Roubini: China's Renminbi Will Likely Overtake US Dollar As World Currency

New York Times:

THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar's status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.

Read the whole story: New York Times

Comments

[VOICEOFKNOWING]

Look at the tag or marking of anything, ANYTHING you have in your home.... Chances are it says made in China! Stop buying foreign products if you can... Buy U.S.!

[FairTalk]

This is why the FEC has become extinct!

[swift goat pet for truth]

Our biggest impediment is our system of crony capitalism.

[munki]

STOP criticizing other nations...

We need to fix our own first...

What is wrong is... OUR system got MESSED UP!

Financial meltdown... greed+abuse...
Paper CEOs/Executives... greed+abuse
Outsourcing - Cutting Expenses... India, China outflow of jobs...
Aren't you scare that you are talking to India regarding your financial matters?
Customer Services? They are in a different jurisdiction!!!

OK... My point... we do not have 1.3billion population to circulate money...
our 300million+ is small if we add 1.3 bio (China) + 1.0 bio (India)...

Let's not criticize others, but FIX our problems...
Because... people will remember for a LONG TIME in Asia than here...

[MuchMadness]

A whole lot of the stuff that we buy from China is stuff that, if push came to shove, we could do without.
If Americans just stopped buying so many consumer goods, what would China do about it? If our economy is going into the tank anyway, why let a communist government prosper from our problems?

[PhilipTaylor]

Your Theory:

Our problem is consumers buying goods from China!

Did Wall Street ship nearly our entire manufacturing Base to other countries with TAX CREDITS from a corrupt Government funded by Wall Street and other Lobby Interests?

Does America produce any manufactured goods anymore?

Did the Wall Street Banks Create $700 Trillion in Toxic Debts?

Did Bush+FED+Obama give $13,000,000,000,000 of America's Wealth to Wall Street as Bloomberg reports?

Did we engage in TWO Wars - Iraq costing us $3 Trillion so far?

I think the problem is MORE INTERNAL CORRUPTION Between Wall Street and Washington than simply consumers buying goods from the LOW PRICE LEADER!

[chedet]

ipods are made in china. Imagine how many they have sold out there.

[Carolab]

The bankers loved this private/public system whereby they all collected huge fees and goodies by lending to anyone and everyone including illegal aliens, and then palming off these loans to the government which then sucks down all the losses. This foolish banking system must be terminated. We can’t afford it because we are not a sovereign wealth nation. Our wealth is now debt and of course, paper money which is merely an IOU to the Federal Reserve’s private owners who happen to own the Bank of England, too. Namely, the Real Rulers whose names are kept out of the media.

Now is a perfect time for the people to demand change -- we need a new monetary system by which the government issues our currency, per the Constitution, in the form of credit to the real economy.

[3dtrix]

You are one smart gal...

[ThatOne4Me]

She sure is

[PhilipTaylor]

FED=Debt System owing to Banks=America # 1 Debtor Nation! = Built on Toxic Financial Tricks!

China=# 1 Creditor Nation build on Wealth Building Manufactur­ing+Servic­es!

[Carolab]

China Be Bank

More and more people are noticing that China has surpassed the US as ‘engine of world growth’. The US role for the last 30 years has been as consumer. China is a producer. The US can’t figure out the difference between ‘production’ and ‘consumption’ anymore than we understand the difference between ‘creditor’ and ‘debtor’. This fatal inability leads us to mistake our losses, imagining losses are increasing our wealth.

http://emsnews.wordpress.com/2009/05/12/china-be-bank/

[3dtrix]

This is it - right here! A miniature doctoral dissertation - just as much as punch and truth as a book-length analysis in five lines, covering psychology, anthropology, micro and macro economics, foreign policy and electoral politics. I salute you...

[ranchomerced]

China is cutting corporate taxes to lure investment; I wonder why they would do that?

[Patricia84]

Normally I find myself agreeing with Professor Roubini but this fantasy of China as a superpower the Peterson Institute and many have been babbling about for months now is beneath him. I know Pr. Roubini isn't one to buy into the hype but maybe, just maybe, he is becoming a victim of his success. All this doom talk, the US becoming a third world country and China rising as the world's hyperpower leaves a funny taste of deja vu. It's like it's the 80's all over again with Paul Kennedy leading the pack.

Since 1900, we've been served this sames predictions about the « supposed danger that the Asiatic peoples will overwhelm the white, or overrun the world ». But apparently, it didn't happen. It will even happen less now that we're no longer so much white, black, yellow, purple, red or green but increasingly just human beings. So, please stop scaring the little children ... wrongly. The only domination that we should fear doesn't come from some Asian country, it comes from a certain world elite at the heart of what Hardt and Negri calls the Empire.

[BigBagel]

Significant portions of the United States are indeed living in third world country conditions and conditions have worsened. The empire has been too busy overseas to worry about the crumbling homeland. Unfortunately President Obama is marching in lockstep with previous policies.

[Carolab]

Is that so?

"Pimco, the world’s biggest bond fund manager with about $756 billion in assets, expects global growth rates to slow from historical levels as household and business balance sheets shrink and place a smaller emphasis on borrowing to boost returns. The U.S. dollar may fall out of favor as the world’s reserve currency, leading to a greater ‘inflationary bias’ in the U.S., El-Erian wrote."

http://www.bloomberg.com/apps/news?pid=20601087&sid=abR5NmnjbwCQ&refer=home

When PIMCO speaks, and Mark Patterson of MaitlinPatterson speaks, I tend to listen.

[CaptainHowdy2]

Like keeping your head in the sand?

Here's a thought, just look around you. Can't you see the American system is seriously collapsing... and doing it rather rapidly.

[steelmill]

Truehuman,I'm sorry about your mother and I mean that ,but I think Angelzfantasy was thinking your mother might have been American

[TrueHuman]

America cannot compete anymore because China has intelligent kids same with Europe.

China and Europe and Japan don't want war and don't need it so thrive.

America does, but those days are coming to an end,

All they are good at anymore is burger building and flipping.

[Angelzfantasy4]

Just like you mom huh?

[TrueHuman]

My mother passed away in 1954 when I was 7.

Fcukoffamericanpunk

[steelmill]

Grow up truehuman

[CaptainHowdy2]

Yeah, God forbid he speak the truth. Doesn't he know that losers like you can't face the truth?

[TrekBear]

For the Chinese currency to have a place in the basket of currencies that in the IMF's special drawing rights, it will have to un-peg its currency so it will float like any major currency does. Until that happens, the dollar will remain the dominant reserve currency!

Specifically, because China's economy is export-driven, it requires a set (pegged) value to keep the economic momentum going. A fluctuating currency will require more direct conflict between competing currencies and that can lead to political, economic, and military instability.

The Chinese cannot effectively project power and won't be able to for 20-30 years. Once China develops and stabilizes a significant middle class, then it can devote resources to projecting its power.

[Carolab]

Just hold on to your dream.

[Carolab]

By Ambrose Evans-Pritchard in Doha
Last Updated: 6:16AM BST 14 May 2009

The US Treasury’s effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.

“The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.

The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP’s matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.

Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.

“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road,” he said.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5319359/Geithner-enriches-speculators-in-sham-bank-bail-outs.html

[PhilipTaylor]

Obama must stop this $Trillion give-away to the speculators!

Where are his promises to clean up Wall Street and Washington and to use "Bottom-Up" for the Middle-Class? I guess Wall Street's+Banking's gift of $66 Million to Obama bought them a BLOCK on Middle-Class relief (other than words) and $13,800,000,000,000 for Wall Street with this Geithner Program!

Obama has failed the BIGGEST TEST of his new job!

[planetfotheApes]

The Leftist Neocons and Democrats are working together to kill off the American middle class. The remaining wealth of the nation is being transferred to a small group of criminals. This was being done under Leftist Neoconservative GWB and now under Leftist Democrat BO.

You can't have real kings unless you have real serfs.

[yappnmutt]

the demise of the dollar can happen a lot quicker than nouriel lets on. the switch out (swap) has already begun in earnest. the usa will feel the effects in just a coupla years. in fact, the dxy(dollar index) may be as low as 60 by next year.

[ecbot]

Totally agree. Here's how I believe things will play out -
During the S&P's 39.5% rise over the past two months, the Dollar declined about 9%. While I believe we're just in a bear market rally, any real economic recovery will result in two things -
1. Treasuries - Bernanke has been buying up treasuries in order to keep interest rates low, hoping that will help the housing market to recover. As the economy improves, he will have to off-load at least some of them (if he can find buyers) which results in interest rates rising.
2. Any economic recovery will cause the Dollar to fall which leads to much higher costs for the vast amounts of imports we rely on.
These two things will cause the economy to sink right back down. These cycles will continue with the Dollar having lower highs and lower lows each time.

Trying to spend our way into recovery won't work and will just prolong and intensify the agony. Limited and targeted spending such as Obama is trying to do with energy independence (solar, wind, etc) is good as long as we don't outsource the manufacturing of it because this country can't survive on the service and government sectors.

[x004Ronin]

Sigh, people need to realize that being the World Currency isn't everything!
Luxemborg and Norway have higher GDPs per capita and higher quality of life than the U.S., and neither one of them owned the World's Reserve Currency.
I'm tired of these headlines being interpreted by people who don't understand economics. It's *not* a big deal if the dollar isn't the world's sole reserve currency.

[yappnmutt]

you are wrong. the seignorage privilege of the reserve currency status the usa enjoys underpins the present money manufacturing economy that is the usa. its a huge deal. ask the brits.

[OneTop]

It will be the first time in nearly a century that US will be exposed to foreign currency exchanges.

When you have to buy Oil in a currency other than the US dollar -- it will be a "big" deal.

[deepintheheartoftejas]

Norway has its enormous north sea oil reserves that greatly boost their GDP, and Luxembourg is one of the largest banking centers of the world, far larger in proportion to its economy than banking and investment in the US. The US seems to only lead the world in debt.

[swift goat pet for truth]

That is not all Norway has:

http://www.nytimes.com/2009/05/14/business/global/14frugal.html?_r=1&em

[Ping]

What the Euro-centric, America Hating, China Promoting, woo-woos fail to realize is that China is still a totalitarian state. They are a country of a billion mostly illiterate, uneducated people. They are not all happy with the Communists. It will be another 100 years before their society is advanced enough to host the reserve currency. It will probably require another People's revolution.

[MilwaukeeDan]

Woo-woos??? You're kidding, right? 100 years? Illiterate, you obviously haven't been to any of our top universities over the last 15 years. I give them 10 before they're running this place.

[TrueHuman]

I am a Euro and former American..­..........­....I was sick of a country that needs to wage war to survive economically.

I lived in the USA for 30 years and now 20 years back in europe.

The USA is becoming a fascist state.....­...started back in the 60's.

[apduncan1]

I'll be doing the same in 4 years ... after 30 years in the USA. I'm also sick of a country that needs to go to war to keep its economy going.

Eisenhower issued the warning but nobody listened.

It will be downhill from here on; this economic model is unsustainable.

[PerfectSense]

By paying for Europe's defense, the USA has subsidized Europe for 60+ years.
The European economic model depends on having someone else pay for their defense costs.

[TrueHuman]

Most Americans are 'legends in their own minds' and are clueless as to how far behind the modern world they are.

[steelmill]

Next time you Europeans get yourselves in another jam remember that,were would your economy be without the states

[notAMoron]

I really think that the next century will be an indian century. They are still experiencing rapid population growth, I think they have a healthier political and economic ecosystem that enables them to provide a world currency.

[swift goat pet for truth]

Well, India has a big social problem. The masses of poor and uneducated. Maybe in the next century, starting 2101.

[yappnmutt]

china was the largest, most important economy in the world for a coupla thousand years before the 1800s. in another generation they will be again. as it is they will lead the world out of this recession, not the usa.