From Zerohedge:
For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper… Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these: “World’s Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade”, “China, Russia Drop Dollar In Bilateral Trade”, “China And Iran To Bypass Dollar, Plan Oil Barter System”, “India and Japan sign new $15bn currency swap agreement”, and now this: “Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says.”… Next thing you know China, Russia and Japan will engage in bilateral trade agreements with the Eurozone in exchange for purchasing European or EFSF (which at last check are now forced to give 30% guaranatees) bonds, and bypassing dollars completely. But yes, aside from everyone else, virtually everyone is still using the dollar as currency of global exchange.
In other news, also from ZH, Germany is now being paid to borrow money. I can smell the desperation in the introductory APR of -0.0122%.
Predatory lending at its finest. Germany will now be pressured to borrow cheaply and buy junk Eurozone bonds in order to “stimulate the economy” of the peripheral countries. Once they’ve loaded up on crap debt, the markets will be shocked — shocked, I say! — at their profligate borrowing habits and crap-filled portfolio, rates will rise, and Germany will be Greece 2.0. No one will have seen it coming.
Don’t do it Germany.
David Alexander
January 9, 2012
Germany will now be pressured to borrow cheaply and buy junk Eurozone bonds in order to “stimulate the economy” of the peripheral countries.
Well, how else do you expect the Europeans to buy what the Germans make for everybody else?
Chris
January 9, 2012
No, Germans will rebel. Merkel will be sacked. the Goldmark or similar will be established as an alternate currency.
Unlike the kiwi, which is 76 cents OZ. Sincewe are visiting it tomorrow, we went shopping today
alcestiseshtemoa
January 10, 2012
Germany will be Greece 2.0
Poor Greece and Germany.
Elspeth
January 10, 2012
I would like to think the Germans will rebel but I don’t see it. The reality is that it is not an easy thing for Germany to extract itself from the Euro with which its economy is so linked. The fates are intertwined as DA wryly noted above.
I think in the end Alte will probably be proven right.
Alte
January 10, 2012
Of course I will be. Have I ever been wrong? (Hint: don’t answer that.)
They’re all piling into Germany because they figure when the Euro crashes German bonds will get the smallest haircut in the exchange to DM or Neuro or whatever comes next. They’re willing to pay a fee (negative interest rate) in order to be in on that exchange.
Alte
January 12, 2012
http://www.zerohedge.com/contributed/when-white-house-touts-falling-wages