Yuan on the Way to Becoming an Alternative Reserve Currency & Obama’s Off to China to INSIST That the Chinese Play Nice

~~By InsightAnalytical-GRL

OK, here we go again, in all likelihood, with another big blast of hot air from Barack Obama.

Reuters, like the AP, doesn’t appreciate quoting from their articles.  So, for details follow the link from 11/10/2009:

World Bank: yuan to become alternative reserve currency

Let’s summarize.  Former Bush Adminstration biggie Robert Zoellick who has moved on to become President of the World Bank thinks the dollar as a reserve currency is “relatively secure” but the Chinese yuan is going to become an alternative to the greenback. Zoellick muses that it might take 10-15 years and that we shouldn’t be “complacent” about the dollar.

As if anybody these days is complacent???  And, don’t you think that these comments just confirm the actions of Ben Bernanke and the Fed that are allowing the dollar fall?

Ah, but according to the Telegraph (U.K):

Barack Obama pledges to tackle Beijing on yuan

President Obama, who, since taking office in January, has resisted branding the Chinese government as currency manipulators, promised to discuss the thorny issue of the yuan, and whether it is undervalued, as part of a visit to Shanghai and Beijing.

“Currency, along with a host of other issues, will come up, and I’m confident that both the United States and China can arrive at a broad set of policies that encourages trade that benefits both countries, that allows ongoing economic growth,” said Mr Obama.


But Mr Obama will have to tread carefully as the Chinese government owns almost $800bn (£477bn) of US Treasuries, its largest foreign creditor.

Earlier in the day, the Chinese premier, Wen Jiabao, urged the US to “effectively discharge its responsibilities” and “maintain an appropriate size” to its budget deficit.


A couple of days ago on CNBC, PIMCO’s Bill Gross made this point (see minute 4:30 on the video titled America Still Number 1?:)

Gross notes that over the last year alone the depreciating dollar means that every single Treasury purchased by China, Japan etc with a 1 to 2 % yield has essentially generated a negative 13 to 14% return. Yes, NEGATIVE 13 to 14% return.

Yeah, I guess Obama will HAVE to tread carefully.  China owns us and is not happy, especially about that negative return…

If you read our previous post Globalization/U.S. Decline Right on Schedule Courtesy Obama Backdown…Summer 2010 Projected Completion of Integration of NAFTA with EU to Counter BRIC/ASEAN Bloc, you’ll see an example of Obama’s big talk and big backdown type of leadership.

And, on this currency issue, Obama supporters are urging The Chosen One to live up to his campaign promise:

Yuan Critics Want Obama to Keep Campaign Promise

At the time, Obama said that he would “”insist that China stop manipulating its currency because it’s not fair to American manufacturers, it’s not fair to you and we are going to change it when I am president of the United States of America.”

I can’t wait to see this unfold over the next few days as the Obama crowd hits Beijing…I’ll be looking for the “insisting” part of the trip…

The World Bank Running Out of Money?

~~By InsightAnalytical-GRL

Well, here at home the FDIC is broke, but guess what?

The World Bank is on the verge of going broke, too…

According to the  Telegraph (U.K.):

World Bank could ‘run out of money’ within 12 months


The Bank, whose job it is to support low-income countries, has had to hand out so much cash in the wake of the financial crisis that it faces a shortfall in what it can spare for new projects within 12 months.

“By the middle of next year we will face serious constraints,” said its president Robert Zoellick, as he launched a major campaign to persuade rich nations to pour more money into the Washington-based institution.

He conceded that such a task was likely to be extremely difficult, given the difficulties facing countries in the wake of the developed world’s biggest recession since the Second World War.

Although the Bank has enough cash to fund existing projects and its day-to-day operations, the demands thrown up by the global recession have meant it may need extra capital contributions from rich nations to bolster its balance sheet if it is to satisfy such needs.

Mr Zoellick, speaking at the opening of the IMF and World Bank annual meetings in Istanbul, said the Bank needed a capital increase of $3bn-$5bn, though others suspect the eventual need could be higher still.


The money would be shared between the International Bank for Reconstruction and Development – the key part of the bank, which lends to poor nations – and the International Financial Corporation (IFC), which lends to companies.

The World Bank has pretty much screwed poorer countries with the terms of the largesse they’ve offered in the past, but, nonetheless, it’s still pretty amazing that this oufit would be afraid of  running out of cash.

What an economic cesspool we’re in…


By the way, Robert Zoellick is an alumnus of the George W. Bush Administration…

McCain LIVE at the Clinton Global Initiative, Obama by Satellite (Too Busy Cramming for the 1st Presidential Debate the NEXT DAY?)

In my most recent “The Past Week” post for September 7-13, I commented on the Clinton-Obama meeting in NYC on September 11 and how Bill promised he would be going out to work for Obama as soon as his Global Initiative meeting was over (the event is from September 23-26). (Video link and a discussion of the body language at that meeting here.)

Well, looks like Mr. Clinton has decided to get a little ahead of the game…sort of. Maybe.  Well, read this try to figure it all out…

There it was, a little squib on Time’s website  yesterday (Tuesday, September 16) that said:

Obama, McCain to Speak to Clinton Global Initiative

The two presidential candidates will participate with the likes of Queen Rania, Gordon Brown, Hamid Karzai, Al Gore, Michael Bloomberg, Lance Armstrong, Bono and more in addressing the fourth annual meeting.

Obama by satellite.

The little squib didn’t mention how McCain would be speaking, but there was a link to another page which featured the entire press release.

About midway through the long list of participants and meetings, I saw the mention of McCain and Obama’s appearances.

Both United States presidential candidates will have a role in the Annual Meeting. Senator John McCain will deliver the opening remarks live at the “Integrated Solutions: water, food and energy” plenary session. Senator Barack Obama will address meeting participants via satellite.

Here’s a rundown on the session:

PLENARY SESSION: Integrated Solutions: Water, Food & Energy

Thursday 9/25/08, 9:00 A.M. – 10:00 A.M.
Metropolitan Ballroom

During the 20th century, more people than ever benefited from clean water, plentiful food, and the mobility and comfort of an oil-based economy. World grain harvests quadrupled and world oil production grew 180-fold during the last century. However, our food, water, and oil reserves are increasingly strained as resources are depleted, natural systems become strained, and world population increases. The rising price of oil and increases in biofuel production are driving up global grain prices. New oil-extraction opportunities are heavily water- and carbon-intensive, and increasing demand for water is lowering water tables around the world. Because water, food, and energy issues are so closely related, solutions addressing one should address all three. This panel will discuss ways to use water more efficiently, expand food security, and reduce our dependence on fossil fuels to create a more sustainable future.

Program Participants:

Tom Brokaw, Special Correspondent, NBC News
T. Boone Pickens, Founder and Chairman, BP Capital Management
Robert Zoellick, President, The World Bank Group

(Quite a group…Tom Brokaw, who is the only one at NBC who occasionally tries to act like an adult, along with Pickens and one of our “favorites,” Robert Zoellick.)

Oh, we know that Barack is terribly busy on the campaign trail these days (maybe Obama will be off trying to win over people in one of those hick towns he loathes so much) and I’m sure he would have wanted to be there.  Or maybe not, if he didn’t want to upset his minions by appearing in person with Pickens or Zoellick.  On the other hand, the meeting takes place the day before the first Presidential Debate on September 26 which will be moderated by Jim Lehrer. The focus will be on foreign policy and national security, so Obama probably will be CRAMMING on the subject of the Logan Act and practicing how to talk without a teleprompter!

But you’d think he want to meet all those foreign leaders, now, wouldn’t you?

If Obama were the only one of the two included, and appeared via satellite, I wouldn’t have been at all curious.  But the fact that McCain is taking a day off the campaign trail and appearing LIVE–the day before the first debate–well, now isn’t that interesting?

McCain is either very confident on the debate subject or Bill Clinton wants to get him good and tired before that debate the next night in Mississippi…OR

Do you think there will be a nice photo op featuring McCain and Clinton shaking hands and smiling??  I’m thinking back to just before the Democratic Convention when Bill explained the differences between Candidate A and Candidate B and then asked “who would people vote for” in a comment perceived by many as a dig at Obama.

Needless to say, I can’t wait to see what happens at the Global Initiative and to what extent the media will ignore the McCain appearance…and let’s see if Obama’s absence from the meeting pays off in any way…


(Hat-tip to Matthew Weaver who posted a short diary on this at No Quarter on Tuesday.)

For a full schedule of the Global Initiative meetings, see here.  A link to the attendees is on the sidebar if you are interested to see who’ll be there…)