[MrBill]

It would be a very healthy development for the Asians to improve the depth and performance of their very under-developed bond markets. They are way behind Europe and the USA.

Secondly, disintermediation means that some firms are by-passing Wall Street and The City of London, and borrowing directly from sovereign wealth funds (SWF) for investment in EEMEA. In other words less recycling of export earnings back into western capital markets; faster growth in EEMEA; and lower investment banking income in the traditional money centers.

[seahorse2]

Chinese international businesses not quoting prices in dollar on non-U.S. transactions.

$this->bbcode_second_pass_quote('', 'F')riday, March 28, 2008
Chinese Avoiding Dollar as Invoicing Currency

Listen to this article Once sign of the move away from the dollar as reserve currency that we've noted before is the shift away from its use as an invoicing currency in commercial transactions. The Financial Times provides another example, namely, that Chinese exporters are avoiding the dollar:

Rising numbers of Chinese exporters are shunning the US dollar or devising ways to offset the impact of the falling currency as they confront rising labour and raw material costs at home.

According to Alibaba.com, the online company that matches Chinese suppliers with international buyers, the vast majority of their almost 700,000 Chinese suppliers no longer use dollars to settle non-US transactions in order to minimise foreign exchange risk.

"They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi," David Wei, chief executive, told the Financial Times. Moreover, he added, prices quoted in dollars were now often valid for just seven days compared with the 30-60 days common previously.

The dollar has long been the currency of choice for Chinese and other exporters around the world. However, the impact of its recent weakening has led exporters to begin questioning its place as the de facto world currency.

The renminbi, which western governments have long alleged is undervalued, thus giving Chinese exporters an unfair advantage, has appreciated 6.7 per cent against the US dollar in the past six months. Economists expect it to rise 10-15 per cent against the dollar in 2008 and it is expected to rise a further 10 per cent in value this year, according to Qing Wang, economist at Morgan Stanley China. He warned that pace could quicken to more than 15 per cent should inflation in China, already running at a high level, continue to climb.

Quanzhou Leething Garment & Knitting, a Chinese men's underwear factory, said it had started encouraging clients to pay in euros instead of dollars in November. While the Chinese currency has appreciated against its US counterpart in recent months, it has moved little against the euro. Orders placed in US dollars are now subject to having their prices adjusted according to the latest exchange rate just prior to shipping, said a company spokeswoman.

Dongguan Wang Cai Garment, based in the southern Chinese province of Guangdong, exports mainly to Europe and quotes prices in US dollars but this year began updating their quotations every week.

Other companies have taken more unusual approaches, such as setting their own exchange rates and, therefore, in effect raising prices.

Xiao Zheng, chairman ofDongguan City Shima Toys in southern China, said its price quotations were valid for three months but were calculated based on an exchange rate of Rmb6.6 to the dollar.

With the official exchange rate at Rmb7.01 to the dollar yesterday, this in effect raised prices 5.8 per cent.

"We are thinking about renewing our quotations every other month and we are also going to offer quotations in euros very soon," Mr Xiao said.

Bruce Rockowitz, president of the trading arm of global supply chain company Li & Fung, said many Chinese companies still favoured US dollars because "everybody is used to using [that currency]. But it all comes out in the price."

William Fung, managing director of Li & Fung said international buyers would have to accept higher export prices from China, especially for goods such as toys that are largely made only in the country.

"The final result is they will buy at a higher price, but at lower volumes," he said. Mr Fung added that retailers are mitigating the effects of higher costs by locking in proprietary, or exclusive brands, which in turn allows them to charge higher prices to consumers.

Posted by Yves Smith at 8:33 AM

[MrBill]

A friend of mine imports clothing directly from China. She has confirmed that all of her suppliers now request payment in euros instead of US dollars.

[cube]

Silly question?

Does the mafia still accept payment in US dollars? You know what I'm getting at right.....the day the mafia quotes prices in Euros is when we know for sure the US dollar is doomed.

mafia menu list
1) shake down 5,000 Euros
2) break a leg 15,000 Euros
3) take someone out 50,000 Euros

[Petrodollar]

$this->bbcode_second_pass_quote('', 'D')oes the mafia still accept payment in US dollars? You know what I'm getting at right.....the day the mafia quotes prices in Euros is when we know for sure the US dollar is doomed.

[threadbear]

$this->bbcode_second_pass_quote('Petrodollar', '')$this->bbcode_second_pass_quote('', 'D')oes the mafia still accept payment in US dollars? You know what I'm getting at right.....the day the mafia quotes prices in Euros is when we know for sure the US dollar is doomed.

[seahorse]

Ouch! I can't help but think this is going to hurt!


Merrill Lynch report sees US is giving Gulf Coast the "go ahead" to unpeg their currencies from the dollar.

$this->bbcode_second_pass_quote('', 'M')errill sees U.S. giving nod for Gulf FX change
Sun May 25, 2008 9:27am EDT

DUBAI (Reuters) - Merrill Lynch & Co said the United States has effectively given Gulf Arab oil producers the go ahead for making changes to their dollar-pegged foreign exchange policies, by recognizing inflation as a problem.

In a report entitled "U.S. Green Light for the GCC", the U.S. investment bank said the United Arab Emirates and Qatar will probably move to a currency basket in the next few months, with their respective currencies appreciating 5 percent before the end of the year.

Saudi Arabia is unlikely to follow until late next year, Merrill said in the report received on Sunday.

Citing a U.S. Treasury report to Congress that for the first time mentioned currency and inflation issues in the six-member Gulf Cooperation Council, Merrill said the United States government had become more confident about the outlook for the dollar and therefore did not necessarily need Gulf support for its currency.

"We believe the inclusion effectively gives the GCC countries the green light for change," the bank said.

Investors piled into Gulf currencies from September on speculation some of the states in the world's biggest oil-exporting region would sever their links to a dollar that was tumbling to record lows against the euro.

While there may some domestic political constraints for currency change, ultimately a "number of GCC countries will be forced by the market to let their currencies strengthen," Merrill said.

Inflation in Saudi Arabia, the world's biggest oil exporter, rose to 10.5 percent in April, its highest in at least 27 years.

"At this stage, we believe that there is little benefit for the authorities to maintain normal undervaluation in the face of rising costs to the pegged exchange rate regime," the investment bank said.

(Reporting by John Irish; Editing by James Cordahi)

[AlterEgo]

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

Uh, what comes after quintillion?

$this->bbcode_second_pass_quote('', '"')The largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for the amount of 100 quintillion pengo (100,000,000,000,000,000,000, or 1020)."

[MrBill]

"If (banks) get relief (from the appeals court), it's activist judges trying to give them what they could not get legislatively,"

$this->bbcode_second_pass_quote('', 'T')he mortgage banking industry already faces pressure from state and federal regulators, who have accused banks of lowering underwriting standards and forcing some borrowers, through fraud, into costly adjustable loans that the banks later bundled and sold as high-interest investment vehicles.

The loans have caused serious instability in the financial sector, as mortgage interest rates adjusted upward and borrowers began defaulting at a significant rate starting in 2007, drawing lawsuits from investors and homeowners.

Federal appeals courts disagree over whether class-wide rescission under the Truth in Lending Act is available, said attorney Christine Scheuneman, whose firm represented Chevy Chase at the district court.

"If class treatment is found to be available for rescission ..., given the current crisis not predicted in 2005, the result all over the country could be massive class suits," said Scheuneman, a partner at Pillsbury Winthrop Shaw Pittman LLP.

The Truth in Lending Act, a 1968 federal law designed to protect consumers against lending fraud by requiring clear disclosure of loan terms and costs, lets consumers seek rescission, or termination, of a loan and the return of all interest and fees when a lender is found in violation