US Default Will Kill Many Here?

[Yewheng]

Gold price rise not just because of the weakness in USD. It also rises because of buying demand as a hedge to inflation or simply as a safe haven (it is not fiat money like other global currencies around the world) when economy turns bad.

 

So if USD collapse, gold price will shoot up simply because of people moving their money to a safer haven.

 

But if USD is backed by gold when it collapses, than it will be too expensive to regrowth USA because of high gold price ( in terms of other currencies ), gold price will start to drop after that ?

[Without_a_car]

I don't think USD will decouple as the world reserve currency...at least not now.

 

Simply because Euro is just as crap and RMB is not ready. And I don't think the China gov. will want RMB to be the world reserve currency just yet because it will drive up RMB value and make their export uncompetitive.

 

So the final option that I think will happen is to go back to prior 1973...have the USD backed by gold. US would have avoided today's problem if they didn't unpeg themselves from gold in 1973.

 

Nixion administration dropped the Bretton Woods gold standard because the US was printing too much money to finance the Vietnam War. US could not honour all holder of USD, when they demand to redeem their USD for gold from the US treasury.

 

Going back to the gold standard will result in massive deflation.

[Plim72]

Than how will people going to restart business in US if gold price rise until no tomorrow when US is backed by gold if it happens in future?

And other countries who want to regrowth US economy will also be super difficult to regrowth due to super high gold price.

So if let's say USD collapse and USD were to return to be back by gold.. that means gold price will start to drop?

 

So am I right to say gold price will rise until collapsed of USD.. after that it will start to drop in value if USD is backed by gold by than.. ? (in terms of other currencies )

 

do you know how much gold usa is holding? they are no 1 in that aspect...their last line of defence...usd collapse? not so fast..

[Icedbs]

Nixion administration dropped the Bretton Woods gold standard because the US was printing too much money to finance the Vietnam War. US could not honour all holder of USD, when they demand to redeem their USD for gold from the US treasury.

 

Going back to the gold standard will result in massive deflation.

 

No choice.....

 

If USD collapse, they are going to face a very painful period anyway.

 

There is already hints among the big guns about Bretton Woods II.

[Without_a_car]

do you know how much gold usa is holding? they are no 1 in that aspect...their last line of defence...usd collapse? not so fast..

 

For the gold standard to work, US first have to default, repudiate all it debt, and collapse world trade.

[Yewheng]

do you know how much gold usa is holding? they are no 1 in that aspect...their last line of defence...usd collapse? not so fast..

 

I have no idea how much gold USA holding.. [laugh] ( I do not know everything )

[Without_a_car]

I have no idea how much gold USA holding.. [laugh] ( I do not know everything )

 

9000 ton. PRC 1000 ton.

[Yewheng]

9000 ton. PRC 1000 ton.

 

Than do you know Singapore hold how much gold?

[Without_a_car]

Than do you know Singapore hold how much gold?

 

you guess loh...

[Yewheng]

you guess loh...

 

Should be very little.. I guess 100ton ?

[Without_a_car]

Should be very little.. I guess 100ton ?

 

go wiki you will know

[Yewheng]

go wiki you will know

 

K thanks.. found already

 

http://en.wikipedia.org/wiki/Gold_reserve

 

127.5 tons. [rolleyes]

 

So if let's say USD collapse and back to gold standard, perhaps after that gold price will drop.

[Sabbie]

Not the property index la.....that is a bloody lagging indicator.

 

What I mean is the real estate indexes which shows the overall performance of the stock prices of the real estate companies in SGX. That one will give you a lead indication on how the property prices are going to be in time to come. Mr.Market always sense it first before the people on the street.

Oh then you probably right i just long sg index today hope I can make 50 bucks to cover my new shaver today

[Yewheng]

This is interesting..

 

http://www.businessinsider.com/wsj-chinese...ou-think-2011-7

 

Never fear, say the banks and some analysts. They point to the extraordinarily low loan-to-deposit ratios of Chinese banks, averaging around 65%, as evidence that these banks have plenty of cash to cushion themselves against any future loan losses they might suffer. Everything is under control.

 

This argument is misleading, and offers a false sense of comfort.

 

First of all, the loan-to-deposit ratio is a measure of liquidity, not of solvency. A high ratio suggests that a bank may be relying too much on volatile short-term borrowing rather than stable long-term customers to fund its lending. It risks getting caught without enough cash reserves on hand to satisfy its creditors, forcing it to sell other assets at a loss, which could eventually cause the bank to fail. Having plenty of cash reserves on the left (asset) side of a bank’s balance sheet can help prevent such a crisis. But it has nothing to do with a bank’s capacity to absorb losses from bad loans without going bankrupt.

 

Indeed, estimates leaked by Chinese bank regulators suggest that 23% of loans to local government-sponsored infrastructure projects are an outright loss, with another 50% at risk of cash default. If Chinese banks made appropriate provision for these losses alone, it would reverse the record earnings they have been reporting and eat into their capital base. Apply these estimates across other risky loan categories, such as real-estate development and business lending diverted to speculation in stocks or property, and their capital is in real danger of being wiped out. The loan-to-deposit ratio doesn’t matter; they can have captive deposits and lots of cash, and still be bankrupt if they threw it all away on bad loans.

 

People who look to low loan-to-deposit ratios as proof that all is well with Chinese banks need to think again. The statistic tells you nothing about solvency and precious little about real liquidity. If anything, it’s a symptom of the deep imbalances that lie at the heart of China’s banking system.

 

Edited August 3, 2011 by Yewheng

[Zze121]

All r blood sucker, matter of time only, till there is nothing to suck and by then all the problem will surface. Then a hero come, all problem fix, again the sucker come back conitune sucking. There is no or very little Control.

 

 

[Yewheng]

what will china shift to?

 

http://www.npr.org/templates/transcript/tr...oryId=138754315

 

LIM: For the past three years, China has tried to diversify its foreign exchange holdings away from U.S. treasuries. Some, like Huang Weiping, wonder if that asset diversification should now be sped up.

Edited August 3, 2011 by Yewheng

[Gendut]

Why would it be a problem for Apple and Microsoft ? Their greatest assets are talents and U.S. continues to have a huge talent pool for them. It will more costly for them to operate overseas if USD crash. They will continue to export high quality and popular products and services, and people will continue to buy them giving them higher USD profits.

 

Even if they don't produce goods, their IP and patents continues to generate revenue for them.

 

In this respect, Singapore is in a much more volatile position because we are so dependent on foreign talents and investments. How much IP do we own ? How much of our own talents have we developed ? Do we have strong branding and technology ?

 

Not only more volatile, its MOST volatile.

 

We only have 127 tonnes of gold which is only 1.5% of our reserves. We really are holding so much cash, probably USD. s--t this is a time bomb. The only problem is the vultures do not know how much USD and Euro MAS is holding. Otherwise an attack on the Sing$ is a big possibility.

 

Added to that is the insistence that we be a very open economy. When there is good times, we do very well. In a bad global economic climate, we will suffer first and suffer the worst. The 2008 recession reflected that very clearly. I'm not sure that we will not do a currency control ala Mahathir-style eventually.

 

I'm contemplating emptying out my CPF before s--t hits the fan.

 

Also the only way out for US is a war that can recoup their previous glory. But for the time being I do not see any cause that US may use to justify war. But knowing how creative Americans are, I'm sure they will think of something.

[Yewheng]

Not only more volatile, its MOST volatile.

 

We only have 127 tonnes of gold which is only 1.5% of our reserves. We really are holding so much cash, probably USD. s--t this is a time bomb. The only problem is the vultures do not know how much USD and Euro MAS is holding. Otherwise an attack on the Sing$ is a big possibility.

 

Added to that is the insistence that we be a very open economy. When there is good times, we do very well. In a bad global economic climate, we will suffer first and suffer the worst. The 2008 recession reflected that very clearly. I'm not sure that we will not do a currency control ala Mahathir-style eventually.

 

I'm contemplating emptying out my CPF before s--t hits the fan.

 

Also the only way out for US is a war that can recoup their previous glory. But for the time being I do not see any cause that US may use to justify war. But knowing how creative Americans are, I'm sure they will think of something.

 

I don't think Singapore are holding as much USD as before already.. Just look at last week or the week before (should be), where MAS announce record loss due to currency exchange.. I think much of currency already diversify to emerging countries.

Edited August 3, 2011 by Yewheng