The end of fiat currencies - continued

In Malaysia, the Sultanate of Kelantan, one of the states, has introduced “Islamic” currency: gold dinars containing 4.25 grams of gold, and the dirham containing 3 grams of pure silver. Civil servants may choose to receive up to 25% of their salaries in dinars and dirhams. The uptake has been enthusiastic and some local merchants and cab drivers are exhibiting a preference to being paid in gold and silver coins, although they are not yet “legal tender.” (The Business Times of Singapore, September 6, 2010)

China: The Christian peril

There are about 75 million Christians in China today, up from 2.5 million thirty years ago and about the same number as members of the Chinese Communist Party. At the present rate of growth, Christians will equal over half the Chinese population in under 20 years. (special section in Straits Times, September 5, 2010)

Chinese reserves subterfuge

The composition of Chinese reserves is a state secret, so it was of considerable interest when China released its $2.45 trillion reserve composition last week. The official China Securities Journal “revealed” the composition as follows:
1. 65% US dollars
2. 26% euros
3. 5% pounds
4. 3% yen

China imports from the following countries for 2009:

1. United States $298 billions
2. Japan $229
3. Hong Kong $175
4. South Korea $157
5. Taiwan $106
6. Germany $106

Chinese reported statistics are often false, and it is reasonable to assume that the dollar holdings are overstated. (If the numbers were accurate, why would they release them?) The point China is trying to make is probably that their dollar reserves are consistent with recent years as a percentage of the total and that therefore nothing has changed. But it is widely known that China has accelerated its buying of Japanese yen and Korean bonds. It is also a buyer of gold. The Chinese are no doubt trying to support the dollar as they exit their positions.

A vice governor of the People’s Bank of China separately expressed concern about the depreciation of the country’s reserve currencies and its concentration in dollars. It has also been reported that China has been absent from recent treasury auctions, with the Fed assuming the role of biggest buyer. It looks like China is bringing its reserves more in line with its imports. This risk to the dollar is that China will cease to offset its US exports with purchases of US bonds. (source: Report in Reuters printed in The Business Times of Singapore, September 4-5, 2010)

How to succeed in business without really trying

The collapse of Kabul Bank, due largely to doling out $100’s of millions in loans that were never repaid to the persons and families of President Karzai and Vice President Fahim, many of whom have left the country, illustrates W.C. Fields’ three rules for succeeding in business:

1. Find out what they got;
2. Git it; and,
3. Git.

(http://www.nytimes.com/2010/09/03/world/asia/03kabul.html )

Divine Intervention?

Under pressure from the American Gathering of Holocaust Survivors, the Mormon Church has just agreed to refrain from converting posthumously those killed in the Holocaust. (New York Times: http://www.nytimes.com/2010/09/02/us/02brfs-MORMONSHOLOC_BRF.html)

The Rastafarians, meanwhile, have made no such demands and are relying on the spirit of Emperor Haile Selassie to help their dead keep the faith. On the other hand, the liberal United Church of Christ believes that their dear departed should be allowed to choose their own religion, arguing that they have more information.

Are Americans abroad becoming financial pariahs?

The Business Times of Singapore reported on Sept. 2 that that US tax investigators have set up an office in Hong Kong and are in Singapore to set up one here “as they tighten the noose around US citizens and Asian green card holders. . . as part of increasing scrutiny of Asia-based financial institutions and individuals for tax evasion.” The article added that many financial institutions are dealing with this by simply refusing to deal with American citizens.

Another reason to worry about the US$

The Wall Street Journal says: “But China is shifting some of its $2.4 trillion in reserves into Japanese yen and Korean won, which in part explains the recent runup in those currencies.”