Dollar Reaches Breaking Point at Banks Shifting Record Reserves Into Euro

Dollar Reaches Breaking Point as Banks Shift Reserves (Update3)
By Ye Xie and Anchalee Worrachate


Oct. 12 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.” ...........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a4x9dIJsPn4U

nt

..... it assumes that it will make U.S. exports cheaper.....but what the f**k do we make to export to anyone?

No, I'm not kidding.
Everything else has been off shored.

BHN

It took a few years, but following the collapse of the Soviet Union, the Pornography industry found out you could get a lot of blond young women cheap in the Ukraine, and since that date it has dominated the Pornography business. Thus the drop in the dollar will have almost no affect on Porn.

The idea that the "US doesn't make anything" is a tired meme not based on any facts.

The US is either the largest or a major exporter of:
steel
oil
chemicals
aluminum
semiconductors
networking equipment
telecom equipment
nuclear reactors
locomotives
heavy industrial machinery
construction equipment
turbines
aerospace products
satellites
rockets
weapon systems

Just because the $39.99 pair of sneakers you buy is made in China doesn't mean the $2 billion Westinghouse AP1000 nuclear reactor is.

or related to the off shored accounts of the MIC that don't pay taxes.
How do those help the average US citizen?

I imagine US pornography is one of the few exports in the hands of small
business owners who do pay taxes.

And for the record, I don't buy anything made in China unless it is
something I find in a thrift store.

I try not to support the corporate machine when ever possible.

Since all the exports you mention are now in privatized corporate hands,
as a tax payer, I don't have much say in their matters, except for paying
for their expenses to screw the world and continue endless wars for THEIR profits.

Respectfully,
BHN

GIANT CORPORATION builds stuff in US?

No

GIANT CORPORATION hires Americans to build stuff in the US.

They can follow it just fine.

BHN

Period.

There is unemployment all over the world. A large portion of unemployment not from the fact that "we don't export anything" but rather PRODUCTIVITY has grown massively over last 30 years. The export GROWTH rate has been slower than PRODUCTIVITY growth rate. As such less workers are needed to produce same amount of goods. Now this wouldn't be a problem if he was opened up more markets for exports (to keep up with producitivity gains) but we failed in that economic foreign policy.

only because we haven't yet allowed defense contracting of high dollar weapons and military equipment to be outsourced. Every other manufacturing sector has been hollowed out, including chip fabrication.

The drop in 2009 had little to do with outsourcing rather semiconductors are EXTREMELY cyclical. We are in the largest cyclical downtrend since the Great Depression.

Good news is Intel reports volume declines stopping in Q3 so if worldwide recover continues in 2010 American semiconductor companies should ride that wave.
http://www.computerworld.com/s/article/9138394/Otellini_says_PC_industry_on_brink_of_recovery

2008 top US exports
1. Civilian aircraft … US$74 billion, up 1.3% from 2007 (5.7% of total US exports)
2. Semiconductors … $50.6 billion, up 0.3% (3.9%)
3. Passenger cars … $49.6 billion, up 13.3% (3.9%)
4. Medicinal, dental and pharmaceutical preparations … $40.4 billion, up 15% (3.1%)
5. Other vehicle parts and accessories … $39.9 billion, down 10.1% (3.1%)
6. Other industrial machinery … $38.1 billion, down 0.6% (3%)
7. Fuel oil … $34.9 billion, up 124.1% (2.7%)
8. Organic chemicals … $33.4 billion, up 5.5% (2.6%)
9. Telecommunications equipment … $32.9 billion, up 4.6% (2.6%)
10. Plastic materials … $31.6 billion, up 8.7% (2.5%).

Read more: http://import-export.suite101.com/article.cfm/americas_top_imports_exports_2008#ixzz0Tm8R5GG3

Total exports are $1280 Billion. The US export market is remarkably diverse, no product segment makes up more than 10%.

China is currently dominating in advanced technology products.

Here are the U.S.-China trade facts from before the downturn:

Exports to China - .....$55,224,200,000
Imports from China - $287,772,800,000
Trade Balance - ... (-$232,548,600,000)

Total Imports from China - $287,772,800,000
ATP Imports from China - ...$72,708,770,000

Total Exports to China - $55,224,200,000
U.S. APT Exports to China -.. $17,627,164,000

Advanced Technology Products (ATP) do not include all machinery and tools imported from China. The machinery and tools import and export information is available here:

Value of Exports, General Imports, and Imports for Consumption by (SITC - 7): Machinery and transport equipment:
http://censtats.census.gov/sitc/sitc.shtml

Click on (7) Machinery and Transportation. Select from the 2-digit and 3-digit SITC codes thereafter. The list is extensive.

The situation has only worsened since.


U.S. Trade in Advanced Technology Products (ATP)

YTD December 2008 data

Type Products / Exports to China / Imports from China

Biotechnology - $91,005,000 / $55,487,000
Life Science - $1,404,430,000 / $1,069,977,000
Opto-Electronics - $258,139,000 / $6,620,873,000
Information & Communications - $3,666,274,000 / $80,377,673,000
Electronics - $6,631,985,000 / $2,043,154,000
Flexible Manufacturing - $1,071,764,000 / $552,740,000
Advanced Materials - $285,638,000 / $149,669,000
Aerospace - $5,288,482 / $405,520,000
Weapons - $1,495,000 / $114,839,000
Nuclear Technology - $33,425,000 / $2,932,000

Export and Import Totals - $18,732,639,000 / $91,392,865,000
http://www.census.gov/foreign-trade/statistics/product/atp/2008/12/ctryatp/atp5700.html

The only improvement on our side was in nuclear technology.

According to your source, we only seem to be dominating in civilian aircraft and semiconductors.

"Five of the top 10 American exports shipped around the world in 2008 were capital goods (aircraft, semiconductors, vehicle parts, industrial machinery and telecommunications equipment)." That doesn't sound very diverse to me.

After all, too many DU'rs cling desperately to the idea that the only industry in this country is retail trade.

It's no wonder, because all that is seen on the highways are trucks made by DAF, Mercedes Benz, ERF, MAN, Hino, Mitsubishi Fuso, Renault, Scania and Volvo. And it is common knowledge that every single rail car moved on the railroads of this country are built overseas. Not one single section of pipe, valve, pump, backflow valve, meter or controller used in the water and sewage systems in the United States are made here nor is any of the wire, transformers and related equipment used in the transmission of electricity.

Dalton, Georgia is a ghost town because not one single inch of carpeting is made here anymore and Seattle has seen its population plunge since Boeing closed shop and started building airplanes in Shanghai.

I could go on and on.

No, we don't build anything here anymore.

I mean hell Newport News shipyard is one of the largest shipyards in the world but likely it is a big show. They must keep building and unbuilding the same ships over and over and over.

Anyways it is a tired meme but one that both DU and the media loves to push.

DU'rs that hold that absurd opinion really need to take a few hours and peruse the Thomas Register.

:)

Most of the Steel that is exported from the US is "specialty steels" i.e. Stainless Steel, Galvanized Steel, high tempered steel etc that is used elsewhere and made into things imported into the US. What are the major reason for the Steel production? First we have the most older cars (Yes Europe has more car per capita but the US still has to most TOTAL cars), this volume provides the US will a huge reserve of steel that can be reprocess and then exported. Second the Largest Iron mine in the World is still in operation in Minnesota. That ore needs to be processed into Steel before it is shipped elsewhere (Cheaper to ship steel and/or iron then iron ore).

The Largest open Pit iron mine in the World:
http://en.wikipedia.org/wiki/Hull-Rust-Mahoning_Mine

As to Aluminum, Australia is by far the #1 producer. The US is among the also ran, which include, China, Brazil, Venezuela, Guyana, Jamaica, India, the US and Russia. Again it is a raw material, but this time based more on low energy costs (Aluminum requires a huge amount of Electricity to be refined, thus most locations are either close to major mines, such as the Jamaica plant, or where electricity is cheap, such as Brazil (using the flow of the Amazon).

http://en.wikipedia.org/wiki/List_of_alumina_refineries

The US is NOT even in the top ten of MINING of Bauxite, the main source ore of Aluminum:
http://en.wikipedia.org/wiki/Bauxite

As to Oil, the US exports a huge amount of REFINED oil (For example to Mexico) but import MORE then we export (again for example Mexico).

As to Locomotives, we dominate the diesel-electric market. Europe and Russia (Through outside of Russia, Belarus and the Ukraine, Diesels still dominate the former Soviet Union) primary uses electrified rail systems so it is NOT a major Export market of the US (some are sold, but for use on sidelines for the main lines are all electrified). China can has some Steam Locomotives (last made in the mid 1980s, but now being phased out) but its system is primary home made home made Diesel or electric (Through some GE made diesels are being exported to China, including 422 GE C-36-7 purchased in the 1980s):

http://en.wikipedia.org/wiki/List_of_locomotives_in_China

The GE-36-7 in its Chinese designation of ND-5:
http://www.railwaysofchina.com/nd5.htm

Please note China made it own Diesels at the same time as it purchased the above GE products, and still uses its own and seems to be buying additional GE engines. In 2005 China purchased additional GE engines this time in GE's "Evolution" models:

http://en.wikipedia.org/wiki/China_Railways_HXN5
http://en.wikipedia.org/wiki/GE_Evolution_Series

Thus China has been a good area of exports of Locomotives, but has also been a competitor elsewhere for locomotives.

As to Rockets and Weapons systems, the US has dominated that market since the collapse of the Soviet Union. While the exportation of small arms from the US has NOT expanded (most countries produce their own OR import from Russian, China or Israel) larger systems (antitank, anti-aircraft, planes, tanks etc) the US dominates, but this market is mostly filled. The major foreseeable conflicts involves the control of territory against guerrilla groups. In this type of war you need Infantry NOT high tech, thus NOT an area of major growth in the foreseeable future (i.e. what countries need are AK-47s NOT supersonic fighters).

As to semiconductors, networking equipment, and telecoms equipment the US holds a good bite of the latest technology, but sooner or later you start to run across the problem of people accepting what they have is good enough. You will still see a growth, but the demand will not be as it was. This is called the declining rate of return. All industries go through this as they go from an Boom industry to a mature industry. Computers are entering a mature market, so expansion is limited, possible but limited. Better market then military equipment above, but more limited then we may think.

Just comments on the list, notice cars are NOT mentioned, Computers are not mentioned (Semi-conductors are, but not computers). These are NOT the major exports in the world, oil, and cars are your main high end exports and the US is a net imported of oil, and exports few cars (and most US Car exports are to Latin America and the Middle East, neither area known for high purchases of car on a per capita basis).

We need it right now. When the economy is stronger, the dollar will be stronger.

- signed,
Your friends on Wall Street

...what do I mean by that?

Tim Geithner and Larry Summers put in charge of recovery. How can you put people in charge that were the very same people that caused the collapse? Like putting Henry Kissinger in charge of Human Rights... oh wait.. he already is in charge of that? Never mind.

$Billions for the Banks.. almost nothing for the Homeowners, and almost NOTHING for job creation.

The USA has arrived at the door of the Banana Republics... if we are LUCKY.. we will be able to sustain a living standard equal with the 3rd world.

...what do I mean by that?

Tim Geithner and Larry Summers put in charge of recovery. How can you put people in charge that were the very same people that caused the collapse? Like putting Henry Kissinger in charge of Human Rights... oh wait.. he already is in charge of that? Never mind.

$Billions for the Banks.. almost nothing for the Homeowners, and almost NOTHING for job creation.

The USA has arrived at the door of the Banana Republics... if we are LUCKY.. we will be able to sustain a living standard equal with the 3rd world.

I wonder if I can get paid in Euros!?!

I doubt they ever would and here is why.


Say you make $40K per year. In 2005 that would have cost them about 34K E. Today the same wage cost them 27K E. 7K Euro saving despite your wage being the same.

http://www.google.com/finance?q=EURUSD

I talked with somebody who said that the usa was for sale

he said that now was a good moment to invest money
In the usa and a some people i know did by a house
it seams they are not to expensive and a good investment
in realastate
is this true ? is now the moment to invest in american realastet

Meanwhile, the infighting threads get 20 and 30?

Soon, we will become a superpower on the verge of bankruptcy like the Soviet Union.

This was starting to be posted on last week and is a trend we should follow.