Dollar on the downslide

Posted on January 9, 2012 by


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.