| If this true, the dollar is dead- Kaput in 2weeks after 1 international bank shutdown.-----Read this clip->
Times have changed in the entire psychology of credit support for the USGovt and USEconomy in a manner that is shocking, if not revolutionary. The creditor nations have begun to discuss new terms of continued support. Foreign creditors are noticing Uncle Sam groveling and in growing desperate and confusion. Behind the curtains, the Chinese have clearly struck some important deals. Rumors are ripe that in a March trip to Beijing, Secy State Hillary cut a deal promising Eminent Domain on US property in return for continued USTreasury Bond support. So maybe a shopping basket of thousands of homes, hundreds of commercial buildings, scads of idle industrial plants, and a few million acres of farmland are soon to be seized by the Chinese in exchange for USTreasury Bond debt. One must wonder. The American people, i.e. USA Inc shareholders, will be the last to know in this criminal syndicate environment, a hatched cloud from the Fascist Business Model. Seemingly on a quarterly basis, something must be handed to the Chinese for continued USTBond support. The USTreasury officials and USFed have lied through their teeth about avoiding direct monetization. If the Chinese have half a brain individually, they can see the back-door monetization with collusion of foreign central banks. The Chinese are in town for the next concession. One can only wonder. Well, the Jackass has a good idea of what comes next. It is just a matter of time.
USGOVT YUAN BONDS
The concept can be described in very simple terms. The vehicle is devastating in its effects and consequences. What are they exactly? The USGovt might soon issue bonds, except not in US$ denomination, but rather in Yuan currency. Out of the gate (with debt signposts), the USGovt must purchase gigantic swaths of Yuan and pay with USDollars. The result is a quantum decline in the US$ exchange rate relative to everything holding the Yuan together. The Chinese decided in 2005 to tie their Yuan currency to a basket of currencies, led by the US$, the Euro, the Yen, the British Pound, and a small additional group. So the direct purchase of Yuan by the Untied States, the newest upcoming member of the Third World, will have numerous profound effects to lift other currencies.
The direct consequences of USGovt Yuan Bonds would be vast, visible, lethal:
¡The USDollar exchange rate would fall with each debt issuance
¡The loan balance in USGovt debt would rise with a declining USDollar
¡The Yuan currency would be further established as a global reserve alternative
¡Continued trade settlement in Yuan terms would be enabled
¡Rise in entire cost structure to the USEconomy from commodity pricing
¡The risk of USTreasury Bond default grows with each passing new issuance
The Chinese want protection and assurance against the falling USDollar and even the growing principal risk of USTreasurys. Higher bond yields mean principal bond loss. Both currency and bond loss mean a powerful combined loss. Beijing wants protection and security in exchange for continued debt support. A Yuan-based bond issuance by the USDept Treasury, sold by the USFed would accomplish this to some degree. In a few years time, if the US$ exchange rate is 15% to 30% lower, the loan balance in Yuan terms would be unchanged. The cost to the USGovt grows by that percentage however. If the yield rises, then protection can be locked by means of making the debt securities of shorter maturity, like two to five years.
The Chinese have already been shifting their USTBond portfolio from long-term to short-term maturity. This has been the driving factor behind the rising 10-year USTreasury yield and the steeper yield curve. Perversely, the US banks enjoy a benefit. They can amplify their Carry Trade, borrow at the short end, invest in the long end, pocket the 2% to 3% difference, and even store their booty of bonds at the USFed itself. This is one reason the US banks are not lending to Main Street firms and households. They are too busy playing the USTBond Carry Trade under the aegis of the discredited US Federal Reserve. And the topic of Bank Consolidation has not even been raised, whereby the big US banks reverse the carry trade by buying up distressed regional banks. Maybe the Chinese will become involved in that racket as a fringe benefit. Maybe they have been tipped off to purchase stock in the giant pharmaceutical firms who will reap windfall profits as the swine flu is spread by means of faulty vaccines and forced inoculations.
BOTTOM UP BUT NEXT TOP DOWN
The USGovt Yuan Bond will be a significant blow to the US financial sector from a psychological standpoint, a deep undercut to US supremacy and arrogance. China has not been able to supplant the USDollar from the top down within banking circles. The Yuan Bond will serve as the sword that shatters the highest tables finally, their first phalanx |
