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My blog (http://thehonesttrader.blogspot.com/) is set up based on the following premise: There is so much nonsense spouted by investment pundits everyday that is so poor it makes me ill. Not only is most of the advice poor, but the majority of the time these people take no firm positions, know... More
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  • Wary of dollar, China wants super-sovereign currency  1 comment
    Jun 28, 2009 12:19 PM | about stocks: UDN, UUP, TLT, TBT, GLD, SLV

    Reuters.com reports that China's central bank renewed its call on Friday for the creation of a super-sovereign reserve currency to reduce the dollar's global domination, which it said had worsened the financial crisis. In its annual financial stability report, the central bank did not mention the dollar by name but said it was a serious defect that one currency should tower over all others. "An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis," the People's Bank of China said. In thinly-veiled criticism of loose U.S. monetary and fiscal policies, the PBOC urged the International Monetary Fund to exercise closer supervision of the economic and financial policies of major reserve-issuing countries. The 170-page report dusted off a call by the bank's governor, Zhou Xiaochuan, for the creation of a super-sovereign currency. Friday's report not only advocated a full role for the SDR but said the IMF should be entrusted with managing a portion of its member countries' foreign currency reserves. "To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the report said.

    Again, over the longer term I see the American lifestyle getting worse as the dollar weakens and begins losing its "monopoly" as the reserve currency. I unfortunately don't see any other result to be honest.

    Potentially related postions: Long: TBT, GLD, SLV

    Short: TLT

    Themes: China, dollar, gold, SDR, silver, treasuries Stocks: UDN, UUP, TLT, TBT, GLD, SLV
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  • Pottermus
    , contributor
    Comments (31) | Send Message
     
    The United States is on a "slippery slope". Because of it's enormous runup probably for the last 60 years the economy can withstand enormous hits and continue. We have been taking these hits now longer than I would have thought possible.

     

    I hope our luck is not ready to run out!
    28 Jun 2009, 01:10 PM Reply Like
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