This is an article from Reuters (U.S. has plundered world wealth with dollar: China paper dated Oct 24 2008). It says "The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies."

At the moment, US Dollar is still being considered as the reserve currency of the world as well as the main trading currency. Oil and many other goods are priced and traded in US Dollar. So you can imagine that moving away from US Dollar is hard given that there maybe long term contracts between countries and companies written in US Dollar. However, given the present global economical crisis and how many parts of the world view it as a US centric problem. We may get whispers of talk from disgruntled citizens of the world about the end of US Government, economy and the Dollar. For those who have not heard the claims from Hal Turner, please check out his claim on You Tube that the US Government is in works to replace the currency with a new currency called Amero. While that may sound extreme at the moment, we cannot deny that the massive monetary injection to bailout the banks and the economy can only lead to further financial distress. Since we only transferred the problem from banks/ insurers to the taxpayers. Taxpayers are holding onto the remains of the worthless assets (not only US but also true for UK, Europe and many other problem countries) . In effect, our debt holders (Chinese, Japanese Governments in particulars) are lending money to the US to buy risky assets which they do not want to hold in the first place. Somehow since it is a treasury paper, it is now triple A. So this time round, we don't even need the likes of Moody's to turn "junk" into "AAA". How sweet! Of course, the difference is that, the asset side of the balance sheet is non-static unlike those toxic CDO. We are supposed to have "taxes" coming into the asset side of the balance sheet for the US Government. So all in all, if the recession continues, the tax incomes will be lower on a year-on-year basis. The likelihood is that house prices will be lower too and therefore the value of the toxic mortgages. To come out of this recession, Government is likely to spend more to revive the economy. So all in all, it is going to drain more money from the already debt-laden government balance sheet. It cannot be good for the long term credit rating.

We are worried about the present recession and the repercussion of the massive money printing operation. We recommend to diversify into Gold and other real asset since the long term value of the paper money is in question.

Do we need a global recession confirmation

Sunday, October 26, 2008 | posted by RedApple
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Have a look at the Baltic Dry Index. The retracement is massive. No doubt that it is linked to the Chinese/ emerging market demand as well as the oil price. For the past few years, this index has been correlated with Aussie Dollar. We can see both of them collapsing.