Gyroscopic Investing

China’s central bank has radically revised its view of US economic and strategic power, predicting that the dollar will remain the world’s paramount reserve currency for decades to come.

Read the rest here...
http://www.telegraph.co.uk/finance/curr ... -back.html

That reminds me of the Mark Twain quote that went something like "When I was 14 I thought my Father to be a damn fool.  By the time I was 21, however, I was astonished at how much he had learned in such a short period."

The U.S. currently enjoys enormous advantages on the world stage.  China may also be realizing that allowing the U.S. to continue being the world's policeman might not be a bad thing for China.

That Mark Twain quote is simply perfect here.

I don't know if I agree with your last statement, MT. It's not just that China enjoys contracts in countries where we have given blood and treasure -- not that those wars were a good idea -- It's also that as part of our policing we have this annoying habit of trying to secure human rights for people.

But surely, Beijing does need us to play a role for a while longer.

"Jin Zhongxia, head of the central bank’s research institute, said America’s energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time. “The dollar’s global dominance will continue,”? he said. "

Would someone explain to me what energy revolution they are talking about? 

Benko wrote: "Jin Zhongxia, head of the central bank’s research institute, said America’s energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time. “The dollar’s global dominance will continue,”? he said. "

Would someone explain to me what energy revolution they are talking about?

Fracking shale oil.

dualstow wrote: I don't know if I agree with your last statement, MT. It's not just that China enjoys contracts in countries where we have given blood and treasure -- not that those wars were a good idea -- It's also that as part of our policing we have this annoying habit of trying to secure human rights for people.

But surely, Beijing does need us to play a role for a while longer.

I think it's more like they appreciate letting a potential opponent become exhausted at someone else's expense.

Pointedstick wrote:

Benko wrote: "Jin Zhongxia, head of the central bank’s research institute, said America’s energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time. “The dollar’s global dominance will continue,”? he said. "

Would someone explain to me what energy revolution they are talking about?

Fracking shale oil.

Eh...the problem with shale oil/gas is that the U.S. and Canada have been early adopters, but some of the largest reserves are in areas like Russia and China, although it's believed to be distributed globally.  Eventually everyone is going to hop on this money train.  The "U.S. is the new Saudi Arabia" folks should pass what they're smoking.

Here is the energy revolution:
http://www.reuters.com/article/2012/11/ ... IQ20121112

Additionally, what else would replace the dollar? The Euro? That currency is a total joke without an entity that can issue nominally risk free debt. The Yen? The Japanese politicians appear hell-bent on destroying it's value to boost their exports and plus China hates Japan.

I bet the Chinese will just continue to accumulate Treasuries and gold.

Maybe the guy who wrote the report had eaten at KFC for the very first time the night before.

RuralEngineer wrote:

Pointedstick wrote: Fracking shale oil.

Eh...the problem with shale oil/gas is that the U.S. and Canada have been early adopters, but some of the largest reserves are in areas like Russia and China, although it's believed to be distributed globally.  Eventually everyone is going to hop on this money train.  The "U.S. is the new Saudi Arabia" folks should pass what they're smoking.

There's a good article in the most recent issue of of Foreign Affairs about how those North American reserves are affecting Putin. He really is dependent on high energy prices, in part because Russia has not invested a lot in new extraction and transmission technologies. Unfortunately for him, gas in the U.S. has brought his prices down.

Medium Tex wrote:I think it's more like {the Chinese} appreciate letting a potential opponent become exhausted at someone else's expense.

Yup.

dualstow wrote: There's a good article in the most recent issue of of Foreign Affairs about how those North American reserves are affecting Putin. He really is dependent on high energy prices, in part because Russia has not invested a lot in new extraction and transmission technologies. Unfortunately for him, gas in the U.S. has brought his prices down.

That sounds like the plot of Hot Tub Time Machine if Putin had been in the starring role instead of John Cusack.

MediumTex wrote:

dualstow wrote: There's a good article in the most recent issue of of Foreign Affairs about how those North American reserves are affecting Putin. He really is dependent on high energy prices, in part because Russia has not invested a lot in new extraction and transmission technologies. Unfortunately for him, gas in the U.S. has brought his prices down.

That sounds like the plot of Hot Tub Time Machine if Putin had been in the starring role instead of John Cusack.

You mean he should go back in time and invest in the infrastructure, or just go back in time and not be an evil dictator?

dualstow wrote:

MediumTex wrote:

dualstow wrote: There's a good article in the most recent issue of of Foreign Affairs about how those North American reserves are affecting Putin. He really is dependent on high energy prices, in part because Russia has not invested a lot in new extraction and transmission technologies. Unfortunately for him, gas in the U.S. has brought his prices down.

That sounds like the plot of Hot Tub Time Machine if Putin had been in the starring role instead of John Cusack.

You mean he should go back in time and invest in the infrastructure, or just go back in time and not be an evil dictator?

John Cusack's character in Hot Tub Time Machine felt that the person he had become was due, in part, to mistakes he had made in the 1980s while on a ski vacation.

Putin may be realizing that instead of polishing his thug skills in the 1980s, perhaps he should have been trying to learn something from the effect that the early 1980s collapse in oil prices had on the fate of the USSR.

So yes, he should go back in time and invest in infrastructure, but he should also realize that allowing his economy to be overly dependent upon a commodity whose price can be manipulated by your adversaries is perhaps not a prudent approach to world domination.

Of course, diversifying your economy away from commodity production is hard to do.  For a kleptocrat like Putin, it's far easier to get rich and consolidate power while helping your cronies get rich privatizing formerly state-owned enterprises without actually making any needed structural changes to your economy that might help your country become stronger from the inside out.

If they did make the movie I am describing, perhaps they could call it Kremlin Kleptocrat Time Traveler.

Would that I could find a time machine somewhere...