Brian Parkin in Berlin reports on the current world currencies discussions on Bloomberg today.
He says that world leaders have agreed to avoid devaluing their own currencies (in order to gain an advantage by making their exports cheaper). Such a move move trigger retaliatory moves and cause further chaos in the current currencies issues.
The root cause of the current currency issues is the US and other G7 countries' use of the printing presses to issue new debt, debt which I have opined will never be repaid.
"With officials from Brazil, India, China and Russia pushing consideration of alternatives to the dollar as the world’s dominant reserve currency, the draft called for a “stable” monetary system, according to a German official who read the language to reporters today. [...] They also agreed to “promote a stable and well-functioning international monetary system.”
The BRIC countries have been talking about a new world reserve currency to replace the dollar. However, they know that is avery long term proposition, and it won't happen overnight. Brazil’s President is advocating wants that the BRIC use their own currencies in settling trade accounts (as reported in trades with China earlier in the year).
This is only part of the problem, a really big problem. I believe the BRIC nations will eventually indeed stop using the USD as their main exchange currency because the risks on the USD are too big. The world clearly needs a stable currency exchange mechanism. Gold's global reserves are to small (see post). The US debt will cause a sudden devaluation of the USD (by the way, causing pain to all those holding or parking their money in money markets). Switching to other currencies is only logical. A "New USD" will be eventually born.
Remember that such stranger things have happened in recent months.
Thursday, July 9, 2009
The New World Currencies: Trade in Local Currencies not USD
Subscribe to:
Post Comments (Atom)
Blog Archive
-
▼
2009
(843)
-
▼
July
(31)
- Natural Gas and UNG Ahead of Inventories Report: S...
- Roubini: Risk of Double Dip Recession
- S&P500 is Overbought: 330 Overbought Companies, On...
- H1N1 is Big Business: Stock Market Opportunities
- Best Strategy to Trade USO, S&P500, USD/Yen
- Nortel Wireless Unit Sold to Ericsson for $1.13B
- Natural Gas Collapses, Again: Do Not Go Long Until...
- Dollar Reaches New Low vs Real, Dollar down 47% Si...
- S&P 500 Report: 115 Overbought Companies, Only 1 O...
- Ontario Gives $10K Cash for Residents Buy Electric...
- Potash: Athabasca Selling Parts of the Company
- Vale Rumoured to Buy Mosaic
- Natural Gas Report: Time to Short UNG Again
- S&P500 Report: Zero Oversold Companies, 7 Overbought
- Tim Hortons Strikes New York
- Natural Gas: UNG Cannot Issue New Shares, Price to...
- S&P500 Overbought/Oversold Report for July 13
- World's Largest Companies in 2009, Fortune 500 Top 10
- The New World Currencies: Trade in Local Currencie...
- UNG and UCO July Straddles: ROI of +40% and +46%
- S&P500: Near Oversold, but not Quite: 4/183 OB/OS,...
- Goldman Sachs: Stolen Code Can Be Used to Manipula...
- Natural Gas and UNG are Caput: Exit Shorts; Next i...
- Financial Times: Brazil Dancing Through the Crisis...
- Brazil's Vehicle Sales Hit Record High During Janu...
- Goldman Sachs Algorithmic Trading Theft: Programme...
- 15 for Federer, No Economic Crisis in Wimbledon
- S&P500 Complete List of Overbought and Oversold Co...
- Natural Gas Report July 2nd: Short Term Bounce But...
- Dollar Suffers Biggest Loss Since 1999 vs Real.
- Happy Canada Day
-
▼
July
(31)
No comments:
Post a Comment