Saturday, September 12, 2009
China Hoarding Gold and Plans to Issue Yuan-Denominated Bonds in Hong Kong
China to Issue Yuan-Denominated Bonds in Hong Kong
The Chinese Ministry of Finance said Tuesday that it would issue 6 billion yuan worth of government bonds in Hong Kong, a major step to internationalize its currency at a time of concern about the dollar.

Kin Cheung/Associated Press
This is the first time that government bonds, comparable to U.S. Treasury securities, are to be issued. Above, a Bank of China in Hong Kong.
The yuan bond issue, the equivalent of $879 million, will “promote the yuan in neighboring countries and improve the yuan’s international status,” the ministry said on its Web site.
“The first step toward internationalization is regionalization,” Shi Lei, a currency analyst at Bank of China in Beijing, said during an interview. “China wants to develop the offshore market in Hong Kong.”
While domestic banks like Bank of China and the Export-Import Bank of China have issued yuan-denominated bonds in Hong Kong for a couple of years at the encouragement of Beijing, this is the first time that government bonds, comparable to U.S. Treasury securities, are to be issued. The sale is set for Sept. 28.
In July, the People’s Bank of China, the country’s central bank, started a program for local companies to settle trade in yuan, but it has so far spurred little trade. Zhi Ming Zhang, an analyst at HSBC in Hong Kong, said the government bond issue might show foreign investors they could rely on the yuan.
“If I’m doing trade with China, where am I going to park this money?” Mr. Zhi asked, referring to the yuan. The yuan-bond market needs security and liquidity to make such settlements attractive, he said, and government bonds will provide security and a pricing benchmark. The next step, he added, would be to increase the number of Chinese issuers and investors in the yuan.
Experts estimate that China holds about 75 percent of its $2 trillion in foreign reserves in dollar-denominated assets, but since the global financial crisis began, that position has made Beijing uneasy. Since the beginning of 2007, the dollar has slipped more than 20 percent against the yen, and more than 12 percent against the yuan, and investors are concerned as the United States continues to pile up debt to finance its huge stimulus package.
In March, China’s prime minister, Wen Jiabao, expressed concern about the dollar’s slide and encouraged the United States to ensure its stability.
While the bond issue announced Tuesday is a step toward making the yuan a global currency, the size of the sale is small compared with those of U.S. Treasury securities, and the time it will take to establish the yuan internationally remains uncertain. [less than a year]
“There is no timetable,” said Mr. Shi, the Bank of China analyst, adding that developing the market would take “at least three to five years.” [it happen much faster, driven by panic about the collapsing dollar.]
In another move to make the yuan accessible to investors, BOC Suisse Fund Management, Bank of China’s asset-management arm based in Geneva, said Friday that it had received approval from the Swiss financial regulator to create a new set of funds, nearly half of them denominated in the Chinese currency. [This looks interesting]
The Telegraph reports that China is alarmed by US money printing.
China alarmed by US money printing
The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.
By Ambrose Evans-Pritchard, in Cernobbio, Italy
Published: 9:06PM BST 06 Sep 2009
Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".
"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.
"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.
China's reserves are more than – $2 trillion, the world's largest.
"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added.
The comments suggest that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.
Mr Cheng said the Fed's loose monetary policy was stoking an unstable asset boom in China. "If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.
"Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down."
Mr Cheng said China had learned from the West that it is a mistake for central banks to target retail price inflation and take their eye off assets.
"This is where Greenspan went wrong from 2000 to 2004," he said. "He thought everything was alright because inflation was low, but assets absorbed the liquidity."
Mr Cheng said China had lost 20m jobs as a result of the crisis and advised the West not to over-estimate the role that his country can play in global recovery.
China's task is to switch from export dependency to internal consumption, but that requires a "change in the ideology of the Chinese people" to discourage excess saving. "This is very difficult".
Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.
"The US spends tomorrow's money today," he said. "We Chinese spend today's money tomorrow. That's why we have this financial crisis."
Yet the consequences are not symmetric.
"He who goes borrowing, goes sorrowing," said Mr Cheng.
It was a quote from US founding father Benjamin Franklin.
The Telegraph reports about China, Bernanke, and the price of gold.
China, Bernanke, and the price of gold
By Ambrose Evans-Pritchard Economics Last updated: September 7th, 2009
China has issued what amounts to the “Beijing Put” on gold. You can make a lot of money, but you really can’t lose.
I happened to see quite a bit of Cheng Siwei at the Ambrosetti Workshop, a gathering of politicians and global strategists at Lake Como, including a dinner at Villa d’Este last night at which he listened very attentively as a number of American guests tore President Obama’s economic and health policy to shreds.
Mr Cheng was until recently Vice-Chairman of the Communist Party’s Standing Committee, and is now a sort of economic ambassador for China around the world — a charming man, by the way, who left Hong Kong for mainland China in 1950 at the age of 16, as young idealist eager to serve the revolution. Sixty years later, he calls himself simply “a survivior”.
What he said about US monetary policy and gold – this bit on the record – would appear to validate the long-held belief of gold bugs that China has fundamentally lost confidence in the US dollar and is going to shift to a partial gold standard through reserve accumulation.
He played down other metals such as copper, saying that they could not double as a proxy currency or store of wealth.
“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not stimulate the market,” he said.
In other words, China is buying the dips, and will continue to do so as a systematic policy. His comment captures exactly what observation of gold price action suggests is happening. Every time it looks as if the bullion market is going to buckle, some big force steps in from the unknown.
Investors long-suspected that it was China. We later discovered that Beijing had in fact doubled its gold reserves to 1054 tonnes. Fait accompli first. Announcement long after.
Standing back, you can see that the steady rise in gold over the last eight years to $994 an ounce last week – outperforming US equities fourfold, even with reinvested dividends – has roughly tracked the emergence of China as a superpower in foreign reserve holdings (now $2 trillion).
As I have written in today’s paper, Mr Cheng (and Beijing) takes a dim view of Ben Bernanke’s monetary experiments at the Federal Reserve.
“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.
This line of argument is by now well-known. Less understood is how much trouble the Fed’s QE policies are causing in China itself, where they have vicariously set off a speculative boom on the Shanghai exchange and in property. Mr Cheng said mid-level house prices are now ten times incomes.
“If we raise interest rates, we will be flooded with hot money. We have to wait for them. If they raise, we raise.”
“Credit in China is too loose. We have a bubble in the housing market and in stocks so we have to be very careful, because this could fall down.”
Of course, China cold end this problem by letting the yuan rise to its proper value, but China too is trapped. Wafer-thin profit margins on exports mean that vast chunks of Chinese industry would go bust if the yuan rose enough to close the trade surplus [but China will let the yuan rise anyway when food crisis really begins]. China’s exports were down 23pc in July from a year before even at the current exchange rate, and exports make up 40pc of GDP. “We have lost 20m jobs in this crisis,” he said.
China’s mercantilist export strategy has led the country into a cul-de-sac. China must continue to run its trade surplus. It must accumulate hundreds of billions more in reserves. Ergo, it must buy a great deal more gold.
Where is the gold going to come from?

My reaction: The news developments above are screaming warning sirens telling the world to get out of the dollar before it is too late.
China continues to internationalize the yuan
1) On September 28, China will issue 6 billion yuan worth of government bonds in Hong Kong.
2) This is the first time that China issues bonds comparable to U.S. Treasury securities.
3) This represents a MAJOR step to internationalize the yuan at a time of rising concern about the dollar.
China issued "Beijing Put" on gold
1) Comments by Mr Cheng (until recently Vice-Chairman of the Communist Party's Standing Committee) validate the long-held belief of gold bugs that China has become the driving force in the gold market and can be counted on to buy whenever there is a price dip, putting a floor under any correction.
2) Comments by Mr Cheng (on record) also validate the long-held belief of gold bugs that China has fundamentally lost confidence in the US dollar and is going to shift to a partial gold standard through reserve accumulation.
3) China is buying the dips in gold prices, and will continue to do so as a systematic policy. Mr Cheng’s comment captures exactly what observation of gold price action suggests is happening. Every time it looks as if the bullion market is going to buckle, some big force (Chinese buying) steps in from the unknown.
Conclusion: Gold is never going back down. Don’t expect to ever see gold beneath $900 again. Prices that low would result in too much Chinese buying, so those short gold can’t allow it to happen.
Meanwhile the yuan continues to strengthen as an alternative to the dollar. By the time a dollar panic begins at the end of 2009, the currency will be ready to serve as a makeshift replacement for the dollar in international trade.
Treason, Betrayal and Deceit: The Road to 9/11 and Beyond
We need to take a hard look at why the mainstream media (MSM) have paid more attention to Sarah Palin’s wardrobe than they have to dissecting blatant falsehoods.
| Courtesy: 911truth.ozempire.com |
(JACKSON, Miss.) - The attacks on September 11, 2001 have been a defining moment for America. Although the losses were not great in terms of urban slaughter during WWII, the political and psychological impact on Americans of a concerted and visible attack in America were enormous — indeed, it is an interesting “coincidence” that the attacks occurred on the one day of the year whose mention reinforces a public sense here of danger and emergency: 9-1-1.
With remarkably little reflection or concern with details and evidence, Americans accepted sweeping restrictions on civil liberties, torture as an instrument of government policy, and waged wars first in Afghanistan and later in Iraq, presumably punishing those who attacked America then or might do so in the future. A similar if less enthusiastic drama is unfolding today, as many of the same parties who brought us 9/11, Afghanistan and Iraq are edging America into confrontation and war with Iran.
Like most Americans, I take a dim view of a fixation on conspiracies. I am also conscious of a remark by a French colleague some years ago to the effect that Europeans saw conspiracies everywhere, but Americans never saw them anywhere, and both were wrong. I am even less enthusiastic about presumed coincidences with global consequences driving policy, or superficial explanations of physical catastrophes that fly in the face of both logic and physical realities. With one war waning today, another getting hotter and a third “in the oven,” it is high time to look hard at what brought us to this place.
Prelude to 9/11
Most of the world (but not Americans) understood for decades that American Middle East policy was weighted heavily towards Israel. Eisenhower could compel Israel to withdraw from the Sinai, but the last US President who forcefully opposed Israeli regional and nuclear ambitions was John F. Kennedy. His assassination brought Lyndon Johnson into the White House, so much a friend of Israel that he disregarded the deliberate Israeli attack on the USS Liberty during the 1967 war, in which over 200 US sailors and Marines were killed or wounded.
Shortly thereafter, pilgrimages to Israel and laudatory appearances before AIPAC (the powerful Jewish lobby in Washington) became effectively obligatory for Presidents and serious aspirants for the White House alike, with the Congress (both houses, both parties) being even more supportive – something commonly understood in Washington, but almost unknown elsewhere in the country.
A significant development in the 1990s was the formation of the neo-conservative think tank known as PNAC (Project for a New American Century), whose members prepared position papers for the Israeli government and for a future US Administration sharing their views. That happened in 2000 with the election of George W. Bush, and a contemporary writer summarized the tip of the neo-conservative iceberg in his first Administration this way:
The “outsiders” from PNAC were now powerful “insiders,” placed in important positions from which they could exert maximum pressure on U.S. policy: Cheney is Vice President, Rumsfeld is Defense Secretary, Wolfowitz is Deputy Defense Secretary, I. Lewis Libby is Cheney’s Chief of Staff, Elliot Abrams is in charge of Middle East policy at the National Security Council, Dov Zakheim is comptroller for the Defense Department, John Bolton is Undersecretary of State, Richard Perle is chair of the Defense Policy advisory board at the Pentagon, former CIA director James Woolsey is on that panel as well, etc. etc. (PNAC’s chairman, Bill Kristol, is the editor of The Weekly Standard.) In short, PNAC had a lock on military policy-creation in the Bush Administration.
The presence of so many people from PNAC in key positions definitely sent a signal that US Middle East policy would henceforth be that of Israel, something that brought no joy to any other countries in the region, much less the long-suffering Palestinians. Mutterings about a supposed “Road Map” to some type of peace arrangement in such circumstances were utterly meaningless, and almost everyone except the American public understood this fact of life.
Far more significant in terms of subsequent events was the acknowledgement in one of PNAC’s own documents that their program for America (and Israel) would not readily be accepted by the American people. What this meant, PNAC opined in 2000, was that “the process of transformation, even if it brings revolutionary change, is likely to be a long one, absent some catastrophic and catalyzing event — like a new Pearl Harbor.”
9/11 Reconsidered
On September 11, 2001, the PNAC people in and out of government — and by extension AIPAC and Israel — “coincidentally” got the event they needed, barely eight months after coming into office. Most people are familiar with the basic details of that day — two commercial aircraft crashing into the two tallest buildings in New York City’s World Trade Center (WTC), a third striking the Pentagon, and a fourth ending up in a Pennsylvania field. Few people will forget the images of the burning buildings, their collapse, the casualties, and the sense of shock and tragedy that ensued. Few should forget the passage of emergency legislation (the misnamed “Patriot Act”), the rush to attack Afghanistan for harboring the source of the attackers, or the later rush to attack Iraq to forestall “mushroom clouds” from its apocryphal “weapons of mass destruction.”
The official 9/11 Commission’s work and report were at best an incomplete exercise. Many people dismiss the findings of the Commission, and that includes its co-chairs. Many others who utterly distrust the 9/11 Commission report, dismiss the US Government’s explanation of it, and point to both an official cover-up and an “inside job,” include veteran fighter pilots, EMTs (Emergency Medical Technicians)(see: EMT interview), air defense experts, experienced commercial pilots, demolition experts, architects and civil engineers – none of them professions that inherently attract and retain the gullible and credulous.
Errors abound in the report. Among the more catastrophic is the collapse of a third WTC building (the 47-story WTC7) which was not hit by a plane, and fell in what appears to be a controlled demolition, but has essentially been sidestepped by the mainstream media (MSM). And this video interview (Interview) with a demolitions expert overseas explains clearly and succinctly what happened to WTC7, with the shock and chaos accompanying the impact of the aircraft serving to distract attention and conceal what happened overall.
The overlay of the World Trade Center below shows the layout of the affected buildings:
| '> Danny Jowenko talks about WTC 7's controlled demolition |
Even more unbelievable is the “coincidental” salvage of an intact passport presumably belonging to one of the hijackers inside the plane that hit WTC2 — and this was how the official 9/11 Commission report described it:
The passport was recovered by NYPD Detective Yuk H. Chin from a male passerby in a business suit, about 30 years old. The passerby left before being identified, while debris was falling from WTC 2. The tower collapsed shortly afterwards. The detective then gave the passport to the FBI on 9/11.
Reflections
Several things are very clear to me from a careful assessment of both official and critical evaluations of the 9/11 attacks. First, the striking aircraft alone simply could not have brought down either of the two buildings in the manner in which they fell, much less a third building which was not hit by a plane (I expect the one intended to do that as a “cover” had ended up in that Pennsylvania field), given the available physical evidence and a wealth of expert testimony. This means the attackers had assistance on the ground, and it had to have been active before the attacks occurred: preparing buildings for controlled demolition is not something done haphazardly in the midst of chaos.
Second, only two intelligence agencies had the expertise, assets, access and political protection to execute 9/11 in the air and on the ground: our CIA and Israel’s Mossad. Only one had the incentive, using the “who benefits” principle: Mossad. And that incentive dovetailed perfectly with the neo-con’s agenda and explicitly expressed need for a catalytic event to mobilize the American public for their wars, using American military power to destroy Israel’s enemies. Only the unexpected strength of the Iraqi resistance kept Syria and Iran from being attacked in the second Bush Administration. Thus, the evidential trail for 9/11 and the wars in Afghanistan and Iraq run from PNAC, AIPAC and their cohorts; through the mostly Jewish neo-cons in the Bush Administration; and back to the Israeli government. None of the denials and political machinations can alter that essential reality. Terms such as treason, betrayal and deceit do not overstate the case against them.
Finally, we need to take a hard look at why the mainstream media (MSM) have paid more attention to Sarah Palin’s wardrobe than they have to dissecting blatant falsehoods, discrepancies and inconsistencies in the US Government’s treatment of 9/11 and its aftermath. And the reason is that on this issue, all are on the same side, and the official line is the one they all prefer – “all” meaning the PNAC alumni who took over the Bush Administration’s national security apparatus and their counterparts in the Obama administration, AIPAC and the rest of the numerous Jewish PACs, the MSM owners and Israel. The depiction of the media management in America in 2002 is especially informative, and has not changed significantly since then:
Looking Ahead
Today we are getting the same line on Iran, from the same type of people — Obama himself tries to be more independent, but most of the key staff and national security people in his Administration do not differ greatly on Israel and the Middle East from those of his predecessor. And the Congress has shown itself to be even more of AIPAC’s lap-dog than the preceding Congress, an exercise in self-serving cowardice that admittedly has taken some doing. This is not a simple anti-Jewish canard or mindless prejudice, both of which are juvenile and self-defeating sentiments. They are a factual depiction of specific people in specific positions advocating specific policies and stonewalling specific attempts to elicit specific information about specific lies, misrepresentations and deceit.
AIPAC and company are riding a tiger in America, and if they ever slip, the resulting convulsion will be catastrophic for them and for Israel. The open unfolding of the 9/11 tragedy and its ensuing wars that is now occurring can be that slip. The human cost to America to date is some 60,000 people, military and civilian, killed or wounded on 9/11 and in Iraq and Afghanistan together, with more to come once we go to war with Iran (or get dragged into it following an Israeli attack on Iran). Much of the deliberately misdirected rage that followed 9/11 has given way to endurance and grief, captured all too well in the following picture of a military funeral here:
But grief is a close cousin to rage, and an enraged America is not pretty, as anyone familiar with our history can appreciate. Americans are often deceptive without meaning to be. To much of the world, they often come across as naive, bumbling innocents in the world of global politics. And on a day-to-day basis, there is much truth to that.
But an enraged America is a very different character. You have only to look at what happened in WWII to German and Japanese cities, towns and villages, where America slaughtered literally millions of German and Japanese civilians — most of them women and children — knew it was doing it, and cared nothing at all. The goal was to crush, and restraint was not a word used much at all.
If these Americans and those like them ever fully understand just how much of their suffering — and the suffering we have inflicted on others — is properly laid on the doorsteps of Israel and its advocates in America, they will sweep aside those in politics, the press and the pulpits alike whose lies and disloyalty brought this about and concealed it from them. They may well leave Israel looking like Carthage after the Romans finished with it. It will be Israel’s own great fault.
Special thanks to: intifada-palestine.com
Also see:
700 Architects and Engineers for 9/11 Truth -- Check out more info at: AE911Truth.org
And the video below:
US Mainstream Media not picking up on the story. Architect Richard Gage Interviewed in Clovis:
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Census: Income fell sharply last year
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Median household income sank 3.6% to $50,303, after adjusting for inflation, during the first full year of the recession.
Income tumbled to its lowest dollar level since 1997 — a decade's worth of gains wiped out in one year — and things will get worse before they get better, says Sheldon Danziger of the Population Studies Center at the University of Michigan.
"2009 is going to be dreadful," he says. He predicts income will drop at least 5% this year because of rising unemployment in the recession's second year.
The Census Bureau's annual report on income and poverty is one of the most important benchmarks of the U.S. economy.
The income and poverty data reflect the sweeping effects of the recession, which began in December 2007 and has erased 6.9 million jobs. The report covers a wide range of pre-tax income, such as wages, Social Security payments and dividends. It doesn't count the value of non-cash benefits, such as food stamps or employee health insurance.
The cause of the income decline is clear. "The economy was slow. People lost work. Incomes fell," says Robert Rector, a senior fellow at the conservative Heritage Foundation.
Other key findings for 2008:
•Poverty rate jumps. The share of people living in poverty rose to 13.2% in 2008 from 12.5% in 2007. That's the highest poverty rate since 1997.
•Health coverage holds steady. The portion of people in the USA without health insurance was almost unchanged at 15.4% .
• Men and women, still different. Women earned 77% of what men made in 2008, unchanged from a year earlier.
•Seniors fare best. Of the 25 groups tracked by the Census, only households led by people 65 and older enjoyed income gains — a 1.2% increase. Doing worst: the middle-aged. Households headed by 45- to 54-year-olds suffered a 5.4% drop.
"Social Security and Medicare make a big difference for the elderly," says Minnesota state demographer Tom Gillaspy. He says the income report doesn't show the wealth lost by the elderly because of falling stock prices.
Cass Sunstein - Pres Obama's Regulatory Czar - views on 2nd Amendment
America was behind the 9/11 atrocities, says actor Charlie Sheen
Charlie Sheen has provoked outrage with claims that the U.S. government was behind the September 11 terror attacks.
Ahead of today's eighth anniversary of the atrocities that killed 3,000, the Hollywood star has insisted there was a cover-up.
And he has appealed to President Barack Obama to hold a new investigation into the attacks on the World Trade Centre towers in New York and the Pentagon in Washington DC.
Actor Charlie Sheen, shown here with ex-wife Denise Richards in 2005, has demanded Barack Obama open a new investigation into 9/11
Sheen, the highest-paid actor on U.S. TV, argues that 'the official 9/11 story is a fraud' and says the commission set up to investigate was a whitewash.
He claims the attacks simply served 'as the pretext for the systematic dismantling of our Constitution and Bill of Rights'.
The actor, 44, says the administration of former president George Bush was behind the attacks, which they were then able to use to justify an invasion of Iraq.
He even hints that Osama Bin Laden was working with the CIA up until 9/11.
Sheen, who appears in the hit comedy series Two And A Half Men, made his claims in the transcript of a fictional encounter with Mr Obama, called Twenty Minutes With The President.
It was published on the website of radio show host Alex Jones, PrisonPlanet.com, two days ahead of Sheen's appearance on Jones's show today.
Most of his observations make up the basis of all the conspiracy theories surrounding the terror attack. Those who support the theories in the U.S. are known as Truthers.
He voices doubts over whether the planes really were passenger jets and questions how passports identifying the hijackers survived the infernos.
The actor, whose father Martin played the president in The West Wing, said he hoped the work would be seen by Mr Obama.
He urged other Americans who were sceptical of the investigation into the attacks to demand the truth.
He said: 'We cannot allow governments to continue to advance their political agendas by exploiting forged pretexts and the fact that big budget hit pieces against 9/11 truth are still being rolled out proves that the establishment is upset that the population is waking up to false flag terror.'
Sheen first questioned the events of 9/11 in 2006 when he said: 'It seems to me like 19 amateurs with box cutters taking over four commercial airliners and hitting 75 per cent of their targets, that feels like a conspiracy theory. It raises a lot of questions.'
This week President Obama's 'green jobs' tsar was forced to resign after it was revealed he had signed a petition from a 9/11 Truther movement that claimed the U.S. government staged the attacks.