Gary’s Note:
Despite what Washington wants, China just won’t see the U.S.
dollar as something to fear or something worth owning. And China
is acting accordingly. And furthermore, warns Keith Fitz-Gerald,
what China does will affect every single asset class in the
world.
|
Greenback Woes Boost China’s Global
Muscle |
By Keith Fitz-Gerald
November 25, 2009
Washington continues to believe that the U.S. dollar is a weapon
and most of the G8 is playing along. They simply can’t see — or
won’t acknowledge — where the dollar is actually headed, even
though the evidence is right before their eyes.
On
the other side of the world, however, China is refusing to drink
the U.S. Kool-Aid. It sees what’s really happening with the
greenback, and understands the implications for its own finances
and economic growth.
That’s why Beijing has taken matters into its own hands.
As
Beijing breaks with the West, Western investors need to take
notice — China is now a serious player on the global financial
stage. It’s only going to grow in power and stature.
And
it has a powerful hand to play.
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Not
only does the Red Dragon have a $2.3 trillion cache of reserves
to work with, it also has the world’s most powerful growth
engine: An economy that’s advancing at an 8% clip, 1.3 billion
consumers who save an average of 35% of their incomes, and a
government that’s spending money in an effort to propel them
into the 21st century.
What
makes this especially poignant is that China understands its
role — past, present and future. Most of its leaders are
exceptionally well versed in Western history, meaning there’s a
profound understanding of the problems and potential obstacles
the West faces as it attempts to bounce back from the worst
financial crisis since the Great Depression. There’s an irony
here, since China may understand our problems even better than
we do.
China’s outlook and economic fate is no longer totally dependent
on the United States and other Western counterparts. China knows
that it has to take matters into its own hands if it is to avoid
being dragged down and smothered by Western has-beens. Beijing
is doing just that.
What’s more, China’s leaders are taking a whole host of steps
that will affect basically every asset class on the planet for
years to come.
Some
of these moves are subtle on their face, but will have a broad
and lasting impact that investors need to see and understand.
Others are as shrewd as they are aggressive. For instance, China
is actively diversifying its dollar risk by buying up hard
assets — including oil, gold and all sorts of other commodities
— as part of a global shopping spree that’s unparalleled in
recent memory.
As
part of his global game of let’s make a deal, China is reaching
pacts with resource-rich despots around the world — not because
Beijing likes dealing with these people, but rather because
China has little choice given is massive population, zooming
growth and the neutered status of the Western financial system.
Sheer size isn’t China’s only objective: It also wants to join
the “adults’ table” that seats the current global financial
leaders. To achieve this status, however, Beijing knows it needs
to have a credible currency. Instead of waiting for the
international currency exchange community (read that to mean the
self-centered currency traders in New York and London) to
integrate the yuan into major trading pairs, China’s leadership
has been establishing yuan-based swap agreements with nations
around the world. In doing so, Beijing has completely bypassed
the international system now in place.
China has simultaneously been working — albeit quietly — with
other groups having similar vested interests to ensure
alternative financing methods, whether the U.S. cottons to
Beijing or not. I’ve been predicting this for years, which is
why I wasn’t entirely surprised when reports surfaced earlier
this month about the Organization of Petroleum Exporting
Countries (OPEC) and the so-called “BRIC” nations (Brazil,
Russia, India and China) shifting to an international currency
basket and gold to replace the use of U.S. dollars in pricing of
oil contracts. While this was quickly denied by some of the OPEC
nations, their comments made it clear that they were talking
about "convenience."
I
could go on but I think you get the picture: The global guard is
changing. Whether we like it or not is irrelevant. It’s going to
happen, so as investors we need to look for the profit
opportunities that will assuredly come our way.
As
history demonstrates, these guard-changing shifts are major
profit opportunities — and are not to be missed.
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Profit Lessons of the Past
As
was the case when France’s hegemony was usurped by England’s —
and then England’s by United States — there are major profits to
be had. To be clear, I’m not calling for the total demise of the
U.S. way of life, or a complete abandonment of U.S. assets on
the global financial stage. Any such notion would be foolish in
today’s interconnected world. The real issue for most U.S.
investors is that they need to bring their holding into line
with what the changing of the guard implies…and increasing
proportion of global choices.
Most
investors remain dramatically underexposed to the new realities
of global investing. They may have only 15% — or less — of
their portfolios invested in internationally focused
investments. At a time when U.S. equities make up less than 25%
of the world’s total stock-market capitalization — and when
nearly 75% of global economic activity is place beyond U.S.
borders — that’s a serious miscue for an investor to make.
What
you really want to do is to go with the flow, and recognize the
changing of the guard for what it actually is — a new source of
wealth.
Regards,
Keith Fitz-Gerald
P.S.:
For the last several years I’ve made my insights about the Asian
markets and the true nature of the global capital markets
available to investors via my daily columns in Money Morning and
its monthly affiliate, The Money Map Report. Now I’m
making those insights available through my new book,
“Fiscal Hangover: How to Profit from the New Global
Economy,” which can be purchased
here.
 |
I’m
not going to say much today because the letters really say it
all…and a lot better than I could.
Bravo on promoting Mr. Hadar to newest guest columnist! His
views do seem to be at odds with the general position of the
Cato Institute but reflect a fairly balanced position. I
detected a little too much coattail chewing on President Bush
and a little too much lapdog fawning on the current President
but he saved himself by pointing out that President Obama is
stuck with the situation he inherited and that President Bush
was following through with policies and positions that he also
had little control over. His attack was not so much against
Conservatives and Right-wingers per se as it was against those
who claim to be conservative while demanding ever more foreign
intervention and waste of resources in the name of ill
conceived, unwanted and illegal American authority.
We
will never recover any position of authority and respect in
the world while we continue to seek it through force. Our
military needs to come home. All of it.
Two
important points are neglected in the harangues against
foreign and domestic Federal intervention. Our economic
strength is being drained by our force projection abroad. Our
domestic strength is being drained through borrowing in an
attempt to backfill the open pits left by this flight of
Capital, leaving our hospitals and schools and domestic
society in general unfunded. Meanwhile our enemies spend
themselves into a frenzy to counter our military while our
"friends" thumb their noses at us, repeating ad nauseam the
lie that their socialized economies have provided more for
their citizens than our Capitalistic one.
*******
Thank you for reprinting this thoughtful piece. I look
forward to reading what the shooters have to say about his
reasoned observations...!
Unqualified praise! And that’s the last letter of its kind in
today’s batch.
I'll
bet you're getting a clogged mailbox about this guy.
No
wonder he was published in the Huffington Post. This guy has a
big chip on his shoulder, doesn't address the issues, and
makes a feeble attempt to deride the opposition.
Hadar and those like him are becoming ever more frustrated
with their inability to overwhelm the people of this country
with their oppressive ideology. Most Americans want freedom,
not tyranny.
*******
You
are either a sadist or just plum crazy, Gary. Publishing
drivel like Hadar's is akin to starting a bar fight in an old
west saloon!
Hadar's article, besides being a waste of space, was very
poorly written and extremely difficult to read. Words were
out of place or even missing, some sentences never ended - it
was as if my elementary child had written it. It was
certainly a fitting diatribe for the likes of The Huffington
Post, but wasn't suitable for the refined tastes of the
shooters in this bar. Try not to waste our time, Hoss, for
our trigger fingers could get mighty itchy...
*******
The
only reason I read your posts are to see how misguided you
idiots are. If you are honestly in the dark about Obama and
his agenda, I'll pray for you.
*******
This
newsletter is getting way too political for my taste. To
prosper in the world you guys propose, would require
denouncing my Christianity.
Ouch.
It
is impossible to take seriously anyone who insists on
repeatedly using the term "teabagger" to ridicule those
concerned Americans who have demonstrated a concern for Mr.
Obama's attempt to push socialism onto all of us. This
dismissive term of sexual perversion is a favorite of
Hollywood types and others from the Ho Chi Minh wing of the
Democratic party, and matches his sneering tone. "From that
perspective it is quite possible" that Saturday Night Live
gave a better analysis of Mr. Obama's leadership than did Mr.
Hadar. Yuk! No more of this fool, please. Leave him to rant
on HuffPo where he obviously feels at home.
*******
Gary: I'm sure someone with Mr. Hadar's credentials is
capable of better than this tripe. I wouldn't invite him back
until he has learned some manners.
*******
The
next time you would like to give time to a bloating UN idiot
give us fair warning. To label Tea Party participants as Tea
Baggers only lets the reader know that this incompetent is off
his rocker or a regular on MSNBC. Most Tea Party
representatives are split about the wars abroad. Their
biggest concern is for Liberty here in America, which this
idiot seems to omit. The simple fact of the matter is you
cannot have liberty with a government takeover of medicine or
the enormous debt which Obama and the democrats want to heap
on top of the disastrous debt already accumulated under the
spend thrift Republican George W Bush. LOL! Conservative my
ass!
*******
Everyone’s upset about the public option in health care. I
don’t know why? They say that if I don’t buy insurance I will
get fined and imprisoned…. So if I don’t spend $12K a year in
insurance the gov’mint will in turn spend 50K a year on
housing and feeding me and on top give me free health care.
Gold-plated quality heath care…the same kind that covers
breast implants for men in IL prisons. Can’t you people see?
This is shovel-ready job creation at its best.
*******
I
was really surprised by the depth of your liberal bias. The
nasty bashing of conservatives was totally uncalled for. I no
longer care to read your stuff. Like Letterman, you are too
stupid to realize that you have alienated half your
constituency.
*******
You
are right; us right wing guys think Obama is an embarrassing
empty suit. So does Europe. Don't send me any more emails.
*******
Well
Gary,
You certainly entertained us conservatives with the rants of a
far left wing nut. You can stop printing his articles any
time you want. If I want to read or watch that junk I can
just read the Huffington Post or tune in MSNBC (a.k.a Maximum
Socialist National Broadcasting Company).
*******
I
willingly subscribe to Whiskey and Gunpowder. I appreciate
different viewpoints even if they are a rehash of a blog I do
not care for like Huffington Post. But I must take exception
to you folks allowing an article to be sent out that insults
and denigrates people who have attended and support the
so-called Tea Parties. The author uses the offensive "teabaggers"
label that liberals use to dismiss and insult those that are
protesting against the government. If you had written an
article that used the "N" word to describe someone or called a
woman the "B" word, or anything similar, my guess is you would
not be writing for Agora much longer. I do not know why this
double standard is allowed to continue and am disappointed it
ended up in a newsletter than I like and respect.
*******
Kudos to Root and a big thumbs down for Hadar and the
Huffington Post. (Is that the best you can do in seeking to be
"fair and balanced"?) For the benefit of readers who might
choose to endure any future submittals by Hadar (which
definitely won't include myself), I strongly suggest the
services of an editor. The errors of grammar and syntax made
his comments doubly annoying to read. I'm normally a fan of
the Cato Institute and not a fan of overseas nation building
(though we desperately need people with the insights to do
some serious nation re-building at home), but I'll take Beck
and Limbaugh over Hadar any day of the week.
*******
Is
this guy for real? Can somebody who works for Cato actually
be dim enough not to realize that a big slice of what he
dismisses as "teabaggers" (real classy, using the lamestream
liberal media's favorite juvenile sexual innuendo) are "Ron
Paul Libertarians" who oppose not only the fiscal suicide of
trillion-dollar deficits, Wall Street bailouts, "soak the
rich" tax hikes and the impending steamroller degradation of
medical care, but also the hubris and historically blind
stupidity of empire? (BTW, you too get a whack from the "Clue
x 4 of Truth (tm)" for using "teabagger.")
Don't stop trying out new contributors, by any means. Just be
aware that some of them will be prime candidates for the big
red FAIL stamp. Toss Hadar in the circular file and save the
space for the likes of Wayne Allyn Root and James Howard
Kunstler.
Regards and a shot of the good stuff,
The
Denizen of Barstool # (well, actually I'm still waiting,
hint-hint...)
Whew. Made it…and smelling only a little of smoke and not a
scratch on me.
That
last Shooter certainly earned his barstool! And thank you to all
who wrote in…those of you who haven’t unsubscribed anyway.
Regards,
Gary Gibson
Managing Editor,
Whiskey & Gunpowder
