If it was a Bush it is also hard to say. He notoriously mishandled Katrina. If it was Reagan, you can be assured he would be on top of it with a strategic plan. He would not wash his hands of it and leave it to the experts.  As commander in chief, kennedy was not a military, but he was in charge. He convened his panel of experts and went with the blockade in the Bay of Pigs.  Reagan would have been in contact with bp chiefs long ago and with the best experts out there from the US major oils--who are no lightweights.  So cant fault Obama for the spill and can't  relieve him of responsibilty for consequences either. He has been a president that liked to talk of mistakes of bush in the past and he has done this over and over.  It's time for him to get over it and to be president as you rightly point out.

China lifts holdings of US bonds
June 16, 2010 - 7:53AM
               
China's holdings of US debt climbed to their highest level this year, the US Treasury said on Tuesday, even as Beijing stepped up attacks on the United States for its burgeoning debt.

The cash-rich Chinese government raised its US Treasury bond holdings to $US900.2 billion ($A1.05 trillion) in April, its highest level since November 2009, while posting the second consecutive monthly rise, according to a report on international capital flows.

China remained far ahead as the top foreign debt holder, followed by Japan, which held $US795.5 billion ($A927.16 billion) in April, and third-placed Britain at $US239.3 billion ($A278.9 billion), according to the figures.

The monthly gain in April and the previous month came after six straight months in which China appeared to reduce its Treasury holdings, or keep them flat.

While that triggered concerns Beijing was diversifying away from US bonds, some analysts said Beijing was secretly buying bonds via third countries to mask its importance as a creditor -- a role which had attracted considerable scrutiny.

Globally there has been an influx of investments in recent months into US Treasury bonds -- a channel used by the government to borrow from the public to finance its burgeoning deficit -- amid the mounting European debt crisis.

The crisis, which sent the euro to four-year lows, also deterred China and several other countries with massive foreign reserves from diversifying away from US bonds and other long-term US securities, analysts said.

``Threats of reserve diversification over the last two years by China and Russia have ended since the breakout of the European sovereign debt crisis and the euro's (sharp) decline against the US dollar,'' said analyst Michael Woolfolk of Bank of New York Mellon.

The data on Tuesday indicated that China remains ``a steadfast buyer'' of Treasuries, averaging $US10.3 billion ($A12.0 billion) per month in 2009 and $US8.2 billion ($A9.56 billion) per month for the first four months of 2010, he said.

China, the world's largest holder of foreign-exchange reserves, has been constantly criticising Washington for its snowballing debt levels, fearing that Beijing's investment in US government bonds could turn sour if a debt crisis overwhelms America.

Analysts cited the latest criticism from the Chinese national pension fund chief last week, saying it had also helped the euro recover against the greenback, including on Tuesday.

``The Euro was bought up quite aggressively on comments from the head of the Chinese pension Fund that the euro will survive the crisis and that he was more concerned about their US debt holdings,'' said Tony Darvall of Easy Forex.

The latest Treasury data showed that net foreign purchases of US securities rose in April but at a slower pace than record-setting March levels.

Net long-term foreign purchases fell to $US83 billion ($A96.74 billion) from $US140.5 billion ($A163.75 billion) in March.

``Despite falling from their record-high March level, net long-term capital inflows to the United States remained solid,'' said Gregory Daco, US economist at IHS Global Insight.

``Foreign investors' confidence in the US recovery was illustrated by the increased holdings of all three largest foreign holders of US Treasuries: China, Japan, and the UK,'' he said.

AFP

Link here:
http://www.smh.com.au/business/w ... -20100616-ydr5.html

China is right in this case.  The US has to get it's spending under control. Bernanke the Treasury secretary said so himself last week. Sounds like china will keep buying because it has no choice not to. The euro does not look like a place to be.

More exchange rate flexibility by China
CARA ANNA
June 20, 2010 - 6:19AM
               
AP
China's central bank has promised to allow more exchange rate flexibility, suggesting a possible break from the Chinese yuan's two-year peg to the US dollar, but has ruled out any large-scale appreciation.
The statement posted on the website of the People's Bank of China on Saturday mentioned no specific policy changes, though markets will be watched closely on Monday for its effects. Chinese officials have said all along that reforms of the yuan, also known as the renminbi, or "people's money", will be gradual.
"It is desirable to proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility," the central bank said.

Signs that an economic recovery has taken hold prompted speculation that China would begin letting the yuan resume a gradual appreciation against the US dollar that began in 2005 but was halted abruptly in 2008 as the global financial crisis took effect.
Since then, the yuan's value has remained at roughly 6.83 to $US1, although it is formally pegged to a basket of currencies that includes the US dollar.
The statement, timed just before President Hu Jintao's trip to the G20 summit in Toronto, Canada, follows warnings from Beijing earlier this week against making its currency policies a main focus of the meeting.
US Treasury Secretary Timothy Geithner and IMF Managing Director Dominique Strauss-Kahn quickly praised China's move. "We welcome China's decision to increase the flexibility of its exchange rate," Geithner said in a statement issued in Washington. "Vigorous implementation would make a positive contribution to strong and balanced global growth. We look forward to continuing our work with China in the G20 and bilaterally to strengthen the recovery."
"A stronger renminbi ... will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer," Strauss-Kahn said.
Beijing kept the yuan frozen against the dollar to help Chinese manufacturers compete amid weak global demand. It faces pressure from the United States and other trading partners who contend the yuan is undervalued.
"It definitely sounds significant. They're saying they're going to press forward," Stephen Green, an economist at Standard Chartered Bank in Shanghai, said of Saturday's statement.
"We didn't ever think they were going to do a big one-off, so it looks like that's not going to happen," he said. "We're going to see more movement around a basically stable exchange rate until the global economy is basically healthier. The proof will be in the pudding on Monday."
Some US lawmakers argue that Beijing's exchange rate policy gives Chinese exporters an unfair advantage, costing millions of American jobs.
But Chinese officials have warned that any adjustment to the exchange rate is not other countries' concern.
The director of the international department of the People's Bank of China, Zhang Tao, told a news conference on Friday that Chinese leaders will not discuss the yuan at the summit.
Saturday's statement pointed to economic growth both inside and outside China as a reason for the increase in exchange rate flexibility.
"The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability," the central bank said.
However, it indicated no major policy changes, adding: "The exchange rate floating bands will remain the same as previously announced in the interbank foreign exchange market."
Link here:
http://news.smh.com.au/breaking- ... -20100620-yocl.html

Will the currency appreciate and if so how much.  Read on bloberg possible for rmb to depreicate versus dollAr

The RMB will not depreciate against the US$ but as stated earlier will move up very. very slowly. It's nothing new. This was just a statement by the Chinese to ease some political tension. A PBOC spokesman did say "a gesture to the US, but without a specific timetable". So, don't hold your breath.

So is it still pegged to the dollar and will move as the government allows it.  It seemed from the bloomberg article that it would float freely.  If it truly was going to float freely expect this would be much bigger news

There is no real change and RMB will still be fixed to the US$. The Chinese made the statement ahead of the G20 summit to appease the US. Noticed how quickly Obama jumped in and 'welcomed' the news. The announcement as well as the response from Obama was all prearranged in the recent visit by Hillary Clinton and Tim Geithner to China. Something had to be announced to give US some face. As my Post No #26 mentioned, the spokesman did say it was a gesture to the US but without a specific timetable. RMB did not move up this weekend as a result of the announcement by the People's Bank. It may go up a few pips before the G20 actually takes place.

[ Last edited by  geoduck at 20-6-2010 20:18 ]

Thanks.  Obama and Hillary and Geithner will surely take credit.  And it sounds like there is really nothing that has changed anyway.  Obama has his hands full with thebp crisis with his supporters turning into his biggest critics.  His critics actually are raining quiet. So Obamaay try to make this big news let's see.  It was a lead article o bloomberg

AS EXPECTED, there's no real change but one thing's for sure....upside for the RMB 'in time'. This would cause some speculation on mainland airline stocks in the short term but with property stocks, I'll still be cautious as Govt many enact some new legislation to stop properties from rising any further in the short term.

QUOTE from the SCMP today:

"When the central bank announced on Saturday that it was going to make the yuan's exchange rate more flexible, it wasn't enough to settle the intense debate about whether the Chinese currency would appreciate against the US dollar.

The People's Bank of China offered further explanation yesterday, saying the yuan would not have a one-off revaluation and the daily trading band against the greenback would be unchanged.


China has held the yuan at roughly 6.83 to the dollar since July, 2008, to shield the country from the impact of the financial crisis. For the three years before that, Beijing linked the yuan rate to a basket of currencies and gradually let the yuan rise about 21 per cent against the greenback.

The moment China's economic recovery had consolidated would mark the time to resume the yuan rate mechanism, the central bank said.

The central bank said using a basket of currencies was more scientific and reasonable than pegging to the US dollar.

However, economists are divided on how the yuan rate will move against the US dollar as the reform is resumed.

"The yuan rate will rely more on the basket of currencies, which is like an automatic adjustment mechanism. If the European debt crisis does not improve and the euro and other major currencies continue to depreciate against the US dollar, the yuan is likely to depreciate too. If the euro advances, the yuan is also likely to appreciate," Ha Jiming, an economist with Beijing-based investment bank China International Capital Corp, said.

But Chinese Academy of Social Sciences (CASS) Zhang Ming said China would not take the reference to a basket of currencies too seriously.

"The nominal exchange rate of the yuan against the dollar is extremely sensitive now. The central bank will not allow the yuan to depreciate against the dollar in the near future," Zhang said.

"At the same time, the Chinese government's tolerance to yuan appreciation is limited, because the yuan effective rate has been appreciating since this year as the trade surplus's share in China's gross domestic product has been declining. I believe the yuan will appreciate three to five per cent against the dollar this year."

Goldman Sachs economists Qiao Hong and Yu Song wrote in a research note that the most likely scenario was for the yuan to return to a crawling peg against the dollar.

"The appreciation will likely take place through downward movements in central parity rates as well as during intra-day trading," the economists wrote."

[ Last edited by  geoduck at 21-6-2010 09:57 ]

China's yuan hits highest level in five years
June 21, 2010 - 4:09PM
               
China's yuan exchange rate hit its highest level against the dollar in five years Monday, after policymakers pledged at the weekend to make the currency more flexible, Dow Jones Newswires reported.
The yuan surged to 6.8089 to the dollar on the nation's main foreign exchange trading market, its highest since July 2005.
Link here:
http://news.smh.com.au/breaking- ... -20100621-yri2.html


Video link here:
http://media.smh.com.au/business ... rrency-1624130.html

[ Last edited by  atomic3d at 22-6-2010 09:12 ]

Bet with Goldman sachs that it is a crawling peg against the dollar. What freedom isthere for Chinese citizen  to take their newly appreciated currency and convert it to dollars for investment in the US.

Yes, this is the highest the yuan has soared in 5 years. Great sensational headline but in real terms the currency only spiked up 0.4% against the US$. Today, the Yuan has slipped back down again as of this morning. Not really meaningful, is it. The Chinese have a just increased the trading band of the yuan which means it's not going to soar away any time soon.

[ Last edited by  geoduck at 22-6-2010 10:52 ]

The only way that Chinese citizens can ever benefit is that China opens up its captial markets. As mentioned above, this will not happen any time soon because the Central Government is concerned about capital flight. At the moment, a lot of money is being leaked out through HK and Macau but this is still minuscule compared to the real opening up of the nations's capital accounts.

China takes first step to honour yuan pledge
ALLISON JACKSON
June 22, 2010 - 7:14PM
               
China took the first step Tuesday towards honouring a vow to let its currency float more freely, as US complaints that Beijing is stealing an unfair trade edge intensify heading into a G20 summit.
But analysts warned that China would still prevent any large appreciation in the yuan that might curb the ferocious growth of its export-led economy, despite US calls for a hefty revaluation.
The People's Bank of China set the central parity rate -- the centre point of the currency's official trading band -- at 6.7980 to the dollar, 0.43 percent stronger than Monday's rate of 6.8275.

The central bank vowed at the weekend to make the yuan more flexible but ruled out any sharp fluctuations in the currency or a one-off adjustment.
The move was widely seen as a bid to head off rancour at this weekend's Group of 20 summit in Canada, amid mounting accusations abroad that China's currency controls give its exporters an undeserved competitive advantage.
"China has backed up all the talk with action," said Brian Jackson, a senior analyst at Royal Bank of Canada in Hong Kong.
"President Hu (Jintao) will arrive in Toronto later with tangible evidence that China is serious about increasing the flexibility of its exchange rate."
But in the coming months there would only be "limited" gains against the dollar, Jackson added.
In early trading on Tuesday, the yuan strengthened to 6.7968 on China's main foreign exchange market before weakening to 6.8200 on domestic demand for the dollar, Dow Jones Newswires said.
Traders said several Chinese banks were buying the greenback, amid speculation the central bank could be encouraging dollar purchases to reinforce the perception that a more flexible system cuts both ways.
"We saw buying from Chinese banks, mainly mid-sized ones," said a Shanghai-based forex trader.
The 6.7968 level was the yuan's strongest since policymakers unpegged the currency from the dollar in mid-2005 and moved to a managed floating exchange rate.
But Tuesday's level was still within Beijing's tight trading band and analysts said China's pledge did not presage a major revaluation.
The new trading band signalled that the government was making good on its promise for greater flexibility, said Mitul Kotecha, head of global forex strategy at Credit Agricole in Hong Kong.
"It was a further reflection of the reform of the yuan, the change and the depegging announced at the weekend," said Kotecha.
"We think we are going to see some further appreciation, but we are not looking for any aggressive move by the end of this year."
Policymakers revalued the yuan in July 2005 before reimposing a de facto peg at about 6.8 to the dollar three years later during the financial crisis to protect exporters, which have been the backbone of China's economic boom.
Critics, not least in the US Congress, say that has left the yuan undervalued by as much as 40 percent and has cost US jobs.
Prior to making its weekend promise of reform, Beijing had insisted that the currency's rate was not up for discussion at the G20, when presidents Hu Jintao and Barack Obama will meet other world leaders.
The currency issue has been a constant strain on US-China ties, with members of Congress -- facing mid-term elections in November -- threatening trade sanctions on China and pushing for action at the G20.
Senior Democratic Senator Charles Schumer on Sunday expressed disappointment at China's rejection of big fluctuations in the yuan and said US lawmakers would press ahead with plans to introduce retaliatory legislation.
Link here:
http://news.smh.com.au/breaking- ... -20100622-yvjg.html

It seems like a stretch that US lawmakers will be able to use the yuan prcing as a positive in political dialogue in the US.  True there is huge unemployment in the US but the average person does not understand how currency affects the economy.  there also is a strong policy inherent in the US that being protectionist is bad, so it does not seem that lawmakers will campaing on any kind of china currency issue.  they have there hands full just answering blocking and tackling questions.

The major problem with the US is not Yuan, but their own people. A lot of people in the US have been living beyond their means and are not willing to compete against other countries in the world. Revaluing the Yuan may help in the short term, but in the long term if the people are still not willing to compete the US will face bigger problems.
China should probably lower their currency due to domestic inflations

Think it is US Big Business that is the cause of all this mess and not the American people. Started with the Reagan Adminstration and its deregulation policies. From then on, Big Business just got bigger and factories were closed and moved overseas, workers laid off with no rights because the unions had been put down. Big Companies are greedy and just want to screw the public at large and benifit themselves. Look at the deregulation of the financial system. How could banks go lend money to people who they know will never pay back and then wrap up these bad loans into financial instruments no one understands and sell them to investors and overseas Governments. This is disgarceful.

[ Last edited by  geoduck at 23-6-2010 19:35 ]

The financial crisis was surely on the back of the banks. The banks have so much hubris that the think they are smarter than anyone else and know more. Unfortunatelythis culture has persisted for some time and was the result of the repeal of glass steagal which kept Commerical bank out of investment banking.  Under Glass steagal this would not have happened.  The banks cannot police themselves as much as they want to convince everyone they can.  Where is Obama on this.  He has not and will not addresss big business properly.  Now he is after oil companies.  Obama needs a comprehensive policy based upon sound principles.

This has gone on for too long and gets worse with each Administration. The Republicans are Filibusters and Big Business is so entrenched in the Congress it's hard to get anything passed and Obama knows this. Last week Joe Barton (not the VP), Republican Senator from Texas actually apologized to BP at the hearing saying that Obama is a disgrace and the penalties imposed on BP is nothing more than a Shakedown. Well, BP destroyed the environment and should be held fully accountable for it and at least Obama is getting them to pay. Old Joe Barton was was an oilman himself and one wonders how much he's getting paid to make such ridiculous statements. Republicans are scumbags. This is the state of the US Government now  and I really can't see how such deep rooted corruption can ever be reversed.

[ Last edited by  geoduck at 23-6-2010 21:27 ]