook's in congress.
We need to dump the private bankers who are to private....who owns the media and congress..........That's it in a nut shell..............Wake up America....

Bruce

May 19, 2009 10:56 PM

There are two basic differences in the way the USA and China are handeling their stimulus packages. The USA is bailing out old industries and the blue chip banks etc with no money getting to the people, China is making the money available to the people so they can spend it domestically to build up their domestic demand and create jobs in China. China is looking at the small and mediam sized business which is the growth engine of China. The real problem is that the small and mediam sized business are also the growth engine of America but the govt stimulus package does not address or help them.
America has the stimulus package wrong and it's dollar will suffer from this over the long term. In a market economy, if a company does poorly it fails, there is short term pain and at the end someone else, typically someone who has not made the same drastic mistakes, picks up the peices. America and the USA govt should have let all these companies they are bailing out go bust and let the others pick up the peices. If GM goes broke, there will still be cars sold, maybe they will be toyotas or hondas but they will still be built in America with American workers. Not all the banks are going to go bust, only the ones which should because of their parctices. if we had the clensing we can move forward, as it is now, we just prolong the agony.
I am a Canadian and now live in China, everyone here has a smile on their face, there is no welfare but if you can't get a job you can always get a job sweeping the streets or as a crossing guard. Nothing is given to you here but it is always available if you are willing to work.
There is a saying in China "everything is possible in China but nothing is easy in China"
America has to clean up it's act domestically to progress.

Amr

May 19, 2009 10:59 PM

There are two fundamental reasons that China will never depeg its currency from the US Dollar. First, China is one of the largest creditors to the US government and that ties its economic fate to that of the US. If the US dollar looses value then China's US T-bill reserves will loose value as well. Second, the US market is one of the largest importers of chineese goods. Any devaluation in the US dollar will mean lower imports from the US and consequently lower exports from China.

Bruce L. Kapito

May 19, 2009 11:02 PM

Rob, I don't know if you'll be reading this thread again but the word to employ people is "hire" not "higher"

Respectfully,

BLK

just a stupid guy

May 19, 2009 11:05 PM

It's ABC; American, Brazilian and Chinese. Sound as always. American is shoulder the world, Brazil is learning, China is a corrupted and bullyed country. what's designated currency they want; paper.

C. H. Ng

May 19, 2009 11:15 PM

The problem with many Americans is that they are still living in their dream world.
Please remember empires come and go; there is no single empire in the history of mankind that can last forever or for generations.
Anyway a new shift from using a single currency to a basket of currencies for trades is not a bad idea, now that all the current economic woes seemed to be originated from the US. You can't blame those nations and people from thinking of their self interest and backing away from the US currency. In the long run, I think it will be good for America and her people as well.

C. H. Ng

Jan

May 19, 2009 11:24 PM

A year or so ago, some reps in the house had some charts that showed that just about every foreign country owns a piece of the US. We've been sold out. The corrupt wall street and corporate gang that promoted world trade, are having the repercussions come back to bite them. But sadly, the people will pay the price as we are now seeing in our falling economy. If Americans don't start paying attention to the fact that 6 years of a senseless war is bankrupting us, then when we can't pay our debts to the nations that hold our paper, don't complain when they come here and take over. It is a fact - WARS BANKRUPT NATIONS. Always have! We have become a militant mindset nation manipulated by the military industrial complex for profit. Our constitution does NOT call for us to police the world. We ought to mind our own business and start driving electric cars and then we won't have to fight for oil. You big ol'SUV drivers are supporting terrorism by sucking up excess gas that we could be conserving instead of having to import to satisfy Americans glutonous appetites for gas guzzlers.

Americans have had their heads in the sand for the last 20 years. Our dollar is worthless, why shouldn't China and Brazil, or any other country protect THEIR interests? Our Government leaders that the morons of this country continue to leave in office, don't care, as long as they get their paycheck and keep their corporate friends happy. The oil industry runs this country and until we stop throwing our money away every week on this consumable dirty fuel, we'll never be "free".

Andrew

May 19, 2009 11:50 PM

Raise tariffs on Chinese goods so we can pay them back.

trh

May 19, 2009 11:53 PM

lets see now,i want 10 yauns for my 3 reals,but you will only give me 5,so what are we to do?no trade today sorry.nobody else to ask if its fair deal sorry.what a joke,we can't trust the chinese to do anything without us looking over their shoulder to make sure of what we are getting.now a little third world country is going to trust them,get real.

vivian

May 20, 2009 12:18 AM

Its high time the world consider what china is doing.When there is a small disaster in china the call the world to help.What the US done to the world in terms of aid, China will never ever do a tenth of it in life history.Before long those countries that trust China will be weeping and oozing out blood for tears

khamul

May 20, 2009 12:19 AM

so china is gonna defeat america by stop selling a bunch of wal-mart's junk... thats an amazing commercial war... could last a couple of weeks. im really afraid of not get my cheap t-shirts or my really cheap christmas candles for next black friday...

Aly-Khan Satchu

May 20, 2009 12:47 AM

At first, we saw the fingerprint evidence deep in the minutiae of the fringe. The near 50% Copper price rally in the teeth of a demand implosion signalled something was afoot. What was under the radar but barely has now popped itself above the radar.

The $ has been softening sharply, the danger is of a full scale rout.

Aly-Khan Satchu
www.rich.co.ke
Twitter alykhansatchu

jealousamerican

May 20, 2009 1:38 AM

whats funny is a lot people whos made comments here said they are not worried about the status of the greenback...but if they are really not worried as they said, i dont think they would even read this article and spend time making insulting comments which actually shows how much fear they are holding inside. but its too late to fear now.

Bob

May 20, 2009 2:06 AM

While as usual BW tried to sensationalized news in order to draw in some stupid, imature eyeballs, the real event isn't 1/10nth as dramatic as BW made it out to be. Still readers making insulting comments are whistling in the dark.

Elaina

May 20, 2009 2:44 AM

I think US guvernment should do more to keep the dollar # 1, China will play a foul game but i have doubt of winning. Wake up America, we need the jobs in USA and create new jobs for americans.I hope America had learn from this and hope Mr.Obama will lead the country where America was not long ago. We don't want to pay a high price or is too late.I am sure America will be again the world leader in industry with a strong dollar and more dependent of foreign debts.

Paul

May 20, 2009 2:56 AM

China and Brazil dumping the dollar? Isn't that exactly what the US government wants? If the US dollar drop like a rock, then it will stimulate US exports, help revive the US economy and trim its current account deficit, the logic goes. American politicians have been barking at China not to peg its currency to the US$ but let the Rmb appreciate i.e. let the US dollar depreciate. Now the Americans are getting what they've wished for.

Paul

May 20, 2009 2:56 AM

China and Brazil dumping the dollar? Isn't that exactly what the US government wants? If the US dollar drop like a rock, then it will stimulate US exports, help revive the US economy and trim its current account deficit, the logic goes. American politicians have been barking at China not to peg its currency to the US$ but let the Rmb appreciate i.e. let the US dollar depreciate. Now the Americans are getting what they've wished for.

Paul

May 20, 2009 2:56 AM

China and Brazil dumping the dollar? Isn't that exactly what the US government wants? If the US dollar drop like a rock, then it will stimulate US exports, help revive the US economy and trim its current account deficit, the logic goes. American politicians have been barking at China not to peg its currency to the US$ but let the Rmb appreciate i.e. let the US dollar depreciate. Now the Americans are getting what they've wished for.

Paul

May 20, 2009 2:59 AM

China and Brazil dumping the dollar? Isn't that exactly what the US government wants? If the US dollar drop like a rock, then it will stimulate US exports, help revive the US economy and trim its current account deficit, the logic goes. American politicians have been barking at China not to peg its currency to the US$ but let the Rmb appreciate i.e. let the US dollar depreciate. Now the Americans are getting what they've wished for.

Global Investor

May 20, 2009 3:16 AM

It must be a US government conspiracy all along. Encourage Wall Street to export as much toxic financial assets as possible in the form of AAA-rated US$ MBS, CDOs, and SIVs to cheat foreigners out of hundred of billions of hard earned cash. Hopefully foreigners will then pull their money out and let the dollar depreciate. If they refuse, then there is the threat of hyperinflation as Uncle Sam will keep printing money to finance its deficits. The dollar finally plunges as foreign money flee, US exports surge, US trade deficit vanish, US employment increase. All American problems are solved. What about inflation, you may ask? No problem for the US. The US is a net borrower nation deeply in debt, so hyper-inflation is the fastest way to transfer wealth to debtors away from the Chinese, Japanese and Arab creditors who are stupid enough to lend money to the US. Great plan for the Americans.

carldunne

May 20, 2009 8:00 AM

Bruce's comment:

I am a Canadian and now live in China, everyone here has a smile on their face.....

I am also a foreigner living in China for many years. I am suprised at the "smile on their face" analogy. Armies of Chinese certainly aren't smiling. From the victims of the milk scandals, the laid off migrant workers, the 250,000 people incarcerted under so-called "administrative detention", the HIV activists, the victims of countless daily frauds and corruption, the recipients of "family planning" measures..... need I go on with this list. I can't quite see them all smiling.

Perhaps Bruce is one of the army of [smiling] expats living the high life in one of China's booming East Coast cities? Get real and look at the reality over here.

ps

May 20, 2009 8:06 AM

Is this a surprise? We've gone from creditor to debtor in barely a generation. In the 80's Japan, probably our truest ally these days, propped up our finances with massive TBill buys. Today it is China, who is not our friend, buying up US paper while rattling its sabre. We have no one to blame but ourselves. The govt, elected by the people themselves, sanctioned this spend like a drunken sailor mentality and we are now paying for it. And people themselves, buying from Wal mart and using their houses as a HELOC ATM are just as guilty.

s0055d

May 20, 2009 9:44 AM

Maybe Brazil should consider taking back their "poor" that have been dumped in the United States. If the United States is so no good, don't send people who can't make it in your own countries here then criticize our currency, which your expatriates find so attractive!
We will keep the good looking girls, however.

Trade

May 20, 2009 11:25 AM

This crisis would not have happened if it weren't for the massive trade imbalance between the US and China. The trade imbalance occurred because China artificially depresses the value of Yuan by buying up US dollars on the market, to keep their exports affordable for Americans. Now they're stuck with US$2Trillion, and begin to worry the US might inflate its way out of debt. Oops, too late! Reap what you sow China! Like it or not, you're in bed with America, if we go down, you go down too.

Ryan

May 20, 2009 12:04 PM

@Paul
America and export? What does America have that the world would want? Unreliable cars?

david

May 20, 2009 12:59 PM

it's doomed to be so.

Americans have taken everything for granted and are not used to something they feel odd. Look at the fact, the US currency is nothing but just a tool to exploit other countries. The debt of an american now is more $70,000. Use your brain, americans. If not this jerk dollar, who will lend you so much??? no way. did you work hard as people in other countries do? did you spend money as you earned? what you did in the past years is to print Dollars and spend them. why the world shall continue to let it be? your government only protects you but not people elsewhere. it is just a matter of time the world will dump dollars completely.

the only way for American to pay back the debts is to use their un-claimed resources, especially oil. the creditors like china, Japan shall work together to force US to use its oil to pay debts, instead of the toilet paper like currency.

david

May 20, 2009 12:59 PM

it's doomed to be so.

Americans have taken everything for granted and are not used to something they feel odd. Look at the fact, the US currency is nothing but just a tool to exploit other countries. The debt of an american now is more $70,000. Use your brain, americans. If not this jerk dollar, who will lend you so much??? no way. did you work hard as people in other countries do? did you spend money as you earned? what you did in the past years is to print Dollars and spend them. why the world shall continue to let it be? your government only protects you but not people elsewhere. it is just a matter of time the world will dump dollars completely.

the only way for American to pay back the debts is to use their un-claimed resources, especially oil. the creditors like china, Japan shall work together to force US to use its oil to pay debts, instead of the toilet paper like currency.

Yuri

May 20, 2009 1:11 PM

The failed social political economic model of the U.S is the source of:
Global economic crisis.
Global Security crisis.
Global health crisis.

C. H. Ng

May 20, 2009 10:45 PM

As mentioned earlier in my comment, empires come and go. Ever since the 2nd world war, USA has been, and still is, the "taiko" (big brother) in this world. Her US currency is still #1. But the question is "For how long?".

In my mind, USA will still remain as #1 for quite a while. But it won't be surprising if it's cut short as I can see many of her people are still living in their dream world and sticking their "small heads" in the sand by refusing to acknowledge their current woes while pouring scorns and sarcastic remarks on other countries (or rather a single country, China).

This group of people blame everything and everybody but themselves. While there are many other Americans who have wisely waken up (you can distinguish them from their fair comments), the formers have nothing but vurglar words and thoughts for their assumed "enemy" country, China, and her people, Chinese.

Being a Chinese myself (by race) but a Malaysian (by birth), I don't see China can overtake USA as number one "taiko" in this world...not now nor in another decade or two. She too has too many woes in hand currently to ever think of challlenging for the number one position. I doubt her country leaders and the people are foolish enough to think of that. They are at least realistic enough not to live in their dream world, unlike some of you Americans.

Put it this way...if one day the US dollar is to lose its number one spot, so be it. Just like a Chinese saying goes..."Man can propose but God will dispose".

C. H. Ng

May 20, 2009 11:24 PM

Correction to my earlier post:

Like a Chinese saying goes..."Man can propose but God will dispose"...should read as:-

Like a Chinese saying goes (literally translated)..."Man calculates but better Heaven calculate" which has the same meaning as "Man can propose but God will dispose".

Global Investor

May 21, 2009 1:12 AM

You guys just don't understand. It's all in the American play book. The whole plan is to export trillions of dollars in toxic financial assets worldwide to cheat Europeans and Asian out of their money. Then use hyper-inflation to screw the Chinese, Japanese and Arabs and transfer what is left of their wealth to the indebted American borrowers. Of course, America has no fault. Just blame the Chinese for lending money to the US so cheaply in the first place, it's THEIR fault.

Ant

May 21, 2009 4:44 AM

They speak about the economic rise of India.Have you been to Mumbay? It is shocking to see all the slums. It seems that all that economic charts are nothing to do with real life. I sound naive perhaps

Antiques Collecting

Big Rog

May 22, 2009 4:13 AM

Well C.H.Ng, Americans are and have been living their dreams for 300+ years now. We shook off the chains of tyranny from great Britain ages ago. We traded oppression for freedom. America is an infant in the eyes of the old guard. So I would not jump to conclusions on the empires fall debate. There are several other nations that have been around much longer than the good ol USA.
Evil however certainly exists and it is not in America, America is a peaceful nation regardless of the baseless mindnumbing ideology of foreigners.
Evil exists in the thoughts of people that believe the USA should fail.
Evil exists in the hearts of those that would relish in Americas Fall.
God help every last soul if the United States fails.
There will be nowhere to run and nowhere to hide from the chaos that will follow in all the earth.
I hope that the people that can make our world a better place are not listening to the silly notions that the USA cant be trusted or is Evil. For only they can save us from global collapse.
I hope those of you that read this and hate America and what it stands for love your children and your cultures and your current way of life, for it may all be gone soon because you wanted it that way!

TRELIC

May 23, 2009 11:09 AM

The only sensable thing is an international currency....pegging anything to an individual country's money is so.o.o. 60's...get over it U.S. ...having ones' currency used this way is not usually good for that country...The top economies "the E.U. & China" in the world should have the main say in such things...sorry to my friends in the U.S. but you people have almost bankrupted the world...it's going to be 50 years before anyone will listen or trust the states again!

C. H. Ng

May 24, 2009 11:16 PM

Well Mr Big Rog, I think you are really "big" in your thinking (sorry, no insult meant here) but I do not agreed with some of your comments as posted.

1) Evil doesn't exist in America is laughable as IT CERTAINLY EXISTS EVERYWHERE IN THIS WORLD.

2) America is a peaceful nation? LOOK WHO IS THE "MAIN PLAYER" BEHIND ALL THE FIGHTINGS AND BOMBINGS IN IRAQ, KOREA, AGFANISTAN, VIETNAM...?? No doubt you can argue that USA didn't start it first but the point is that, here the word "peaceful nation" is laughable.

3) Evil exists in the thoughts and hearts of those people who relish USA should (and will) fail -- well, I for one, never hope or wish to see the demise of your powerful nation. I can say I have no evil here but then I won't claim to be totally pure in heart either. I just wanted to point out the fact that there are many Americans out there who won't admit to their country's failings and yet still want to pour scorns and blames on other nation / nations and people.

4) And lastly (but not the least), should America fails and / or falls, it won't be the end of the world. Yes, there might be troubles and chaos everywhere but that doesn't mean the world will collaspe. We will still live in our own worlds, our own cultures and our own thinkings. You in yours and I in mine.

Big Rog

May 25, 2009 10:13 PM

Well if you in yours and I in mine applies, why do you and "yours" insist on putting your two cents into a country that is not you or yours?
People who don't live in this country (USA) and do not experience it but only the propaganda that their own countries force on them are in fact wrong about 85 -95% of what they think this country is all about.
Yes we have violence in our streets and poverty and crooked people in places of power. That in no way means we (the majority) are not aware that we need changes and until that happens our countries threatened. We UNDERSTAND that very much! We are trying to change that as well. It will not happen over night. It takes time and with time we can make a grassroots effort to hold those responsible for the wrong doing that has happened for decades not just in the past eight years.
We go to war in other countries for many reasons and blowing little children up is not one of them. We are peace keepers and we want to help those in need, rid their culture and society of oppression. Which is what we have done (Iraq). We continue to do, most certainly we will not stop until tyrants and the dredges of society that follow them are squashed. Only then will the world know peace.
I served four years in the US Navy and I have seen most of the Pacific Rim and the surrounding countries including the gulf, Somalia, the Orient and Australia.
What I found in those countries was nothing we did to any of them, they had done to themselves.
Take Africa for instance, We are not responsible for the wars in those countries although we occupy them to help resolve the violence not to encourage it. I was there I witnessed things go from bad to good because of our country and a few other allies that were there including Italy, England and the U.N.
So please do not try and lecture me on violence or evil and what countries participate in it for violence or evil's sake! America is not that kind of country. Come and live here for some time, long enough to be allowed to serve in the armed forces. You will see we wont turn you away, we welcome those from other countries (even if they badmouth us) with open arms, we have been harboring refugees for decades. Providing them with clothes, food, shelter, medical supplies and even the opportunity to become citizens. All paid for on the hardworking backs of tax paying citizens of the United States.
I hope this has been an eyeopener for you and if not then you are truly lost.
Believe what you want to believe the truth will find you out.
I was not insulted by the way, I have been used to what knowledge lacking people have been saying about things they really know little about for many years.
That part unfortunately wont change.
All I can do is continue to do my part and try to help the misguided find the truth.
For the sake of this article I will finally add my two cents, Money troubles regardless of political/economic structure is found in all countries.
What China wishes to do and what Brazil wishes to do is their own damned business.
Live and let live...

C. H. Ng

May 26, 2009 3:33 AM

Bravo.. Mr Big Rog, you are really one patriotic American even though I do not totally share your thoughts & ideas on the way you described how your country has been doing to squash oppression & tyranny. You (and your fellow comrades) may have done many good things during your tour of duty while in the navy force but that doesn't meant what your country's doing (or was doing at that time) is always right.

Let me give you one good example (but I hope you don't think I am trying to lecture you). Your country's leaders, government and medias (as well as that of other western countries) always like talk about human rights/tyrannys and whatsoever. Then let me ask you WHY your government was supporting those so called despotic tyrants such as Suharto of Indonesia & Saddam Hussein of Iraq (before your country went to war with them) at that time?? Why?? Very simple reason -- at that time, these tyrants were at your nation's becks & calls and so they were friends of USA (and other western allies) and were not branded as tyrants. Once they didn't "listen" to your country's order or became "useless" in a sense, they are deemed as "enemy" of the state and the western medias started to paint them badly.

I am not trying to say whether your country is doing the right things or not. Like the saying "Beauty is in the eyes of the beholder", what seems right to some can be seemed as wrong to others. Likewise what China & Brazil are trying to do by discarding US dollar in their trading is THEIR doing and maybe undoing. This is what I am trying to say in the first place to those who CAN have negative thoughts on this issue but DON'T have to be sarcastic about it.

By the way I am still a Chinese (by blood & race as my father originated from China) though of different nationality as I am born in Malaysia. Therefore you can say I still have "one cent" (if not two) left in my heart to care about the country.

Thank you for your frank debate (if we can call it as that)...MR ROG.

truth1231412

May 27, 2009 7:13 PM

I love the comment on the constitution!!! If we had followed the damn thing in the first place we wouldnt be in this mess!! Income tax is unconstitutional period!!! The federal reserve is unconstitutional, no to mention there banking methods are down right stupid debase the dollar by artifically infalting the money supply destroying the pruchasing power of our hard earned money... Damnit im sick of this country, why wold they even do that if not just to screw the american people. why try an implement HR 875 S.787 or pass the partroit act. what has happened to this country the founding fathers are rolling over in there graves because of how much the constitiution has been disgrace,,,, go to infowars.com become an infowarrior support HR 1207 and stop the bankers from taking us 6 feet under.

Big Rog

May 28, 2009 4:20 AM

C.H.Ng
You are Correct!
I am a patriot and a firm believer that regardless of the obvious facts which you have stated(corruption in the US), this country of mine has been a beacon for the world and will continue to do so.
We war with the bad guys when it is convenient, correct sir.
Because we can not afford to be the worlds police all the time!
However if a scumbag like Saddam whom we have been watching for decades pushes us to far and our "interests" We will take action!
Bet your bottom "US" dollar that's the fact.
I'll admit I have no problem invading a country that terrorizes it's own people or brainwashes them into thinking things like the US is evil and should be destroyed. I only wish my government would have continued into Russia during WWII then none of this would be an issue and you my friend would be a citizen of the Red White and Blue!
I say INVADE, kill em all, let my Lord sort em out!
If it is the creators will that the US be destroyed then ill fight to defend what the creator would destroy.
We are not Perfect! I admit that on many issues we screw up and are responsible for what effects even your counrty(s) today.
My only wish is we could get past the pointing fingers and blaming the USA for the worlds problems.
We do not bring the fight to others they send us invitations.
We do love our parties and if the enemy wants to dance, we have our dancing shoes on!
You are welcome for the frankness...

C. H. Ng

June 1, 2009 2:08 AM

To Mr Rog...I don't know whether to laugh or shake my head in disbelief in the way you put in your comment...! A real red blooded American talking about killing, invading and destroying while advocating human rights and freedom..!
But nevertheless I admire your frankness and straightforward talking even though I do not totally share your point of view.

From which part of USA you are from, if you don't mind to tell? Though I have still have not been to your country before, I do understand most Americans living in the rural parts tend to be more patriotic than their counterparts in the cities. This also applies in most countries like China and Malaysia.
Lest you think I am looking down on you and your fellow countryside people, I am not as it's only a feedback from the study that most of the people living in the rural areas are more strongly patrotic of their governments.

And also lest the readers here will be "troubled" by your strong beliefs, I think it's better if you can voice out your mind and words directly to me at chng3728@yahoo.com.my and / or on Skype at chng3728. I am more moderate in my thinking.

Brazilian

June 3, 2009 6:27 PM

Who listens to South Americans ?

The chinese may . South Americans no longer need to listen to the north-americans , rather listen to the Chinese, who have just become Brazil´s first export market . Soon, no longer the USD komission . Soon, the dollar hyper-inflation . Who cares about north-amerikan problems in South America ? The USA has clay feet . m It will collapse and who cares about it , really ?

locajabra

June 19, 2009 10:42 PM

The strength of the dollar is directly related to the strength of the US economy. Weak economy = weak dollar and vice versa. It makes sense for countries to want to remove the US dollar as the medium of measurement of a country's currency. The US government is heavily indebted to a number of countries and private banks. Check the World Bank report on the subject. Added to which, US corporations moved a lot of their maufacturing abilities outside of the US to satisfy sharholder greed, and you have a recipe for disaster. The weakening of the manufacturing sector will have a debilitating effect on the country's recovery efforts. And if you think there are no other stable currencies which can be used as a world standard, think again. Old standards are receiving new admirers. Precious metals. Especially gold. Check the level of investments into this precious metal for yourself. It remains to this day, the most stable currency in the world, bar none (no pun intended).

Leroy

August 5, 2009 11:08 AM

The only sensable thing is an international currency....pegging anything to an individual country's money is so.o.o. 60's...get over it U.S. ...having ones' currency used this way is not usually good for that country...The top economies "the E.U. & China" in the world should have the main say in such things...sorry to my friends in the U.S. but you people have almost bankrupted the world...it's going to be 50 years before anyone will listen or trust the states again!
hot medical live

Jack

October 13, 2009 11:51 AM

Perhaps, I am a little late with the post but here is what I think. What America needs to do is to immediately DROP the policies which are fueling our economic demise. Do not nationalize the banks. Do not nationalize the auto industry. Do not nationalize health care. The old Soviet Union did that. China does it. How good was the USSR's economy? It fell appart antique sideboard. Why would anyone in their right mind even consider such failed and stupid economic policies? We need to get back on track America. Only then will our currency be worth a damn.

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