Asia Central Banks' Euro Purchases Threaten Stability (Bloomberg) (ouch)

Asia Central Banks' Euro Purchases Threaten Stability, Yam Says

March 21 (Bloomberg) -- Asian central banks boosting holdings of euros versus dollars in their currency reserves may threaten financial markets if they do it too quickly, said Joseph Yam, head of the Hong Kong Monetary Authority.

``The euro may become so popular in this region, it may undermine the stability of international finance,'' Yam, the chief executive of Hong Kong's de facto central bank, said. Asian central banks are already adding to their euro holdings, he said, speaking at a meeting of business executives in Hong Kong.

European Central Bank council member Christian Noyer told the group that international markets may be disrupted by a sudden shift by Asian central banks to the euro. ``The diversification of public and private assets is under way,'' Noyer said.

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http://quote.bloomberg.com/apps/news?pid=10000080&sid=aRUY6ofAtfUY&refer=news_index

We are like a frog in hot water "about to boil" and all we can watch is Bushco distractions like the Shivo case.

just wait until OPEC decides to switch to the Euro, then the 'Hard Landing' will be near. Things are not going to be pretty for the next 3 years, and its about 50%-50% weather our economy will survive it.

the reasoning of financial destabilization is being blamed on countries that are attempting to stabilize their currencies.

Asian central banks boosting holdings of euros versus dollars in their currency reserves may threaten financial markets if they do it too quickly, said Joseph Yam, head of the Hong Kong Monetary Authority.

Not a word is said about the root cause - which, imho, is the fiscal insanity of the US maladministration - huge deficits (both governmental and trade) and the waging of war after war with the continued threat of more wars. :shrug:

and since the US doesn't do business with Mars yet, all countries must cooperate somehow.

Even the US. It's amazing that they seem to operate with a "lone wolf" mentality, but they still can't get away from the fact that no matter how many heists they pull, they're still on this planet with their own messes.

The problems with switching to Euros is the one-world dilemma. As the US moves closer to insolvency, other countries start to look at their dollar holdings. The more dollars they have, the more nervous they get.

Even now, lots of countries have lost money as they dollar is devaluating.

What to do? Let's say Thailand decides to unload its dollar holdings. They're sick of the US screwing around, at their expense. They take all their dollars and convert them to Euros. Let's say it's $14 billion.

The effect of this could cause a currency crash. Thailand might walk away with more money, but they will ultimately lose because it will all come crashing down.

And foreign bankers know this. It's a gigantic game of chicken, and the US is counting on the fact that no one will be the one to flush the US (and themselves) down the toilet.

HOWEVER, if the US keeps pulling this shit, some smaller countries may be forced to pull the plug. They will have no choice.

the pace in which it is done, imo. If done at the right pace, the fallout outside of the US will be lessened considerably, imo. Countries are actively and increasingly signing trade agreements, strengthening alliances with countries other than the US to reduce their dependence on the US public buying their imports so when the crash of the US economy occurs, the harm to their own countries will be lessened.

There is a very delicate, very detailed dance going on, imo, as the rest of the world works to move on beyond the US, isolating it while building a new balance of power elsewhere.

This could be what Stan Goff is referring to. He wrote that the rest of the world understands clearly what is going on. They see the US as a fading prima donna.

They are scrambling for position, once the US topples. I think you're right: it's a very delicate situation right now. Everything that we're seeing now is proof of what's happening.

and much of it could have been avoidable with different fiscal and foreign policies over the past four years. This is not "inevitable business cycles" work.