Brazil, China and the New Asian Currency

Basically, the International Monetary System that we have had for a few decades that revolves around the US dollar has finally reached the end of the line, and the current international monetary crisis was the last straw necessary for the world to realize that it needs a new redesigned international monetary system that would be compatible with the new realities of the 21st Century.

It has been over ten years now, since December of 1998, that I have been advocating and writing many articles saying that Brazil should adopt a new mega currency. First, I suggested in my articles the euro as Brazil’s new currency. But about four years ago I changed my mind regarding Brazil adopting the euro as its new currency, because the entire ball game has changed from the Brazilian perspective in the last few years, and ASAP, Brazil should adopt instead the “New Asian Currency”; a new currency similar to the euro in a major effort to adapt to the new global economic realities of today and the coming decades.

In March 2007 “Brazzil” magazine published my article: Here Is Why Brazil Should Adopt the New Asian Currency. Quoting from that article: “Here we are at a very exciting time – a turning point in world history – and the global economy is changing as never seen before, at the speed of light; and innovation and major advances in technology are helping in rearranging the entire global economy.

…The global economy is slowly splitting the countries around the world into four major powerful blocks of countries – Europe, United States, Middle East, and Asia – and each country around the world will have to evaluate its economic self-interests regarding its economic future and will have to decide in the near future which group is the best for your particular country to establish very close economic ties with.

This article shows why, when we take into consideration the direction that the Brazilian economy should take today in relation to its economic prospects for the future, it becomes crystal clear that the best group for Brazil to integrate its economy with is the Asian group under the leadership of China.

…The global economy is in the process of being rearranged, and these changes are the result of globalization combined with the development of state-of-the-art new technologies such as a world that is connected by fiber optics, the constant increases in computer power, a growing global Internet system that is connecting everybody, and the astronomical developments in global communications that have been making it easier to communicate and send information via satellites, Internet, email or telephony.”

In that article I described in detail the reasons why Brazil should adopt the new Asian currency and in 2009, based on the comments of many Chinese officials, China is finally realizing that it is time to reorganize the international monetary system and create a new system that is in sync with the new international monetary order for the new Millennium.

Common sense tells me that by 2010 the world is finally ready to move forward and the timing is right to finally adopt a new international monetary system designed to meet the needs of the 21st Century when we take into consideration all the major international financial events that transpired in 2008. What the world has witnessed in 2008 was not only the demise of the free market capitalist system in the United States, but for all practical purposes we also have witnessed the end of the line for an international monetary system based on the US dollar.

There are many reasons for the decline of the value of the US dollar

First, we have reached the end of the line for the US dollar currency supremacy, and that has to do among other things with the economic and geopolitical changes that we have had in the world since 1945.

The US dollar served its purpose since the end of WW II and became the major foreign exchange reserve currency for the system that emerged after the war. The days of the US dollar playing that special role that created an international monetary system that revolved around the US dollar as its main currency has reached the end of the line, since today that system is very sick and it is dying a slow death.

Very soon the world will need to put that patient out of its misery, and after we go through the major collapse of the US dollar creating the biggest international monetary crisis the world have ever seen – a massive US dollar global meltdown – from the ashes of the old system will emerge the new international monetary system that will be more useful for the first century of the new millennium.

The US government and Americans in general lost sight of the role that the US dollar has been playing in the world international monetary system since 1945 when the US dollar started becoming an important part of the foreign exchange reserves of many countries.

When a currency achieves that status of a major reserve currency the world expects at a minimum that the currency would be managed in a way to protect its intrinsic value over time. That is not what has been happening to the US dollar for a long time.

The value of the 1947 US$ 1.00 has declined consistently since the US dollar became the major foreign exchange reserve currency, and in April 2009 that same US$ 1.00 dollar is worth only $ .08 cents; that is how much of the value of the US dollar has evaporated because of inflation. During the Reagan and Clinton administrations, the method of calculating rising prices was altered in ways that lowered the official US inflation rate, and if we adjust the current value of the 1947 US$ 1.00 to be consistent with the pre-1983 method of calculating inflation, then the current value of that same US$ 1.00 dollar would be worth about $ .01 cent.

Since the US dollar became the center of the international monetary system starting with the Marshall Plan in 1947 – an unusual place for the currency of any one country to stay for a long period of time – the world has changed in drastic ways during all these decades resulting in a system that is completely broken today and ready to be replaced by a new system that represents the new global circumstances that have evolved since that time.

Today we have too many US dollars flying around the world; an over supply of US dollars that can be considered more as a massive bubble than a currency that can be justified by the prospects of the economic performance of the United States in the coming years. (Today over 70 percent of the US dollar currency ever created is flying around the world outside the circle of influence of the US Federal Reserve and the US government.)

Today, the United States is no longer master even of its own currency, since the accumulation of US dollars as foreign currency reserves by other countries around the world has placed the future economic and financial policy options of the United States in real jeopardy.

Global currency reserves

Currency composition of official foreign exchange reserves

Currency             1999     2008

US dollar             71 %     64 %

Euro                     18 %     27 %

Pound Sterling       3 %       4 %

Japanese Yen          6 %      3 %

Other                       2 %      2 %

Source: IMF

In July 1999 “The Brasilians” published an article by Ricardo C. Amaral – How can currency stability be achieved for the Brazilian economy?

Quoting from that article: “…Most people should not be surprised if in ten years the breakdown of official reserves of the countries around the world will be as follows:

U.S. Dollar = 35 percent of market

Euro Group = 35 percent of market

New Asian Group = 25 percent of market

Other = 5 percent of market”

Regarding my prediction of 10 years ago, I am surprised that England and some Scandinavian countries still have not adopted the euro as its currency as of 2009.

I am also surprised that in 2009 China has not created a major Asian currency as yet; and made a reality a new Asian currency similar to the euro.

If you have been reading many of my articles since 1999 regarding the subject of currency, then you know that I have been saying that the world in a few years would have 4 or 5 major global currencies such as the US dollar, the euro, the new Asian currency (equivalent to the euro), a Middle East currency (Gulf currency), and even some other currency that has not shown on the radar as yet.

Americans still think in terms of old economic structures of last century, and they are having a hard time accepting the new world order of the first century of the new millennium.

We are moving from a system dominated by one world superpower and its dominant currency, the US dollar, to a world of 4 or 5 major block of countries and its currencies – these are the members of the new world economic order – the United States Union, the European Union, the Asian Union, the Arab Middle East Union (Gulf currency), maybe the new Russian Union block, or it is possible that eventually we have even some other economic Union block that we can’t see at this time.

Here are my recommendations for a new international monetary system

spacer.gif1) Regarding China

It is time for China to create immediately and implement a plan for the creation of a new Asian currency similar to the euro.

In my opinion, it would be a mistake for China to try to establish the yuan as the new Asian currency to compete with the US dollar and the euro as one of the main global reserve currencies.

A new Asian currency would be a better choice in the long run not only for China, but also for the other countries that decide to adopt the new Asian currency including Japan and Brazil.

The US dollar has had a unique run as a global foreign reserve currency in the last 60 years, because of geopolitical developments such as WW II, a communist world that was isolated from global financial markets and so on.

An international monetary system based on the US dollar has had its advantages over the years for the US, but eventually it has placed the United States in a situation that the US government is no longer a master of its own destiny, since a few select countries are holding a massive amount of US government debt. A system like that is unsustainable in the long run and eventually becomes a major liability, as is the case today of the United States and its creditors.

I suggest that Brazil adopt the new Asian currency right from its inception since that strategy would help integrate the Brazilian and the Chinese economies in the years to come.

Here is why a new Asian currency similar to the euro is a better choice than the yuan for the new international monetary system.

“The Brasilians,” published in November 1999 my article “How can currency stability be achieved for the Brazilian economy?” Quoting from that article I said:

“Why the euro will provide macroeconomic stability for its members?

The members of the Executive Board of the European Central Bank (ECB) are not there to represent their countries of origin. They are there to provide stability to the euro and they look at Euroland as a whole when making their policy. The euro is a monetary arrangement, and its monetary policy will be adopted independent from political control from its members.

This way of operating keeps the politicians out of the decision process and reduces the risk of them playing their political games with the country’s monetary and currency systems. I am a firm believer that if the economic policies adopted by the (ECB) are good enough for such a diversified group of countries as France, Belgium, Germany, Netherlands, and Italy, then such policies also will be good for Brazil. The Brazilian economy will be better off under the euro system than under the fragile and weak Brazilian currency.”

That same type of logic also applies today regarding China. It will be better for China and the other countries that decide to adopt this new Asian currency; to create this new Asian currency and have a similar arrangement as the euro in Euroland. I am sure that this type of monetary arrangement will be beneficial in the long run even to the economies of countries such as Japan when Japan decides to adopt this new Asian currency.

I don’t understand why China is giving any consideration regarding the International Monetary Fund’s Special Drawing Right (SDR) and even suggesting that the IMF turn the SDR’s into a widely traded new reserve currency. That does not make sense to me, since for all practical purposes that system is still just a basket of few currencies representing the world of yesterday, and the US dollar is still at the center of that arrangement.

2) Regarding Russia

A few years ago I thought Russia might create the new Russian Union block based on the countries that comprised the old Soviet Union.

Today I believe that there is a better economic solution for Russia regarding the future of its economy, I came to that conclusion based on the actual economic realities of the last few years. Instead of keeping the Russian Ruble or trying to create a new currency for a new Russian Union block, the best option for Russia today is to adopt immediately the euro as its new currency.

By adopting the euro as it’s new currency that would give long-term currency stability for Russia, and at the same time it would open the door to new German foreign investments in Russia, and in the process it would speed up Russia’s industrial development with German outstanding technological know-how.

Russia is already a very important customer for German goods and services, and when Russia adopts the euro then a major obstacle, the currency risk, is removed providing a new fertile ground where investment and trading can flourish between the European Union and Russia. That would also help to bring more financial stability to the Russian stock and financial market.

It is a mistake to base the future of the Russian economy on the production of oil and gas and other commodities; by adopting the euro ASAP that would eliminate the currency risk and would open the door to European long-term investments in Russia and that process would be mutually beneficial for both parties.

As I mentioned above, each country around the world will have to evaluate its economic self-interests regarding its economic future, and they will have to decide in the near future which mega currency to adopt – in my opinion, in the case of Russia the immediate adoption of the euro make sense to me.

The Russian government also needs to disconnect itself from any ties that they have today with the Russian mafia, and honor private property rights and the rule of law; otherwise, foreigners will not make new investments in that country.

3) Regarding the Gulf Currency

The new currency will initially be limited to members of the Gulf Cooperation Council, which includes some of the wealthiest nations on earth. The GCC Gulf comprises Saudi Arabia – the world’s most important source of oil, as well as Bahrain, Kuwait, Oman, Qatar, and United Arab Emirates.

The process of creating the new Gulf single currency is moving along, and in May 2009 one more step was taken when the members of this new currency group decided to locate the new regional central bank in Saudi Arabia.

4) Regarding the United States

The decline in the purchasing power of the US dollar over the years reminds me of similar situations in Brazil; I remember the Brazilian currency being changed many times over the years from “Cruzeiro”, to “New Cruzeiro”, then from “Cruzado”, to “New Cruzado”, and finally the “Real’.

Today there are so many US dollars flying around the world that it might be a good idea for the United States government to replace its current completely devalued US dollar with the “New US Dollar” – and the conversion rate to be used to convert the old US dollar to the new currency the “New US dollar” should be for each old $ 100 US dollar would be converted into $ 1 New US dollar. – Just like they usually do in many countries when their currency starts becoming worthless when it loses most of its original value.

Here is a simple example to show the declining value of the US dollar: A house that was bought in a good area such as in Ridgewood, New Jersey in 1947 for about US$ 4,000 dollars, by 1972 that same house was in the market for $ 42,000 – and that same old house is worth today in the range of US$ 400,000 to US$ 500,000. When we take other economic information regarding the United States economy we come to a similar conclusion – The exchange rate of $100 “Old US dollars” to $1 “New US Dollar” would be just about right.

The adoption of a “New US Dollar” as I mentioned above would give, at least for a while, the illusion that something is being done about the value of the US dollar.

5) Regarding Brazil

Brazil has never been in such great financial shape as in 2009 – not only most of Brazil’s foreign debt has been paid, but Brazil has about $ 200 billion dollars in foreign exchange reserves on hand, and for the first time in its history, in 2008 Brazil has become a credit nation – Brazil has gone from a borrowing country to a lending and investing country.

In that article published in July 1999 on “The Brasilians” – How can currency stability be achieved for the Brazilian economy? – I also said:

“Today the amount of hot money which the international speculators have under their management is becoming mind boggling. The amount of daily currency transactions in the global markets is over $ 1.5 trillion dollars.

Countries are losing their capability of defending their weak currencies from the foreign attack of these international money speculators.

It is getting easier and easier for these international speculators to destroy the entire economy of countries such as Russia, Indonesia, Malaysia, Thailand, Korea, and Brazil, all they have to do is destroy their currency and these economies have a complete collapse. It is a form of modern economic warfare. These countries don’t have the economic reserves necessary to defend their currencies from foreign speculative attacks.”

Since July 1999 when I wrote about the hot money of international speculators that is always flying around the world looking for a short-term opportunities to make a quick buck, many countries such as Brazil adopted very conservative economic policies to build a sound economy; they got their government finances under control and they paid most of their foreign debt, and were able to save a lot of money in foreign currency reserves to be able to protect the value of its currency in time of international financial crisis.

Even though the Brazilian government had been managing the Brazilian economy in a conservative and sound way and the Brazilian economy was in very good shape, in May 18, 2008 the Bovespa stock market index in Brazil closed at 73,439.00 level, and only five months later in October 27, 2008 Bovespa closed at 29,435.00; a decline in that index of 60 percent. A similar situation happened in stock markets from China to Russia and so on…these stock markets lost a massive amount of value almost overnight mostly because of the panic in the US financial markets, and that is another solid example of how the “hot money” flowing around the world can devastate the stock market, the financial system, and the economy of these countries in a very short period of time.

To reduce the risk of this kind of devastating event to repeating in the future in Brazil, the Brazilian government should adopt a new set of rules with heavy penalties to keep the global hot money away from the Brazilian economy. The tax on these foreign investments should be designed in such way as to discourage short-term gains with the heavy exit tax of around 80 percent for moneys leaving the country up to one year from date of investment; after two years the exit tax should be around 50 percent, after three years 25 percent, and so on…and the system should be designed to encourage mostly long-term foreign investment of at least 5 years.

The Brazilian government should find a way and develop a system to penalize with very heavy taxes the foreign “hot money.” They should build a system to discourage the international “hot money” from investing in Brazil.

Brazil has to build a system to avoid in the future the “hot money” that rushed in and out of emerging markets during 2008 and caused a market crash in these countries – hot money that came from irresponsible banks, hedge funds, insurance companies and many other types of speculative capital that flows regularly between financial markets in search of the highest short-term interest rates possible, and other short-term investment opportunities.

Finance dictionary gives the definition of the kind of money that I want the Brazilian government to keep away from Brazil with this proposal as follows:

In international finance “hot money” is extremely volatile short-term capital that moves on a short notice to any country providing better returns. Powerful speculators can quickly pump massive sums into a high-yield economy, giving it an artificial aura of success and propriety. But, on a mere suspicion of a downturn or other negative factor, they can (and do) withdraw it almost overnight causing a near collapse of the country’s financial structure.

If you read the articles that I wrote about Brazil and China, and about Brazil adopting the new Asian currency, then you will understand why the future of the Brazilian economy in this new international monetary order is more in tune with the new Asian currency than to any other economic block as discussed in this article.

Conclusion

In this article I made suggestions regarding a new monetary arrangement that will serve as the basis for the new international monetary system; it will be useful at least for the next 50 years – I have no idea what the world is going to look like in 50 years, maybe there are things that we can’t see right now that would rearrange the entire system at one point during the next 50 years.

It is hard to predict the future since there are so many things that could go wrong along the way in the next 50 years that can change our entire future such as major epidemics, major natural catastrophes, major technological breakthroughs, WW III with countries dropping nuclear bombs on each other, and so on…

But, one thing I know for sure is the idea of one or two major superpowers ruling the world is an idea that is dying very fast as we watch the United States economic and political power declining at the speed of light, and in turn a new world economic order is getting ready to replace it.

In the near future we will have for the first time a new world economic order comprised of major blocks of countries sharing the global economic and financial power. For all practical purposes, the United States is no longer that sole surviving economic superpower, since superpowers don’t depend on other countries to keep the superpower financially afloat.

Basically, the International Monetary System that we have had for a few decades that revolves around the US dollar has finally reached the end of the line, and the current international monetary crisis was the last straw necessary for the world to realize that they need a new redesigned international monetary system that would be compatible with the new realities of the 21st Century.

An international monetary system based on the “US dollar” was a solution for the world of yesterday, a world long gone, a world that represents the past, the world of the 20th Century.

The new world order of the 21st Century needs urgently a new international monetary system designed to support the international monetary and economic needs of the 21st Century.

If you want to have a better understanding of the logic behind my proposal about Brazil adopting the new Asian currency, and want to grasp the essence of what I am trying to say then I suggest that you read also the following articles:

1) Brazzil Magazine – March 02, 2007

“Here Is Why Brazil Should Adopt the New Asian Currency.”

Written by Ricardo C. Amaral

http://www.brazzil.com/component/content/article/177-march-2007/9821.html

2) Brazzil Magazine – October 2007

“The Smartest Thing China Could Do Right Now: Invest US$ 200 Billion in Brazil” Written by Ricardo C. Amaral

…The final conclusion is: It’s imperative that China move forward in an aggressive fashion and implement with Brazil the plan described in this four-part series of articles. And China should look at it as a matter of national security and future survival.

Monday, 01 October 2007 – Part 1 of 4

http://www.brazzil.com/component/content/article/184-october-2007/9977.html

Friday, 05 October 2007 – Part 2 of 4

http://www.brazzil.com/component/content/article/184-october-2007/9979.html

Thursday, 11 October 2007 – Part 3 of 4

http://www.brazzil.com/component/content/article/184-october-2007/9983.html

Tuesday, 16 October 2007 – Part 4 of 4

http://www.brazzil.com/component/content/article/184-october-2007/9985.html

3) Brazzil Magazine – September 06, 2006

“While the American Dream Is Outsourced Brazil Drives the World into the Future” Written by Ricardo C. Amaral

http://www.brazzil.com/component/content/article/171-september-2006/9684.html

4) Brazzil Magazine – June 02, 2005

“While China Rises the US Falls in Brazil and Latin America”

Written by Ricardo C. Amaral

http://www.brazzil.com/2005-mainmenu-79/152-june-2005/9296.html

5) Brazzil Magazine – June 2003

Originally published on The Brasilians – from July 1999 to October 2001 – a four part series of articles. (Reprinted on Brazzil Magazine in June 2003)

Should Brazil Adopt a New Currency?

Written by Ricardo C. Amaral

http://www.brazzil.com/component/content/article/16-june-2003/564.html

6) Brazzil Magazine – June 2002

“The Euro Now”

Written by Ricardo C. Amaral

http://www.brazzillog.com/pages/p26jun02.htm

7) Brazzil Magazine – February 2005

“It’s 2008. The US Has Dragged the World into a Depression”

Written by Ricardo C. Amaral

http://www.brazzilmag.com/content/view/1424/49/

8) Brazzil Magazine – Columnist: Ricardo C. Amaral

http://brazzilnews.blogspot.com/

Ricardo C. Amaral is a writer and economist. He can be reached at

[email protected]

67 Responses to "Brazil, China and the New Asian Currency"

  1. Fsinatra.me   July 9, 2009 at 9:37 pm

    Just to let you know, Brasil could do much more then that, South America it self is a great power, Brasil will become one of the super power in the next decade!God is Brasilian!Deus e Brasileiro):

  2. Ricardo C. Amaral   July 9, 2009 at 11:14 pm

    I posted information about this article on the Elite Trader Economics forum and after reading the above article a member of ET economics forum send me an email asking me the following question: “…before I dig into more of your posts, can you simply tell me whether you follow Keynesian economic principles?”Here is my answer to that fellow:You find the answer to your question on the following article:Brazzil Magazine – September 06, 2006“While the American Dream Is Outsourced Brazil Drives the World into the Future” – Written by Ricardo C. Amaralhttp://www.brazzil.com/component/co…-2006/9684.html.

  3. Tufan Özge   July 10, 2009 at 12:16 am

    Brazil must be the leader of South-America and theOrganization of the UNASUR is the best example,how this new South-American Economics Bloc can function.There must be also a new Reservecurrencyfor the UNASUR and this could be the LATINO or theSUCRE.I mean that the Shanghai Cooperation Organization (SCO) must also have a new Reservecurrency the name of this new Reservecurrency could be the ACOM or the ACMETAL and then this two Trade Superblocs can trade with each other and would be not dependent on other Economic Blocs,the African Union must also have a new Reservecurrency and this must be the AFRICOM.There would be 3 different Trade Blocs in the world,the UNASUR (LATINO or SUCRE),Shanghai Cooperation Organization (ACOM or ACMETAL)(SCO) and the African Union (AFRICOM) and this 3Trade Blocs would trade with each other and wouldbe not dependent on the hostile west.This Global Trade Bloc Plan can happen very fast,it depends on the leaders of this Global Trade Blocs and then the Global Trade can continuefor many years to [email protected]

  4. Ricardo C. Amaral   July 10, 2009 at 1:39 am

    Reply to Tufan ÖzgeAbout one year ago we had a discussion on the Elite Trader Economics Forum about the formation of the South America Union (SAU), and you can read about it on the following link:“The New South America Union”http://www.elitetrader.com/vb/showthread.php?s=&threadid=127778&perpage=6&highlight=the%20bankrupt&pagenumber=5By the way, my screen name on the Elite Trader Forum is: SouthAmerica..

  5. Ricardo C. Amaral   July 10, 2009 at 1:46 am

    Here is the correct web address of the material that you should read:”The New South America Union”http://www.elitetrader.com/vb/showthread.php?s=&threadid=127778&perpage=6&highlight=the%20bank&pagenumber=5.

  6. MarkL   July 10, 2009 at 3:41 pm

    Well this is just stupid. You want to exclude Europe, North America, Australasia and Africa completely from your currency and trade? Forget continent what planet are you from? This would not be in Brazil’s best interests – you have been brain washed by China’s slick talking. Boo How.

  7. MarkL   July 10, 2009 at 3:44 pm

    Jongo Ren.

  8. Tom Lloyds   July 11, 2009 at 1:23 am

    A piece of junk!Ricardo: “It is time for China to create immediately and implement a plan for the creation of a new Asian currency similar to the euro.”My reply: Ask yourself. When Euro was created, most of the European currencies were freely traded for years! Is the Yuan freely traded now?Ricardo: “Why the euro will provide macroeconomic stability for its members?My reply: Is it really stable? In this economic turmoil, the spread of government bonds of some European countries is so high. Do you understand why?I think that some Brazilian may wish to Brazil to join this New Asian Currency. I do not think that Chinese will like to invite Brazil to join. Well, is it necessary to invite Brazil? Brazil is only a commodity provider. There are so many commodity providers to China in the world. Can Chinese afford to take care of every commodity providers to her?Regarding your previous suggestion to Brazil of adopting Euro, what is the interest rate in the Euro zone now and what is the interest rate in Brazil now? There is a big difference! Why? Inflation! Can you understand?Regarding your suggestion of this New Asian Currency, what was the interest rate in China one year ago and what was the interest rate in Japan one year ago? There was a big difference! Controlling inflation is the most important task for the Chinese government! It can create social unrest in China! China was facing inflation one year ago while Japan was facing deflation one year ago.I cannot understand why RGE can publish this piece of junk. The whole article cannot give any any … concrete reasoning why China should create a New Asian Currency and invite Brazil to join. Why should the Chinese take care of a commodity provider especially that it is not a major provider. If the Chinese really wishes to play the game of this New Asian Currency, the 1st commodity country that Chinese invites to join should be Australia, not Brazil.

  9. Anonymous   July 11, 2009 at 12:26 pm

    This article is mainly based on personal opinions than real and concrete facts. The constant obsession with the China growth story blinds most market participants to the fact that China itself has embarked on a credit bubble of major proportions. One should look closely to the amount of lending by Chinese banks in the past 6 months in which 1/3 of the lending has been diverted to speculation in the stock market and the commodity contango spread trade.Also, the rapid and accentuated decline in Chinese exports is worrisome which will likely translate to a severe compression in the Chinese trade balance surplus. It is also likely that the lack of demand for goods originated from the US and Europe will remain a problem which will be accompanied by a steady and perverse rise in personal savings.Commodities will come under pressure due to a lack of demand and compression of contango spreads. This effect will force Chinese speculators to absorb large losses and flood the market by dumping inventories built in the past 8 months. It is no surprise that US institutions have been quietly reducing exposure to Chinese banks in the past few months under the argument of “raising capital”. The most recent example of the contango spread compression is clearly seen in crude oil which basically collapsed $10+ in less than 2 weeks.One should look no further than Russia to see what a collapse in demand for commodities allied to structural problems in the financial and political system can do to its currency and population in general. India should be next in line as it suffers the same problems in conjunction with difficulties in raising foreign capital to revive its economy. Ironically, India is victim of the cannibalistic export oriented mentality exercised by China which at the moment shows no signs of abating.The global deleveraging will continue and the Yen should see further appreciation in the months ahead. As a result, there will be diminishing incentives for global capital investments and a lack of available capital.China is betting on a pickup of global demand and at the same time attempting to boost domestic demand. They are buying themselves time while dealing with social instabilities (which is poised to rise in the months ahead), shutting down internet sites and providing to the world a false sense of stability by means of propaganda.

  10. Ricardo C. Amaral   July 11, 2009 at 2:17 pm

    Tom Lloyds started his posting here on RGE Monitor by saying: “A piece of junk!”If you want to see why he feels that way then read all of his comments on Brazzil magazine that he posted after my articles which is listed on the above article:1) Brazzil Magazine – October 2007″The Smartest Thing China Could Do Right Now: Invest US$ 200 Billion in Brazil” Written by Ricardo C. AmaralAnd also after the following article:2) Brazzil Magazine – July 2008Why Brazilians Should Demand the Renationalization of Petrobras – Written by: Ricardo C. Amaralhttp://www.brazzil.com/articles/194-july-2008/10079-why-brazilians-should-demand-the-renationalization-of-petrobras.htmlTom Lloyds lost every argument on the debates that developed on the comments section of those articles, and then he became more like pests that just don’t go away.After you read Tom Lloyds opinions that he posted following my articles, then you will realize that most of his opinions are not worth much..

  11. Tom Lloyds   July 11, 2009 at 4:32 pm

    Ricardo:”Brazil has to build a system to avoid in the future the “hot money” that rushed in and out of emerging markets during 2008 and caused a market crash in these countries – hot money that came from irresponsible banks, hedge funds, insurance companies and many other types of speculative capital that flows regularly between financial markets in search of the highest short-term interest rates possible, and other short-term investment opportunities.”My reply: As I have pointed out in your article of Why Brazilians Should Demand the Renationalization of Petrobras, you demand nationalization of foreign investment on PBR, and you do like foreigner EVEN control a power transmission line in Brazil. If foreigner invests on the power line, of course, they will control it. Now, you wish to control the so-called hot money. If you continue to post this kind of junk, you just simply scare off all the foreign investment in Brazil. Foreigner cannot invest in oil, cannot invest in infrastructure, and cannot invest in financial sector as it replies on rapid movement of money. Come on! What foreigner can invest in Brazil? A Chinese resultant to cook for the Brazilian? Even you refused to invest your career future in Brazil.You have no idea what China means. To control inflation is the MOST important task in the Chinese financial policy. Serious inflation can bring serious social unrest. Can the Chinese afford to hand over their monetary policy to Japan and Brazil by creating this New Asian Currency. I would suggest you to travel extensively in China and better to live there for years to understand China before you even to write and post on the Internet.Your post just only bring the economic hardship to Brazil rather than help!It is good that you bring up my comments on your articles published on the Brazilian Mag. People can understand all the errors and mistakes in your arguments.This RGE article was written using the phase “I believe”. It is not a place for religious article. I cannot even see any data or fact to back up your arguments.

  12. Ricardo C. Amaral   July 11, 2009 at 6:17 pm

    After reading the above article about the New Asian Currency, someone sent me an email asking me the following question: “…before I dig into more of your posts, can you simply tell me whether you follow Keynesian economic principles?”You will find the answer to your question on the following article:Brazzil Magazine – September 06, 2006“While the American Dream Is Outsourced Brazil Drives the World into the Future” – Written by Ricardo C. Amaralhttp://www.brazzil.com/component/co…-2006/9684.html.

  13. Ricardo C. Amaral   July 11, 2009 at 9:07 pm

    This article was also published on Brazzil magazine in July 9, 2009 – “With US Capitalism’s Demise It’s High Time for Brazil to Adopt the New Asian Currency” – Written by Ricardo C. Amaralhttp://www.brazzil.com/component/content/article/205-june-2009/10207-with-us-capitalisms-demise-its-high-time-brazil-adopt-new-asian-currency.html#commentsThere are 21 comments following the article so far on Brazzil magazine.Some people from Asia are reading the article on RGE Monitor, then they are following up with a discussion about this article at:Asia Times Online – The Edge: Asia Times Reader’s Forumhttp://www.atimes.net/The-Edge/Greater-China/171311-New-Asian-Currency.html.

  14. Guest   July 12, 2009 at 2:29 am

    If you believe the following – “these changes are the result of globalization combined with the development of state-of-the-art new technologies such as a world that is connected by fiber optics, the constant increases in computer power, a growing global Internet system that is connecting everybody, and the astronomical developments in global communications that have been making it easier to communicate and send information via satellites, Internet, email or telephony” – then why would you want to create isolated regional blocs in Europe, Asia, and elsewhere that are defined by their exclusion of other countries? This is an inconsistent argument.

  15. Ricardo C. Amaral   July 12, 2009 at 3:33 pm

    Reply to guestEarly this morning I answered a question to one of the readers of Brazzil magazine that I posted following a copy of the enclosed article that were also published on that magazine about the New Asian Currency.Quoting from that member’s posting: “It seems unlikely that China will do anything to upset the dollar or the present system while so heavily invested in both.”My response to his posting:China has invested and has accumulated over a period of many years over $ 2 trillion dollars in US dollar assets.For all practical purposes the US economic system that China has been investing for many years had a quick death in 2008. The US capitalist system has died in 2008, and the United States has a new economic system that only God knows where this economic system is headed in the coming years.I have no idea how this new US economic system works, and in which direction the US economy is heading at the speed of light.I know that the US government is pilling up trillions and trillions of new debt on top of what the US government already has, and that the value of the US dollar will be destroyed even further in the coming years by hyperinflation.The capitalist system that the US had, at least since the US civil war, no longer exists after its sudden death in 2008.I would be lying to you if I told you that I understand how the new economic system adopted last year by the United States works.Today we have an artificial economic system distorted by all kinds of massive US government intervention, and US government guarantees to the tune of trillions of US dollars, and I am sure that without most of this massive intervention the entire US economy would implode in a massive meltdown.Basically, the longer China waits to change and adapt to a new international monetary system, as I suggested on my article – the bigger will be the pain and the monetary loss that China have to absorb in the future.The problems will only snowball and become even bigger problems in the future for China. Or they bit the bullet today and try to fix the currency problem, or they are going to look very foolish tomorrow when they have accumulated trillions and trillions or worthless US currency.I don’t know why people can’t grasp that a New Asian Currency similar to the euro is only an economic arrangement for a group of countries designed to serve as an umbrella to protect the members of that group of countries regarding the dynamic realities of today’s fast moving global financial markets.Nobody is going to force any country to adopt the New Asian Currency, and the adoption of the New Asian Currency would be voluntary by its members when they realize the advantages of belonging to such monetary arrangement.The possible country members that can adopt the New Asian Currency at its inception would include such countries as China, Japan, India, Singapore, Taiwan, Hong Kong, and even Brazil. A Central Bank would be created and the representatives of the member countries would make policies related to the new currency just like the ECB (European Central Bank) decides on policies regarding the euro.Lets take the state of California in the United States to illustrate an actual example. The state of California if that state was an independent country it would rank as the 8th largest economy in the world.The California economy is being protected and is under the US dollar umbrella. If California instead of being under this US dollar currency arrangement – if California had its own currency, then the economy of California would be collapsing today in the same way that the economy of Argentina collapsed a few years ago; with run on the banks, and a total economic meltdown.This type of currency arrangement benefits most the members of such currency arrangement in many ways including lowering interest rates in general to their member countries as it was the case for many countries that became members of the euro currency arrangement.It also eliminates the currency risks among the members of such currency arrangement and helps trading and long-term investments for that group of countries.I give another example of the difference of the 2 currency systems that we have today. First, let’s look at the European Central Bank and the decisions that the members of that currency arrangement have to make regarding Euroland as one country. The ECB is more careful with their policies and more conservative on its decisions to protect the future value of the euro.On the other hand, the US government has been reckless for a long time regarding the management of its currency the US dollar. The Bush administration and now Ben Bernanke and company are destroying the future value of the US currency and in the process they created an artificial US economy based in massive US government intervention, and US government guarantees as never seen before.It does not make sense to me anyway for the Chinese population to continue to work hard and have a savings rate of about 40 percent then send their hard earned money to be wasted away by the US government and the American people. And at the same time the Chinese would continue to accumulate a vast amount of US currency in the coming years that will become almost worthless by the coming hyperinflation.Why the Chinese can’t see the gigantic train wreck that is just ahead of us?.

  16. Huyu   July 12, 2009 at 7:56 pm

    China is just a bit player; the world economic super power is really India. I am Chinese and an under-deserved Anglophile as well. To us Chinese, we prefer not to exaggerate our role in world affairs and we think you should look to India instead and please spare us. To us Chinese, India is already the world’s No.1 Superpower, transending the best traditions of the British Empire every day. No dispute here, and much admired. In PPP terms, India is already the world’s No.1 economy, not even the US comes close. India has a super high-tech economy with InfoSys, Wipro, Nano, Slumdog, and much more that the average Chinese never even heard about, in whose unfit minds, they only know about BYD, Hauwei, ZTE, and Lenovo; never mind, how limited horizons. In the democratic guidance of Gandhi, Nehru, Indira, Rajeev, and Singh super human politicians,India shines while the world declines. India has a huge population dividend, and as time advances and the multiplier labours forth the advantage will become much more pronounced, just imagine millions more Singhs all equalled by only the Oxford Sheldonian debate chamber forged speakers. With her close to 1.1 Billion Software Engineers, they are making this profession obselete; literacy is not even worthy of men’s will as these boys and gals can all express themselves in the languages of their laptops. In the next 100 years, India with her super effective democracy will prevail mightily; as we Chinese just pray that India will also have mercy to leave a bit of room for us to earn a modest living in our corner of the planet. India just needs to sleep walk through the next 30 years, or better yet with their superior intellectual powers they can make an galactical contribution to worthy human endeavours like whether the black cats are superior to white cats, or white ones to black ones, or what the hell, maybe even both, whereas us poor Chinese will have to continue to slave under the Sun, rain, and snow just to keep us fed and our kids in school. Oh, I take it back, I may have to skip my meals so my kids can stay for one more lesson. With the current economic crisis, my salary here in Beijing is shrinking by 8% each year, together with the overall economy; oh maybe I am confused with the sign of this figure as you see I am not that educated with numbers. All I know is that all that necessity is becoming harder day-by-day, yet these crazy people, like my wife, are clamouring for those fake Gucci bags. In 30 years, I suspect my salary would march on to zero, with how many … I really do not know now, but then I would also be dead and need not to care. Oh, by the way whatever you hear from the foreign press, if it is good news, just ignore it, it is not quite right, shall we just say. Cheers to India! Cheers to India!

  17. Ricardo C. Amaral   July 12, 2009 at 11:45 pm

    Reply to HuyuMr. Huyu you said the following on your posting: “Us poor Chinese will have to continue to slave under the Sun…my salary here in Beijing is shrinking by 8% each year, together with the overall economy…”I understand your point of view, and the reasons why you feel that way.I am aware of the Indian Overseas Network and the growing power that they have, but you need to read my article “Here is Why Brazil Should Adopt the New Asian Currency” to be able to understand the forces that are behind China’s outstanding economic development in the last 20 years.That article is almost required reading for people to have a better understanding of the above article “Brazil, China and the New Asian Currency.”1) “Here is Why Brazil Should Adopt the New Asian Currency” – Written by Ricardo C. AmaralBrazzil Magazine – March 02, 2007http://www.brazzil.com/component/content/article/177-march-2007/9821.htmlFor the reader to further understand why I am suggesting that Brazil adopts the new Asian currency then they should also read the following article:2) Brazzil Magazine – October 2007″The Smartest Thing China Could Do Right Now: Invest US$ 200 Billion in Brazil” Written by Ricardo C. Amaral…The final conclusion is: It’s imperative that China move forward in an aggressive fashion and implement with Brazil the plan described in this four-part series of articles. And China should look at it as a matter of national security and future survival.Four-Part article you can see the web link to these articles at the end of my above article.*****By the way, when I think about the future of China I don’t think about a repressive Chinese government – I think about China being ruled behind the scenes by the Overseas Chinese and its network of networks.You need to read my articles to understand what I am talking about..

  18. Tom Lloyds   July 13, 2009 at 1:41 am

    Ricardo always wishes Brazil can share the same currency with China.The Canadian would says,”Thanks God! Canada does not adopt the New American Currency with the USA otherwise the Canadian wealth will pass to USA during this financial crisis.”From all Ricardo’s arguments, I can tell that he wishes to pass the Chinese wealth to Brazil.It is true that most of the Chinese reserve is in US dollars. However, diversification of Chinese reserve in different currencies is completely different from surrendering the monetary authority by adapting this so-called New Asian Currency. Demising of the buying power of US dollar is not the reason to adapt this New Asian Currency. The Chinese is moving the right way to raise the issue of Special Withdrawing Unit which contains a basket of different currencies.From Ricardo’s articles, I can conclude that he confuses with the difference.I have urged him before, For the sake of Chines, Brazilian and the people of the world, please keep your hands off!

  19. Huyu   July 14, 2009 at 11:37 am

    Many thanks Ricardo for the kind words. Oh no, thank God we do not think our government repressive at all. We just think as a nation we have certain limits currently in our stage of development.We love these guys since Mr. Deng, who seems to have made the right call at every turn even if it had not appeared to be so at the time. His contributions to our nation is as great as the Huangdi (1500 BC), Zhou Wenwang (700 BC), Younger Shihuangdi (250 BC), Wudi (150 BC), Taizhong (600), Kublai Khan (1200), Kangxidi (1650), Dr. Sun Yat-sun (1911). His disciples are making this nation on its way to full recovery. However, fully internationalizing our currency is the last thing on our mind and we have a better proposal to multi-lateralize it through the IMF. Even if eventually the Yuan becomes a major international currency the process should be natural, gradual, and imperceptible.Most of us, other than some Gen Z Young&Restless FengQin, prefer to work hard for our wife’s next Gucci bag, real or fake, and for our kids next English class, rote learned or supposed enlightenment of creativity.There are of course many things we would like to win, including an Olympic medal, the next business deal, the next bottle of White Wine, and the next Mil or Bil, but there is nothing we prefer in the military affairs, for the incompatible responsibilities that will entail, and certainly getting our nose into other people’s business is not one of our habits.If there is any trouble anywhere in the world, we prefer to delegate the whole thing to Uncle Sam, nice Uncle indeed, who spend the money and resources to trouble-shoot for us, despite the many disappointments, and allowing us to deliver our people to prosperity. This is a good bargain, I think we are getting used to already.

  20. Ricardo C. Amaral   July 14, 2009 at 3:53 pm

    Reply to Mr. HuyuIf you read most of my articles published by Brazzil magazine, and my postings on Elite Trader Forum among other places – you would find out that I have a great admiration for the policies adopted by the Chinese government in regard to the economic development of China. The Chinese government has been doing an outstanding job in lifting such a large number of people out of poverty in China.Today China has reached a point on its economic that the Chinese government has no choice but to restructure its internal economy from being so much focused to the export market, and create a massive domestic market to sell its goods and improve the standard of living of hundreds of millions of the other portion of the Chinese population that has not participated on this great progress that has been achieved in the Chinese economy.I understand that China is starting to improve the safety nets necessary for the Chinese population to be able to reduce its rate of savings and make possible increased domestic consumption of goods and services.I would have not suggested on my articles to link the Brazilian economy with China as I have been doing for many years if I did not believe that this connection would be mutually beneficial for both countries – I am thinking about the world of tomorrow and not the world of yesterday – and I am sure that China will grow and prosper even faster in the coming years with the assistance of the outstanding group The Overseas Chinese and its network of networks – to give you a better understanding of the spirit that is behind this special group of people I quote from my article “Here is why Brazil should adopt the new Asian currency” as follows:“…The family business of the Overseas Chinese are networks of companies and other enterprises. And they are, in turn, woven together to constitute a huge global Chinese network of networks. Internet is the model for understanding. Just as the Internet is a network of about 25,000 networks, the Overseas Chinese networks number in the tens of thousands.The number of networks and individuals on the Internet is not limited because the Internet is totally decentralized. …It is decentralized right down to the individual; only the individual can access the Internet. Because of this complete decentralization, the Internet can have as many members as want to join. Similarly, the Overseas Chinese network can get as big as it needs to be to transform Asia’s economy.The other general characteristic of both the Internet and the Overseas Chinese network is that no one is in charge; the marketplace is. With the Internet, it is the marketplace of ideas and information, though, more recently, the commercial marketplace as well. With the Overseas Chinese network, market mechanisms are the deciding factor. Motherland or not, economic decisions involving China are driven purely by dictates of the market and guided strictly by rates of return.Individual Overseas Chinese networks of companies are completely decentralized from the whole and they are extraordinarily efficient parts….The Chinese function efficiently as individuals….This mode of operation makes the Chinese, and their enterprises, immensely nimble in the competitive global economy. They react speedily to changing conditions, especially to political vagaries….Also, the individualistic Chinese want to have control of their own destiny. The Chinese proverb has it that “There is no prospect working for others.” Everyone wants to be at the center and be his own boss. This inner entrepreneurial drive makes the Chinese very proactive, risk-taking and enterprising.”You will also find very interesting reading some of my postings regarding China at:06-02-05SouthAmerica: After I posted some information on the PBS message board on April 2, 2005 regarding the “China Price” someone who is a regular member of that board (Darkmoon) asked a few questions, and here are my answers to his questions regarding China….You can read it at:”The China Price” – The best business article I have seen in yearshttp://www.elitetrader.com/vb/showthread.php?s=&postid=763133&highlight=Chinas+economic+progress#post763133My screen name on the Elite Trader Forum is: SouthAmerica.The thread “The China Price” so far has 212 postings and 31,441 views.*****I have no idea why China is even contemplating the issue regarding Special Drawing Rights (SDR’S).The SDR’s were created for the world of yesterday, and even then they did not had much use for that special set up. If the creating of SDR’s were a good idea, other than its very limited use – then SDR’s would have become a major portion of most countries foreign exchange reserves.I don’t know why China is wasting time looking at that solution, since for all practical purposes that system is based on the US dollar.In the world of today, (and in the future for that matter) we have trillions of US dollars in international transactions happening every day – and I can’t see and it does not make sense to me how a international monetary system would work with SDR’s becoming a major player in international finance.“The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies.…The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.”Source: IMF – A Factsheet – February 2009http://www.imf.org/external/np/exr/facts/sdr.htmYou can read about Special Drawing Rights (SDR’S) also at:http://en.wikipedia.org/wiki/Special_Drawing_RightsNo new SDRs had been created between 1981 and the 2008 banking crisis: Only 21.4 billion of them currently exist (equal in value to $31.9 billion) On 2 April 2009, the G-20 authorized the IMF to issue $250 billion in new SDRs to augment the foreign reserves of IMF members and quickly channel resources into emerging economies. Increases in the reserves of some emerging economies will be substantial i.e. South Korea’s will grow by $3.4 billion, India’s by $4.8 billion, Brazil’s by $3.5 billion, Russia’s by $6.9 billion and China’s by $7.3 billion..

  21. Tom Lloyds   July 14, 2009 at 9:05 pm

    Ricardo:”I have no idea why China is even contemplating the issue regarding Special Drawing Rights (SDR’S).”When I see your comments, I shake my head. The Chinese is looking for an new international reserve currency which cannot be controlled by any countries or region. The best is the SDR which represents the average values of the major currency in the world. It does not matter whether there is any newly issued SDR or not recently. When it is accepted by every one, all the world currencies will have an exchange rate with the SDR and SDR is the mean value of the world’s currencies. All the international trade will be conducted using SDR.I hope that you can understand this very simple concept.

  22. Ricardo C. Amaral   July 14, 2009 at 10:50 pm

    Reply to Mr. HuyuI understand that the US government officials want to stretch the US dollar predominance in international trading and finance as long as they can, even after that system has passed the point of usefulness for the entire global community.The US dollar played a unique role for the currency of any country to play for such a long time, and today the role of the US dollar is out of sync with the economic realities of the 21st century.When I made the suggestion that it is time for China to create and adopt a new currency – the new Asian currency – an international monetary arrangement among countries similar to the euro in Euroland – I was thinking about the future, starting tomorrow morning and not a few years from now, since eventually China and the Asian countries will arrive to the conclusion that such financial arrangement is the best bet for all the countries involved.I am aware of the though economic competition that is going on all the time between countries such as China, India, and Japan. I am also aware of the political obstacles that these countries have to overcome for such currency arrangement to become reality.I am aware that international trading is a very important piece of the economy of countries such as China and Japan.My answer to the people who try to find all kinds of excuses for China not create the New Asian Currency is as follows: Germany is the number one exporting country in the world, and the German economy represents a large piece of Euroland and its currency the euro. The Germans and the French were able to overcome their old thinking about losing their sovereignty if they adopted the euro, they also overcame their political issues, and a long-term distrust of each other, and both countries realized that by adopting the euro both countries would be in better shape economically in the future.The monetary and financial arrangement of the countries that comprise the euro is far from being perfect, but the countries that belong in that system are in far better shape than if they were not under the euro’s umbrella. The global financial meltdown would have been a lot worst for individual countries if they were not part of the euro system.Right now, the economy of California, and other states for that matter, such as Michigan would be going through a massive economic and financial meltdown, similar to what happened to the economy of Argentina just a few years ago – if these states were not under the umbrella and protection of the US dollar system, then we would be having a run in the banks, and a complete economic meltdown on these states.In my opinion, it is a major mistake at this point for China to try to develop its own currency the yuan into a major reserve currency, since that would be the wrong way to go based on the economic realities of today, and the new ways of operating of the global monetary system of the 21st century.If China continues on the current path, or try to pursue new strategies based on SDR’s, or try to push the yuan as a new reserve currency that would show that the Chinese mindset is stuck on the past, and not on the solutions that are beneficial for the future.The creation of a New Asian Currency would give the opportunity for countries such as China, Japan, India, Taiwan, Honk Kong, Singapore, and even Brazil to adopt such a new currency, and eliminate the foreign exchange “risk” among these countries and open the doors for fast expanding trading growth, and also to great new opportunities for long-term investments – since these countries would be making these long-term investment in local currency – the New Asian Currency.Eventually we always have some international financial and monetary crisis, and when that happens the economies of the countries that have adopted this new currency – the new Asian currency – would be in better shape than if all these countries had continued with their current currencies. The New Asian Currency would serve as an umbrella to protect its members from major economic and financial shock in the future – and this new financial arrangement it would be beneficial and protect even the economic system of countries such as China, Japan, and Brazil. It would be a win-win situation for all the members that decided to participate in such a new monetary arrangement..

  23. Huyu   July 14, 2009 at 10:53 pm

    Richardo, again thanks for the kind words. I think however only some of it is deserved. Our old man Confucius said once that “Know What You Know and What You do not Know is Real Knowing”. There are 2 considerations that entails that something similar to the SDR is the best transition for us. One political, the US dollar is dominant today, and we do not want to unseat Uncle Sam as long as they are responsible with the dollar. We have no desire to create anxiety in the international system that is detrimental, frankly not only to us, the US, and surely also for Brazil. Our strategy is to peacefully develop our selves to national recovery, anything that goes against it just is not an option. The second is economical. We know fully well that the Chinese economic is not mature enough, we are currently only a 4 tril economy; at least a 10 tril economy can be considered to be mature enough to withstand the shocks of any currency movement. It is not in our interest to cause such shocks even then. Perhaps in another 10 years Brazil can seriously contemplate pegging the currency to the Yuan, but if it ever to happen, it should be imperceptible as truly automatically accepted by the world economies without our deliberate asserting it. Surely it would also be safer for Brazil to have a number of currencies to hedge potential risks. As I said, if the world wants to use only the Yuan at some distant point, so be it, but we cannot be blamed, entrusted, burdened (put in your own favorite phrase here) for that decision.

  24. Huyu   July 14, 2009 at 10:55 pm

    By the way, I am an engineer with a real sense of history. I am not even majored in economics, but I believe there are many more people of truly valuable wisdom in this country who can think much more strategically and logically than I can.

  25. Tom Lloyds   July 14, 2009 at 11:44 pm

    My short comments to your long answer to Huyu”Thank God! We are not using the same New American Currency with the American otherwise our wealth will be moved to the South”, said a Canadian Gentleman.

  26. Ricardo C. Amaral   July 15, 2009 at 5:22 am

    Reply to Mr. HuyuAs you mentioned on your last posting: “The second is economical. We know fully well that the Chinese economic is not mature enough, we are currently only a US$ 4 trillion economy; at least a US$ 10 trillion economy can be considered to be mature enough to withstand the shocks of any currency movement.”Basically you just helped me make my point, and let me clarify to you a little further as follows:You still are thinking in terms of China, and the yuan by itself, and a very slow process ahead of China to achieve its goals.Now just consider what happens when you start thinking in terms of the New Asian Currency, and the countries that could participate on this new powerful monetary arrangement.A new vision of the future emerges immediately, and the entire ball game changes in front your eyes, and the New Asian Currency becomes almost overnight a powerhouse similar to the euro – and backed by a sound economic system, and strong foreign exchange reserves and gold.When we do our analysis in GDP at official exchange rate then:China = US$ 4.2 trillion (2008 est.)Japan = US$ 4.84 trillion (2008 est.)India = US$ 1.24 trillion (2008 est.)South Korea = US$ 858 billion (2008 est.)Taiwan = US$ 402 billion (2008 est.)Hong Kong = US$ 224 billion (2008 est.)Singapore = US$ 155 billion (2008 est.)Thailand = US$ 272.1 billion (2008 est.)Indonesia = US$ 511 billion (2008 est.)Malaysia = US$ 215 billion (2008 est.)Brazil = US$ 1.67 trillion (2008 est.)New Asian Currency – Total = US$ 14.57 trillion (2008 est.)Compared with:European Union = US$ 18.85 trillion (2008 est.)*United States = US$ 14.33 trillion (2008 est.)1) Note (*) : GDP at official exchange rate for the European Union is inflated by the figures related to the member countries that are members of the European Union but are not part of the European Monetary euro currency system such as the UK, Sweden, Denmark and so on…2) Note: Keep in mind …Fujitsu Research in Tokyo looked at the listed companies in just six key Asian countries. As its findings below illustrate, the overwhelming majority were owned by the global network of Chinese entrepreneurs; the Overseas Chinese Network as follows: Thailand 81 percent, Singapore 81 percent, Indonesia 73 percent, Malaysia 61 percent…Conclusion: Based on the above analysis the “New Asian Currency” would be as powerful as the US dollar, and the euro.And the economies of the countries that have adopted the “New Asian Currency” would now be under a more stable umbrella, and they would be better protected from sudden international monetary crisis. And by eliminating the foreign exchange risks among the countries that have adopted this new currency, new investment and trading opportunities will emerge and help these countries develop new markets and integrate its economies and create great prosperity.The new synergy among the member countries would open the doors to the global network of Chinese entrepreneurs to do their magic, and create spectacular economic results; with the Overseas Chinese Network.*****China:GDP at (purchasing power parity) = US$ 7.8 trillion (2008 est.)GDP at official exchange rate = US$ 4.2 trillion (2008 est.)Japan:GDP at (purchasing power parity) = US$ 4.35 trillion (2008 est.)GDP at official exchange rate = US$ 4.84 trillion (2008 est.)India:GDP at (purchasing power parity) = US$ 3.27 trillion (2008 est.)GDP at official exchange rate = US$ 1.24 trillion (2008 est.)South Korea:GDP at (purchasing power parity) = US$ 1.27 trillion (2008 est.)GDP at official exchange rate = US$ 858 billion (2008 est.)Taiwan:GDP at (purchasing power parity) = US$ 739 billion (2008 est.)GDP at official exchange rate = US$ 402 billion (2008 est.)Hong Kong:GDP at (purchasing power parity) = US$ 308 billion (2008 est.)GDP at official exchange rate = US$ 224 billion (2008 est.)Singapore:GDP at (purchasing power parity) = US$ 240 billion (2008 est.)GDP at official exchange rate = US$ 155 billion (2008 est.)Thailand:GDP at (purchasing power parity) = US$ 553.4 billion (2008 est.)GDP at official exchange rate = US$ 272.1 billion (2008 est.)Indonesia:GDP at (purchasing power parity) = US$ 915.9 billion (2008 est.)GDP at official exchange rate = US$ 510.8 billion (2008 est.)Malaysia:GDP at (purchasing power parity) = US$ 386.6 billion (2008 est.)GDP at official exchange rate = US$ 214.7 billion (2008 est.)Brazil:GDP at (purchasing power parity) = US$ 1.99 trillion (2008 est.)GDP at official exchange rate = US$ 1.67 trillion (2008 est.)European Union:GDP at (purchasing power parity) = US$ 14.82 trillion (2008 est.)GDP at official exchange rate = US$ 18.85 trillion (2008 est.)Between 2004 and 2007, the EU admitted 12 countries that are, in general, less advanced technologically and economically than the other 15. Eleven established EU member states introduced the euro as their common currency on 1 January 1999 (Greece did so two years later), but the UK, Sweden, and Denmark chose not to participate. Of the 12 most recent member states, only Slovenia (1 January 2007) and Cyprus and Malta (1 January 2008) have adopted the euro; the remaining nine are legally required to adopt the currency upon meeting EU’s fiscal and monetary convergence criteria.United States:GDP at (purchasing power parity) = US$ 14.29 trillion (2008 est.)GDP at official exchange rate = US$ 14.33 trillion (2008 est.)Source: for GDP at (purchasing power parity), and for GDP at official exchange rateCIA – The World Factbook 2009.

  27. Guest   July 15, 2009 at 10:09 am

    To Mr. Huyu: Ricardo AMaralIt is great to be in the presence of someone who thinks so clearly like Socrates. And, thanks for the quotation of Mr. Confusious.I draw your attention to a few riddles(1) A biography of the banking lords, the RothschildsIn one book that I read about them, it seem they could undo and undermine any financial system they wanted merely by the use of “hot money?”I don’t know the tricks of this trade, but I am convinced that there is a will to profit and to manipulate…and sadly, I think these robber-barons robbed the world back in October,2008.(2) I would also refer you to Naomi Klein’s new book, THE SHOCK DOCTRINE: The rise of Disaster Capitalism. She argues that there is a new brand of capitalism in town and it depends on disasters all over the world. It reminds me of the Roman billionaire, Cassius?, the guy who was in a triumverate with Gaius Julius Ceaser. He ran the only fire company in town. When your house was burning, he’d come with the fire Engines and make you sign over your property. Otherwise he’d let the fire burn the house down. It appears that the new capitalist of today are engaged in the same sort of behavior.(3) there is a third type of capitalism flourishing which is called Biblical Capitalism. check Google or Alternet. This is worse than anything we could believe.Finally, when you play chess, every move is important and every wrong move can spell disaster in the end.

  28. Ricardo C. Amaral   July 15, 2009 at 4:19 pm

    Reply to Mr. HuyuAfter reading your posting I realized that there is one more point that I need to make very clear.You said: “Perhaps in another 10 years Brazil can seriously contemplate pegging the currency to the Yuan, but if it ever to happen, it should be imperceptible as truly automatically accepted by the world economies without our deliberate asserting it.”The point that I need to clarify to all the readers is: I never suggested in any of my articles, including the above article, that Brazil adopt at any point the current Chinese currency – the yuan.If you read all the articles then you realize that I am always talking about the “New Asian Currency” a similar monetary arrangement between nations such as the euro in Euroland.I don’t want Brazil to adopt China’s currency the yuan at any time, since that is 20th century thinking and a world long gone.My proposal for the “New Asian Currency” is a monetary system to be relevant to the global monetary system of the 21st century, and help the country members of this new monetary arrangement similar to the euro to lift its economies into prosperity and eliminate among the members of the new monetary arrangement the foreign exchange risks – in turn lowering interest rates on these countries, increase trading and long-term investments also among the members of the new monetary arrangement.This new system would help increase the trading and long-term investments between countries such as China, Japan and Brazil, because all this trading and long-term investments would be made in local currency – the “New Asian Currency.”And you can bet that between the long-term experiences of Central Bankers from countries such as China, Japan, Brazil, India, Singapore, Indonesia, South Korea, Thailand, Taiwan, Honk Kong, and Malaysia – the “New Asian Currency” would be managed in an effective way to benefit the members of this new monetary arrangement.In the last 10 years the European Central Bank (ECB) has been doing a very good job regarding the management of the euro, and I am sure that the New Asian Central Bank can replicate in Asia the success of the euro in Euroland in the last 10 years.It takes time to replace the current monetary system with a similar system such as the euro, and you need to start the process at a certain point, and move forward according to plan. I am sure that this “New Asian Currency” can be up and running a lot faster than the euro system in Euroland.Maybe China needs first, a massive US dollar meltdown, and hyperinflation destroying the value of the US currency turning it into conffetti, before they realize that they need to put the new show on the road ASAP – the “New Asian Currency.”.

  29. devils advocate   July 17, 2009 at 3:56 pm

    China is moving unbelievably quickly to insure world currency(currencies) are stable for tradingaround the world to continue…if the US dollar should not just weaken but drop in sudden movements world trade would become impossiblefor the good of Brazil and the world (trade) the BRIC and G-8 must coordinate and create an insurance for world trade

  30. devils advocate   July 17, 2009 at 3:59 pm

    p.s. I appreciate your long-standing plea for Brazil to move away from US toward China…could you discuss the Brazilian economy in detail from your personal perspective?

  31. Carlos Soares   July 17, 2009 at 4:40 pm

    I do not think that China will hold this economic evolution for a long period of time.The international crisis has proven that China needs the market to survive; therefore, as soon as the crisis is over the USA will rethink their commerce with Asia.It is a mistake to pull all manufactures to Asia just because they have very low wages, but that everyone knows already.I fear that war is the next step to settle the economic crises in the world.Let’s see.

  32. Ricardo C. Amaral   July 19, 2009 at 3:34 am

    Reply to Devils AdvocateWhen the cold war ended, and the United States lost its interest in South America, instead of wasting time crying over spilled milk, the Brazilians went around the world looking for new markets – and they have been doing well ever since.It is time for China to do the same, and start using its domestic production to supply its own domestic market – by developing a larger consumer market inside China.I am working on a project to bring together the Saudi economic development (Saudi Arabia) and Brazilian economic development – connect them in many ways.I already sent a proposal to a major Saudi Arabian company, and I am also sending to a second major Saudi company just in case. And I am going to reestablish contact with a branch of the Saudi government that got in contact with me a few years ago for them to help me to put this show on the road.This is a project that I have been working for a while..

  33. Ricardo C. Amaral   July 19, 2009 at 3:40 am

    Reply to Devils AdvocateThe Brazilian economy will do very well in the coming years.Everybody that I talk to in Brazil – they seem to be up beat about the future of the Brazilian economy.An area that will do very well is the real estate market for low-income people.I don’t know if you are aware of, but we have had an exodus of Brazilians going back to Brazil from the United States in the last 2 years..

  34. Ricardo C. Amaral   July 19, 2009 at 4:06 am

    Reply to Carlos SoaresYou said: “I fear that war is the next step to settle the economic crises in the world.Let’s see.”You are expecting War between which countries?United States X China + Japan + South Korea + Hong KongHow that war is going to develop when one side – the United States – needs trillions of dollars, and it is dependent on these countries to keep the US afloat economically?And the Asian countries need the US as its major customer for them to sell their goods. And don’t forget the US is paying all these countries in a currency – US dollar; trillions of US dollars that will decline in value very fast in the near future.Why the US would stop buying from all these countries, when they still are accepting the payments for their goods in a currency that is being turned very fast into confetti?How are we going to have a war between these countries when they are so dependent on each other?.

  35. Tom Lloyds   July 20, 2009 at 1:05 am

    After reading Ricardo’s post, I find that he messes up all the issues because he cannot understand the basic.1. The Chinese is really smart by proposing the SDR as the New International Currency. SDR represents a basket of major currencies and is partially back up by the gold reserve in IMF. Yes, in the past, it was hardly a currency but the Chinese is proposing it as the New International Currency. It is a NEW concept rather than a concept of yesterday as Ricardo claims. SDR now has US dollar as a major portion of the currency basket but in the future this composition will change according to the economic performance of its member countries. Therefore, this New International Currency can be used as the new reserve currency, and can preserve wealth. It cannot be controlled by any single country as well as any single region, for example, by Asia if the world uses this so-called New Asian Currency as the reserve currency.2. Chinese is facing the demise of US dollar because of its reserve is mainly in US dollar. This problem is being solved by adapting SDR as its reserve. However, surrendering its monetary authority to Japan and Brazil by adapting this New Asian Currency can hardly be a solution to this problem. The world is looking for some kind of currency, which can preserve wealth. It must be independent of any country and region. Now Asia is doing well. What happens if Asia collapses but USA survives, and becomes rich twenty years later? Ricardo will jump out from his comfortable home in USA and asks Brazil to adapt the New American Currency.3. Euro was introduced after the European feels the need to integrate Europe. It is the outcome after the operation of European Community which evolutes to be the EU. Asia is in a completely different situation. The serious corruption in some of the Asian countries which Ricardo mentions can hardly to bring the Asian countries together as the Asian Union at least today. A common currency must be back up as common political vision. I would say that Ricardo couldn’t understand this.4. The New Asian Currency was first mentioned in US newspaper as proposed by USA, and Japan said that it was a good idea as reported on the newspaper. It is interested to observe that Japan seldom mention this New Asian Currency any more after the news. Why is its? Ricardo, can you think about this?5. I still do not understand why the Chinese should invite or approve Brazil to adapt this New Asian Currency if it exists. The price of oil is so high nowadays and will be higher in the future. It is much expensive to ship one ton of iron ore from Brazil than from Australia. The trading between China and Brazil is less important between China and Australia for the Chinese. Ricardo did not even mention Australia is a good candidate for this New Asian Currency. Why? Are you afraid of your competitor?6. I feel sick when he posts on Brazil magazine that human right goes to the toilet if there is a high density of people. It leads me to think that Ricardo may suggest that Chinese does not deserve human right because there is too many Chinese.In the past, Ricardo has proposed the followings: Nationalization of foreign investment in Brazil, Building a nuclear bomb in Brazil, Adoption of Euro as Brazil’s currency (Now, it is the New Asian Currency)… We can know how he thinks.

  36. Ricardo C. Amaral   July 20, 2009 at 10:11 am

    Reply to Tom LloydsFor some reason you never understand what you read, anyway here is some reminder from one of my above postings.Here is again the information from the IMF:“The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas. The SDR also serves as the unit of account of the IMF and some other international organizations. Its value is based on a basket of key international currencies.…The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.…No new SDRs had been created between 1981 and the 2008 banking crisis: Only 21.4 billion of them currently exist (equal in value to $31.9 billion) On 2 April 2009, the G-20 authorized the IMF to issue $250 billion in new SDRs to augment the foreign reserves of IMF members and quickly channel resources into emerging economies. Increases in the reserves of some emerging economies will be substantial i.e. South Korea’s will grow by $3.4 billion, India’s by $4.8 billion, Brazil’s by $3.5 billion, Russia’s by $6.9 billion and China’s by $7.3 billion.”*****Today with its $ 2 trillion dollar in US dollar assets and still growing by leaps and bounds China almost can be considered a subsidiary of the United States government – and China’s vast US dollar assets position still are growing by almost $ 400 billion dollars per year.Today, the world movement of money is in the trillions of US dollars per day. And when we put in perspective that China’s assets in US dollars still is growing by almost $ 400 billion dollars per year and the fact that the IMF has created a total of only $ 282 billion dollars in SDR’s including the recent increase in the supply of SDR’s.The IMF site says: “On 2 April 2009, the G-20 authorized the IMF to issue $250 billion in new SDRs to augment the foreign reserves of IMF members and quickly channel resources into emerging economies. Increases in the reserves of some emerging economies will be substantial i.e. …and China’s by $7.3 billion.*****O.K. – out of the $ 400 billion dollars that China is going to receive in the coming year China will be able to buy $ 7 billion in SDR’s….Big Deal.And so what?What China is going to do with the other $ 393 billion that China will earn in US dollar? Add the new moneys to the pile of cofetti that China already has on hand?Tom Lloyds also said: “5) I still do not understand why the Chinese should invite or approve Brazil to adopt this New Asian Currency if it exists.”For all practical purposes the Chinese has adopted the US dollar indirectly and without an invitation from the US government or their approval for that matter. Today the printing machines are working overtime in Washington D.C., and at the same time the Chinese government still is accumulating tones of declining US dollars.And Tom Lloyds think that this is a smart policy.I know that few years ago the Chinese government invested billions of US dollars in a bunch of US private companies such as the Blackstone group and many others – and today the Chinese government also has massive losses in the billions of US dollars related to these investments.It seems to me that China is stuck in a lose/lose proposition, and still is trying to find excuses to continue in that same old path.If current trends continue it is possible that in another 2 years China’s US dollar assets probably will reach a number almost equivalent to China’s GDP.I don’t understand why Tom Lloyds want China to continue in a position where China has become subservient to the US dollar?.

  37. Tom Lloyds   July 20, 2009 at 9:28 pm

    Ricardo, your reply shows that you cannot think.Yes, in the past, IMF has not issued a lot of SDR and SDR was not a currency. You are still pushing the monetary policy of the past. I know all of this. You do not need to repeat it again. What the Chinese is doing is to create a new international monetary policy for the future, a new international currency which represent the aggregated mean of major currencies. Why do you think that the world cannot issue more SDR once the international community agrees that SDR is the world’s reserve currency? This new currency can preserve wealth and cannot be controlled by a single country or region such as Asia. The current SDR only provides a platform and structure. A new global monetary system will be imposed once it is a recognized international currency.Your reply on human right is terrible! You cannot distinguish the difference between one does not have human right and one’s human right has been violated. The difference is obvious to me. It is good that you show your true face to the Chinese people!You have not replied my questions. Is it because you cannot answer or afraid to answer? I repeat my questions as the followings:1. Why does Japan seldom mention this New Asian Currency any more after the news?2. Why didn’t you include Australia as a candidate for your New Asian Currency? Why should the Chinese choose Brazil instead of Australia?3. What happens if Asia collapses but USA survives, and becomes rich twenty years later? Will you jump out from his comfortable home in USA and asks Brazil to adopt the New American Currency.

  38. Ricardo C. Amaral   July 21, 2009 at 4:22 am

    Reply to Tom LloydsYou are back on the subject of SDR’s.I don’t know why I am wasting my time in answering your question, since the SDR subject right now is frozen on your brain, and I know it is not going to go away it does not matter what?The SDR’s have been around since 1969, and its usefulness has been shown to be very limited since that time. If the SDR was a great solution for countries to pile up it as its foreign exchange reserves, then by now we would have trillions and trillions of SDR’s being held on the books of central bankers from around the world.I am aware that it does not matter what I say, and I could even write an encyclopedia on the subject, and at the end you still would not grasp the essence of the material to save your life.The reason you still harping about SDR’s is because you have not grasped even the basics why I am suggesting the creation of the New Asian Currency?You are not smart enough to grasp that by starting buying the SDR’s from the IMF you are doing nothing to change the current system – By the way, China does not need the IMF to buy a basket of currencies to hold as its foreign exchange reserves.You don’t have the brain power to grasp this concept – but the New Asian Currency, or the euro for that matter, serves as a umbrella to protect the member countries that are protected by this umbrella from major currency swings that can destroy the economies of countries almost overnight – at the speed of light as the hot money moves from country to country trying to get the best returns and they move forward to the next opportunity.You can’t grasp that there are trillions of US dollars that fly around the world every day at the speed of light to settle all kinds of transactions. And that most countries are vulnerable with their small foreign exchange reserves supply to fight a foreign attack against its local currency.Look back to the late 1990’s, IMF reports were saying how sound the Asian economies of such countries as Indonesia, South Korea, and so on were at the time, and right after that the currency speculators created a major currency crisis in the area of the world destroying the economy of many of these countries almost overnight.That would not have happen if all these countries were protected under an umbrella similar to the euro – the speculators can’t play their games with a currency such as the euro as they can with the local currencies of countries such as South Korea, Indonesia, Thailand, Japan, India, Russia, Argentina, and Brazil.The fact that some high officials of China’s government are coming up lately with the solution for their international foreign exchange reserves problem – to replace their US dollar reserves with SDR’s is just showing to the world how naïve they are in international monetary issues and nothing else.Less than 2 years ago the IMF was ready to go out of business, after Brazil, Argentina and a few other countries paid their debt to the IMF and the IMF became almost overnight a purposeless organization.Over the years most countries hated when they had to borrow money from the IMF with all the strings attached that created a lot o problems to these countries at home. Countries from Africa, to South America they all had one thing in common its bad experiences under the policies imposed by the IMF when they had to borrow from that institution.What I am saying here is that most countries that have had experience with the IMF in the past want to stay away from the IMF any way they can in the future.The IMF and SDR’s is a solution that only a naïve country such as China would come up with – the rest of the countries that had experiences with the IMF are looking to China and laughing about their lack of experience in the international business in dealing with the IMF, and what the IMF means to most countries that had dealings over the years with that organization.I could go on and on regarding all the other reasons that buying SDR’s would not address that the New Asian Currency would, related to the economies that would adopt such a currency.At the end of the day the SDR solution it is not a solution at wall. I don’t even understand why China is wasting time even talking about it since just make their monetary leaders look naïve and foolish?But they already look foolish with all the investments that they have made in the United States in the last few years in the private sector that has gone sour to the tune of billions of US dollars in investment losses. And they don’t need all this talk about investing in SDR’s to look even more foolish and naïve..

  39. Ricardo C. Amaral   July 21, 2009 at 6:17 am

    Reply to Tom LloydsIf you and to talk about human rights in theory, then you can read about it at:http://en.wikipedia.org/wiki/Human_rightshttp://en.wikipedia.org/wiki/Economic,_social_and_cultural_rightshttp://www.iep.utm.edu/h/hum-rts.htmBut if you want to understand what happens to human rights in real life when you have massive overpopulation, and two countries comes to mind China and India – it does not matter what kind of government system you have, for example India is the largest democracy in the world, and you don’t need to look any further than what happens to people under overpopulation conditions to see how the massive poverty results in large parts of the population losing its humanity, and becoming worthless in the eyes of society as is the case of millions of people who live in the slums of Calcutta, India.The truth is there are only so much scarce resources to go around and under overpopulation conditions millions of people just fall through the cracks – and the reality is that most of its human rights also fall through the cracks with these destitute people.*****Tom Lloyds you said: “1) Why does Japan seldom mention this New Asian Currency any more after the news?*****Ricardo: Japan has less than half the US dollar assets that China has today. And the diversification problem is a lot more urgent for China since they are accumulating US dollar assets as if they want to take over the entire United States economy.*****Tom Lloyds you said: “2) Why didn’t you include Australia as a candidate for your New Asian Currency? Why should the Chinese choose Brazil instead of Australia?*****Ricardo: Your questions are very childish anyway, and I am not going to cover every country in the planet and tell you which currency each country should adopt in the future under the new monetary system of the 21st century.Australia is a country almost as large as Brazil, but Australia has a population of 21,262,641 people (July 2009 est.) – about the same population as the population of a city such as Sao Paulo in Brazil.In Brazil we have one city with as much population than the entire country of Australia.Australia’s GDP (purchasing power parity) = $800.5 billion (2008 est.)Australia’s GDP (official exchange rate) = $1.069 trillion (2008 est.)Australia’s:Reserves of foreign exchange and gold = US$25 billion (31 December 2008 est.)Brazil’s foreign exchange reserves = US$ 210 billion (as of July 2009)I left out of my commentaries many countries that might want to become also part of the new monetary system. Every country has to evaluate its position and what would be in the best interest of each country for the long-term.It does make sense for Australia to adopt the New Asian Currency. Australia would be a good candidate to be a member of the New Asian Currency, but the Australian people are the ones who should decide if they want to belong to such an international currency arrangement..

  40. Tom Lloyds   July 21, 2009 at 8:51 pm

    From your reply, I confirm that you cannot think. Do you think that IMF will be the world’s central bank after the world adopts SDR as the world’s reserve currency? Most likely, not! There may be a new organization. Therefore, your repeated answers on the problem of IMF are irrelevant.Chinese is only using the structure of SDR to promote their concept of using a basket of currencies as a new world reserve currency. This can solve the problem ultimately. I have asked you whether you will jump out from your comfortable home in USA to urge Brazil to adopt the New American Currency if Asia collapses. You have not replied. It is an important question. Now Asia is doing well. No one can guarantee that Asia can do well forever. If the world adopts this New Asian Currency as its reserve currency, it may happen that the same problem of US dollar may arise twenty years, fifty years, one hundred years … later. After one hundred years, we cannot expect that you will jump out of your coffer to teach Brazilian what to do. The Chinese solution is to solve this problem forever…., a new global monetary currency independent of any single country or region.China does need SDR rather than a basket of currencies to store its wealth. The problem of basket of currencies is the cost to balance the portfolio of the basket. Given the huge wealth the Chinese has, the impact on the currency exchange market is enormous when Chinese buys or sells one currency. The world cannot afford the impact. If it is SDR, one can only adjust the composition in one unit of SDR. The value of SDR will be kept constant even though one currency in the SDR falls. This is a new global monetary system.Your answer on Japan proves that you twist the facts! Japan was once the largest US treasury holder decades ago and now is only second to China in total. However, the amount of US treasury per Japanese is much much larger than that per Chinese. This is also a serious problem to Japan. I can tell you why Japan seldom mentions New Asian Currency (NAC) again because NAC sucks!Your answer on human right just repeats what you have posted. It is a waste of resources. You imply that the density of Chinese is so high and thus Chinese cannot have human right. It is clear to me as you have repeated your answer for several times. It is an insult to Chinese! Chinese should be careful your motive. You cannot even distinguish the difference between these two statements; “One cannot have or does not deserve to have human right”, and “Ones human right is violated”. Think about the difference. It does not require an IQ of 150 to figure out the difference.

  41. Guest   July 21, 2009 at 11:30 pm

    Richardo,You are asking nothing short of a revolution from the Chinese, albeit in the economic and financial sphere. The one in 1911 killed millions of people, 1949 again, and the one in 1989 was almost going to. Oh no, no, no.A bit of wisdom can be gleaned from one Peking opera play. At the end of a long established dynasty, the central authority is crumbling. All under the heaven had descended into chaos. One prince amongst many had came out to be the leader of the new order. He is invited, reluctantly, well sometimes contrived, to form the next dynasty to declare himself emperor. He humbly declines and stating instead that he is unfit to be the Son of Heaven. He declines again, again, and declares that if anyone continued to push for it, it will be sinking him and his clan into the abyss of greatest sin ever. Of course, eventually after 15 rounds of such interchanges he is declared to be the king of the hill. By the way this had happened in real life for at least 10 rounds since 1500BC in China.Not that the chinese are eager to take any leadership. If they do, it will take a long time, and not contrived. If it happens at all, the world I believe will virtually have to be begging them to do that, perhaps at some distant future.They have a piece of land I suppose that is sufficient and can be well managed to offer themselves a very good living. So for now, unless there is any danger of the dollars mismanagement, we will have the dollar as international currency. I cannot help but think that the SDR is a somewhat clumsy way of reminding the Americans of being careful about the dollar.

  42. Tom Lloyds   July 22, 2009 at 1:54 am

    Ricardo:An additional comment: You do not need to emphasize that Chinese has lost a lot of money in their US private investment. You imply that Chinese is not a smart investor. Even the best investor, Warren Buffet sometimes lose. If you look careful to the wealth that the Chinese has accumulated in this decade through investment, I hope that your IQ can allow you to observe that Chinese is excellent in investment!

  43. Ricardo C. Amaral   July 22, 2009 at 10:22 am

    Reply to Tom LloydsIt hurts trying to have an intelligent discussion with you.Now that I have demonstrated to you that it is not going to happen this SDR basket of currencies that the naive China want to turn into the New World Currency – and in your silly mind you are already dreaming up that China is going to create a new international monetary fund just to manage a basket of currencies that already exists.You are Pathetic.Your statement that – “The Chinese solution is to solve this problem forever….” – it shows how limited your intellectual capabilities are.Only someone very foolish and ignorant would make a statement like that.Today we have no way of knowing, what the world of 50 years from now is going to look like.Your statement is Pathetic.I am not going to convince you about anything regarding SDR’s – you are getting so silly that you want to create a new institution to do the job that the IMF is doing.After I told you that the experiences that most countries that were in trouble, and had to deal with the IMF in the last 40 years were similar to a person going to a dentist and having a root canal work done without any anesthesia – and who on his right mind would enjoy such an experience? – And only then you realized that China turning SDR’s into a world currency was an idea that is not going to happen.Yes, China has many investments here in the United States that made front-page news – investments in the billions of US dollars, and just 2 years later China had lost 2/3 of the value of these investments.It is a fact…the old pros from Wall Street were very happy in cash in just in time and in taking China for a ride – By the way, a very public ride for the entire world to see it..

  44. Ricardo C. Amaral   July 22, 2009 at 11:36 am

    Reply to GuestI don’t agree with your point of view. Here is why:China is moving forward at a very fast pace, and the Chinese government did a great job in the last 20 years in lifting over 250 million people out of poverty.They must be doing something right to achieve the outstanding economic results that they have achieved in such a short period of time.On your example you are talking about a time long gone – today we have a completely different ball game; the world moves at the speed of light.At which point the Chinese are going to do something about its skyrocketing accumulation of US dollar assets? And take the leadership role in creating the Asian monetary system for the future that I described with the creation of the New Asian Currency arrangement.When you combine the good job that the Chinese government has been doing in many years with the great new economic power of the Overseas Chinese and its network of networks – there is no stopping China from becoming almost overnight an economic superpower – and in the process lifting the boats to middle-class status of hundreds of millions of people in Asia.China already has all the pieces in place, and it is just a matter of having confidence and moving the process forward. Just keep in mind the Overseas Chinese, are the greatest entrepreneurs in the world.*****Quoting from my article ““Here Is Why Brazil Should Adopt the New Asian Currency.”The Overseas Chinese: The New Great Economic Power.The dynamics of Asia’s extraordinary growth cannot be understood without a thorough examination of the Overseas Chinese, the greatest entrepreneurs in the world. According to an assortment of estimates, Chinese around the world hold between $ 2 trillion and $ 3 trillion in assets, and many believe the real figure is higher….Fujitsu Research in Tokyo looked at the listed companies in just six key Asian countries. As its findings below illustrate, the overwhelming majority were owned by Overseas Chinese as follows: Thailand 81 percent, Singapore 81 percent, Indonesia 73 percent, Malaysia 61 percent, and the Philippines 50 percent.This astonishing revelation about the tremendous economic power of the Chinese is confined only to the publicly listed companies. What about the less glamorous small and medium-size enterprises that together make up 96 percent of all companies in the Asia-Pacific Economic Cooperation (APEC) realm? According to Bustanil Ariffin, the former Indonesian minister who co-chaired the Pacific Business Forum, it is believed that small and midsize companies employ half of the workforce in most Asian countries. Chinese own 90 percent of these companies.The economy of the borderless Overseas Chinese is the third largest in the world. If we counted the economic activity of all the Overseas Chinese as country all by itself, it would be outranked only by the United States and Japan. Overseas Chinese dominate trade and investment in every East Asian country except Korea and Japan.Ethnic Chinese – not the Japanese – are the largest cross-border investors in Thailand, Malaysia, Indonesia, the Philippines and Vietnam. The Overseas Chinese account for 80 percent of all foreign investment in China, the motherland.In the thriving new countries of Asia, Overseas Chinese control a huge chunk of the wealth – far more than their numbers might suggest. In Malaysia, they represent 30 percent of the population and control more than half of the economy. The numbers elsewhere are even more remarkable:* Indonesia: 4 percent control 70 percent of the economy.* Thailand: 3 percent control 60 percent of the economy.* The Philippines: 3 percent control 70 percent of the economy.Some historians go so far as to say that the economies of Southeast Asia were in a sense leased to the Overseas Chinese, while the natives concentrate on government.The Overseas Chinese are not a nation-state, and the vocabulary and concepts used to think about nation-states will not help us understand the phenomenon. As science historian Thomas Kuhn has pointed out, we simply cannot understand a new paradigm by using the vocabulary of the old.… The New Paradigm – A Network of Networks.The Overseas Chinese are a network of networks. That is a new paradigm, a new formulation within the framework of the world’s economy. All the key players among the Overseas Chinese know one another. Their businesses stay singularly apart, but they work together when necessary.They are intensely competitive among themselves and exclude outsiders, especially those not of the same family, village or clan. When a crisis arises or a great opportunity presents itself, they will close ranks and cooperate. …If you are being considered for a new partnership, a personal reference from a respected member of the Chinese business community is worth more than any amount of money you could throw on the table….The family business of the Overseas Chinese are networks of companies and other enterprises. And they are, in turn, woven together to constitute a huge global Chinese network of networks. Internet is the model for understanding. Just as the Internet is a network of about 25,000 networks, the Overseas Chinese networks number in the tens of thousands.The number of networks and individuals on the Internet is not limited because the Internet is totally decentralized. …It is decentralized right down to the individual; only the individual can access the Internet. Because of this complete decentralization, the Internet can have as many members as want to join. Similarly, the Overseas Chinese network can get as big as it needs to be to transform Asia’s economy.The other general characteristic of both the Internet and the Overseas Chinese network is that no one is in charge; the marketplace is. With the Internet, it is the marketplace of ideas and information, though, more recently, the commercial marketplace as well. With the Overseas Chinese network, market mechanisms are the deciding factor. Motherland or not, economic decisions involving China are driven purely by dictates of the market and guided strictly by rates of return.Individual Overseas Chinese networks of companies are completely decentralized from the whole and they are extraordinarily efficient parts….The Chinese function efficiently as individuals….This mode of operation makes the Chinese, and their enterprises, immensely nimble in the competitive global economy. They react speedily to changing conditions, especially to political vagaries….Also, the individualistic Chinese want to have control of their own destiny. The Chinese proverb has it that “There is no prospect working for others.” Everyone wants to be at the center and be his own boss. This inner entrepreneurial drive makes the Chinese very proactive, risk-taking and enterprising..

  45. Guest   July 22, 2009 at 12:33 pm

    Yes, quite a lot of unsuccessful Chinese investment was reported on the front page but quite a lot of successful Chinese investment was NOT even mentioned. I only look at the end result. As you have noticed, Chinese is quite wealthy. You are looking a way to share the Chinese wealth through the New Asian Currency. Chinese is wealthy because they are excellent investors. Even Warren Buffet sometimes lose. Can you forgive the Chinese for losing a tiny portion of their fortune to Wall Street recently?Even the world adopt the New Asian Currency (NAC) as its reserve currency, no one can guarantee that Asia will not turn on the printing machine to devalue the NAC. Eurozone did not turn the printing machine recently just because Germany preferred not to but it was a card on the table. Eurozone can turn on their machine if they wanted.

  46. Anonymous   July 22, 2009 at 6:11 pm

    Richardo,This is no longer about agreement or not between us by-standers. It is about belief; the Chinese have had 2500 years to learn what it means to take leadership and whatever wisdom there is cannot be proved or disproved in the short term, so they are likely to hold on to whatever happened to them in history and act on it.As I said the world has to descend into hell and everyone has to be begging them before they will emerge at that point to take the lead.By the way, did you not see the similarity between that and FDR in the US? US alone was isolationist for a long time before joining the fight against Hitler. Of course, by then both sides had been vastly exhausted. In the end relatively little blood was shed by the US for a great hegemony thereafter for 100 years.

  47. Ricardo C. Amaral   July 22, 2009 at 9:26 pm

    Reply to Tom LloydsTom Lloyds said: “Eurozone did not turn the printing machine recently just because Germany preferred not to but it was a card on the table. Eurozone can turn on their machine if they wanted.”Ricardo: The Germans have a very strong voice related to the policy of the European Central Bank (ECB) – and the Germans know from prior experience what happens to a currency when a country starts printing money like there is no tomorrow; the German experience of the 1920’s with hyperinflation still fresh on the German’s policy makers minds.On the other hand the US government policies regarding the value of the US dollar has been irresponsible for many years, and since the Reagan administration years massive deficit spending became the fashionable policy to follow in the US.When China and the Asian countries get their act together, and create the new currency arrangement the New Asian Currency including at least the countries that I mentioned, I can see the new Asian central bank, a new institution similar to the European central bank, to adopt conservative policies similar to the European central bank. The members central bankers who would be making policies for this new currency such as China, Japan, South Korea, Indonesia, Malaysia, and Brazil to just mention a few names – many of these countries became very conservative on their monetary policies because the experiences that they have had in the past with massive monetary crisis that almost destroyed the economies of these countries.I am sure that the new Central Bank of the New Asian Currency would adopt conservative policies to protect the value of the New Asian Currency, and also give protection under its umbrella to the economies of the countries that belong to this new monetary arrangement.Today, you don’t need to look any further than California, to understand what kind of protection that I am talking about that the monetary umbrella can provide to the members of this new monetary arrangement. If California were not under the umbrella of the US dollar today, then the economy of California (the 8th largest economy in the world) would be collapsing with run on its banks, a melting local currency, a total economic meltdown similar to the one we had in Argentina a few years ago..

  48. Ricardo C. Amaral   July 22, 2009 at 9:37 pm

    Reply to all the readers of the above article.In the last 10 years, I have been writing articles about Brazil adopting a new currency, first I suggested the euro, and in the last four years, I have been suggesting the New Asian Currency.I wrote many articles over the years on that subject, and I was involved in many debates with the readers about these articles, including the above article.But I am surprised that over all these years not a single person ever asked me one question: Why did I become interested on this subject and started writing about it?It was from direct practical experience of many years working in international trade, and also noticing over the years that it did not matter that countries were following sound economic development policies – when a country has the protection of just its local currency and the foreign exchange reserves of its central bank, their currency can be destabilized very easily, and the economy of that country can melt overnight under a massive currency crisis as it was the case with various Asian countries in the 1990’s, and also with Brazil.I remember seeing programs on television here in the US showcasing a Brazilian company how they were in the leading edge of technology, and excellent management team, and the company was growing and had an outstanding future ahead for that company – and just about 2 or 3 years later the company was driven out of business.What happened here?The company was growing, and was doing very well, and they had financed its new growth with money borrowed in US dollar, then the Brazilian currency had a major devaluation, and the liability in US dollar became a company killer. The foreign exchange rate between the US dollar and the Brazilian currency killed not only that company, but also created havoc in many other similar cases in Brazil.That company had great technology, know how, and an outstanding team of employees, and foreign exchange rate fluctuation killed that business. That would have not happened if that company belonged to a currency such as the euro, the US dollar, or even the New Asian Currency for that matter – if that company had the option to make that long-term investment in that umbrella currency then they would not have to worry about being destroyed by major foreign exchange fluctuations regarding that long-term investments, and they probably would still be alive today on their path to prosperity.Over the years we lost many opportunities of doing business, because of the exchange risk of doing any business in the Brazilian local currency, and most of the business had to be done in US dollar.If Brazil had adopted the euro, or the New Asian Currency for that matter – many of these transactions would have happened, because of the currency protection that a country has when they are under the umbrella of a mega currency.The adoption of a New Asian Currency would extend that currency protection to all the members that belong to that currency arrangement including China, Japan, Indonesia, Malaysia, South Korea, India, and Brazil.If you eliminate the foreign exchange risk among the members of the new currency arrangement then how do you price risk among the member countries?That is where the level of interest rate comes into play, to price the relative risk regarding to long-term investments in any country or project under the umbrella.When your country has adopted this new currency, then it becomes easier to make long-term investments in local currency (in the new mega currency) since you don’t have to worry about potential losses related to foreign currency fluctuations – you have eliminated the foreign exchange risk.I am sure that the international financial meltdown that we had in 2008 would have been a lot more severe to the individual countries that makes the European Monetary Union – the countries that are under the umbrella and protection of the euro..

  49. Tom Lloyds   July 23, 2009 at 8:20 pm

    Ricardo:” The company was growing, and was doing very well, and they had financed its new growth with money borrowed in US dollar, then the Brazilian currency had a major devaluation, and the liability in US dollar became a company killer. The foreign exchange rate between the US dollar and the Brazilian currency killed not only that company, but also created havoc in many other similar cases in Brazil.That company had great technology, know how, and an outstanding team of employees, and foreign exchange rate fluctuation killed that business.”Tom: Exchange rate fluctuation cannot kill a business. It is currency devaluation which kills. Why does a company borrow US dollar? It is because the interest rate of Real is so high while that of US dollar is low. It is a kind of carry trade. The company wished to pay less interest and was willing to carry the risk of exchange rate “devaluation”. It was greedy! This kind of risk could be easily transferred to Wall Street by hedging using future contract but this company wished to save the money on the future. So, if a company could not even to manage this simple exchange risk and fell, it was good and should be! They were just as greedy as Wall Street.They could borrow in Real and exchange to US dollar but…. They did not want to pay for the high interest rate.The problem of devaluation of Real can be simply solved by pegging the Real against the dollar at fixed exchange rate. Then there will be no currency exchange rate problems for all the Brazilian. However, it does not work because as the economy decays, this pegging mechanism will impose serious stress on the economy like inflation. Therefore, Brazil un-pegged the dollar pegging mechanism. Hong Kong has no problem because Hong Kong is wealthy. Adopting this New Asian Currency as Brazilian currency is very similar to the mechanism of pegging the Brazilian currency to the New Asian Currency (NAC) but with one difference. It is Brazil can easily move the wealth from the hard working Chinese, and Asian to Brazil through that New Asian Currency.I have read quite a lot of your articles. I have only one conclusion—- You are selfish. You promoted nationalization of foreign investment in Brazil while at the same time, telling Chinese to invest in Brazil. It may be good for Brazil to adopt the NAC but why should the Chinese approve Brazil to adopt NAC? You have not explained any benefit to the Chinese, who are your future boss. It you are sure that Brazil’s economy is and will be sound, Real will not devalue. It seems that you are not confident. I have asked you so many times. What is special about Brazil which deserves Chinese’s special care?You may answer that Chinese is not smart to put their money in US dollar… Wow, Wow Wow…. Ba… Ba.. Ba… You work and live in US. I suppose that you are paid in US dollar. I bet that most of your asset is in US dollar unless you have a bank account in Switzerland or other countries to pack your asset in New Asian Currency. It seems that you have not lost your faith in US dollar otherwise you will pack and live in Asia like Jim Rogers. Jim is the guy who I respect because he does what he says and means although he may not be always right.Furthermore, your attitude on human right is really sick. There is no problem to treat human beings in high-density area like monkey. I do not know how the Chinese people feels when they read your comments.

  50. Ricardo C. Amaral   July 24, 2009 at 5:47 am

    Reply to Tom LloydsTom Lloyds said: “Exchange rate fluctuation cannot kill a business. It is currency devaluation which kills. Why does a company borrow US dollar?”***Ricardo: Your entire statement shows that you are completely unaware of what was happening economically in Brazil in the 1980’s, and in the 1990’s until Brazil changed its currency to the Real.***Tom Lloyds said: “The problem of devaluation of Real can be simply solved by pegging the Real against the dollar at fixed exchange rate. Then there will be no currency exchange rate problems for all the Brazilian…”***Ricardo: It seems to me that you also don’t have a clue about what happened to the Argentinean economy in the 1990’s and in the early 2000’s. Otherwise you would not mention such a solution.Your statements also show that you have not grasped the difference between a country using a pegging mechanism to a mega currency such as the US dollar (as was the case with Argentina), and a country which traded their currency for a mega currency such as the euro (which has been the case with many countries such as: Germany, France, Belgium, Spain, Ireland, Italy, Luxembourg, the Netherlands, Finland, Austria, Portugal, and Greece.)You also list Hong Kong as a success story for a country using the pegging mechanism to a mega currency, you said: “Hong Kong has no problem because Hong Kong is wealthy.”I have news for you. If California – also a very wealthy economy – were not under the umbrella of a mega currency, (in this case the US dollar) then today the California economy would be collapsing completely, with run on its banks, and a melting economy just like in Argentina a few years ago.In the 1990’s the United States used all the time the Argentinean economy as a symbol of a country that were doing everything right economically according to Washington’s version of a capitalist system and free market thinking.***Tom Lloyds said: “It is Brazil can easily move the wealth from the hard working Chinese, and Asian to Brazil through that New Asian Currency.”***Ricardo: This is a very ignorant and silly statement to make mainly when you take in consideration what has been going on between China and the United States.You feel like that because the Chinese have been pilling up US dollars by the trillions – US dollars that they have been accumulating because of its massive volume of international trade with the United States. The Chinese have been giving its wealth away – the goods produced by its hard working people with very low wages and no benefits (I would say using an economic system similar to a modern adaptation of a slavery system), and in return the Chinese are getting paid in US dollar that will greatly be depreciated in the coming years. The Chinese have been giving away valuable assets all these years – its produced goods – in exchange for a depreciating commodity – the US dollar.And that is what you are afraid that is going to happen in the future between Brazil and China. If what has been happening for many years between China and the United States is not a major transfer of wealth, then you tell me what transfer of wealth means.China is already holding over $ 2 trillion dollars in US dollar assets, and this US dollars accumulation is growing exponentially, and very quickly they will reach $ 3, $4, and $ 5 trillion US dollars – basically a massive accumulation of confetti.***Tom Lloyds said: “You promoted nationalization of foreign investment in Brazil while at the same time, telling Chinese to invest in Brazil. It may be good for Brazil to adopt the NAC but why should the Chinese approve Brazil to adopt NAC? You have not explained any benefit to the Chinese, who are your future boss. It you are sure that Brazil’s economy is and will be sound, Real will not devalue. It seems that you are not confident. I have asked you so many times. What is special about Brazil which deserves Chinese’s special care?”***Ricardo: You are a smart ass with your silly comments.China will not become the future boss of Brazil as you said. It will be an equal partnership, based on equal respect for each other.You comments shows that you have a very hard time grasping a lot of concepts, and most of the time you comments also shows that your mindset is frozen in the past, and you have no idea that the world is being transformed as never before. You think the world of tomorrow is going to be just the same as the world of yesterday.You said: “You have not explained any benefit to the Chinese…What is special about Brazil which deserves Chinese’s special care?”I don’t expect you to grasp what is the essence of this article, but if you read carefully one more time the article – “The Smartest Thing China Could Do Right Now: Invest US$ 200 Billion in Brazil” – you might find your answer on that article, as follows:Brazzil Magazine – October 2007″The Smartest Thing China Could Do Right Now: Invest US$ 200 Billion in Brazil” Written by Ricardo C. Amaral…The final conclusion is: It’s imperative that China move forward in an aggressive fashion and implement with Brazil the plan described in this four-part series of articles. And China should look at it as a matter of national security and future survival.Monday, 01 October 2007 – Part 1 of 4http://www.brazzil.com/component/content/article/184-october-2007/9977.htmlFriday, 05 October 2007 – Part 2 of 4http://www.brazzil.com/component/content/article/184-october-2007/9979.htmlThursday, 11 October 2007 – Part 3 of 4http://www.brazzil.com/component/content/article/184-october-2007/9983.htmlTuesdayTuesday, 16 October 2007 – Part 4 of 4http://www.brazzil.com/component/content/article/184-october-2007/9985.htmlIn a Nutshell: The Chinese have the choice in the future of getting a stable and plenty foodstuff supply from Brazil to feed its very large population according to the plan that I described on my article, or they can feed them in the future the massive supply of confetti that China has been accumulating for many years and will continue to grow sky high in the future.In my opinion, the foodstuff from Brazil is tastier and more nourishing than confetti.And that is were the equal partner and mutual respect comes into play – without food to feed its massive population China will end up with a nasty civil war, and a complete breakdown of the country – since feeding the population confetti is not a good choice.And don’t forget in the future that Brazil is the country with an outstanding supply of food, and China, on the other hand, is the country with the largest number of human beings that needs to be fed.***Tom Lloyds said: “It you are sure that Brazil’s economy is and will be sound, Real will not devalue. It seems that you are not confident.”***Ricardo: Hello is anybody home?I have been writing many articles for the last 10 years about Brazil adopting first the euro, and now the New Asian Currency. And you claim that you read some of the article. I guess the subject matter of all these articles is above you head for you to be able to grasp it.***Tom Lloyds said: “You are completely wrong! German did not allow ECB to turn on the printing machine only because it was not necessary this time. It was necessary, they would. It shows that the ECB monetary mechanism is determined by one single strong country. It makes not much difference form a single country currency.”***Ricardo: The (ECB) policies are decided by its board, which includes a strong conservative German influence. But that influence can be achieved only because the other members of the board and the rest of the global central bank community for that matter also have a lot of respect for the German leadership.The perception that other people have is an important factor in playing the mega currency central bank game.A little currency can be cornered and can be impacted in world markets even by a single speculator – and in that regard George Soros name comes to mind..

  51. Ricardo C. Amaral   July 24, 2009 at 10:48 am

    Reply to Tom LloydsI want to clarify one point even further to you – and you should keep it in mind when you make future comments regarding Brazil.When a country is improving its economic situation, it is just natural for people to want to have more children as part of their new and prosperous life style, and also to upgrade their daily food diet.That means that in no time China’s population is going to increase even further and possibly pass the 1.5 billion people, and in turn China’s demand for scarce foodstuff will grow even more.In the future China is going to need the Brazilian food resources a lot more than Brazil will need anything from China.Brazil will not have a problem finding other customers around the world to buy the extra supply of foodstuff produced in Brazil, but China will have a major problem finding new sources of foodstuff supply around the world to meet the demands for extra foodstuff for its increasing population.The food supply problem in China will be even more dramatic in the future than most people have realized, because as the Chinese economy develops further, this economic development will replace a lot of productive land that China has today with concrete for all kinds of consumer and manufacturing needs, and a massive superhighways system as the automobile industry grows in China.You can bet that massive population growth in the coming years combined with a declining food supply – that can be a recipe and can result in catastrophic trouble in the future, and it might be the even the path to a nasty civil war.As you can see a massive population – “OVERPOPULATION” – can be a major drawback, and can become the “Achilles Heel” for a country that has aspirations to become a major superpower..

  52. Tom Lloyds   July 25, 2009 at 1:12 am

    Ricardo:Your replies to my comments are mostly nonsense. It does not deserve my replies. However, I must point out the following and ask the Chinese to pay attention of your intention.You think that when a country is improving its economic situation, it is just natural for people to want to have more children as part of their new and prosperous life style, and also to upgrade their daily food diet. It is wrong! Industrialization will cause people have less children. Singapore government needs to pay its citizens to produce some babies. Japan is worrying not having enough young people. In fact, I will expect Chinese population will decrease once China is industrialized. It is true that people will like to eat better. It can be solved by producing better food.You are native that China’s national security can reply on the supply of food from Brazil. It is nonsense! China’s national security replies on food self-sufficiency. Never let any foreign country to control its food supply chain!Industrialization will not necessarily decease agriculture production. It all depends on government policy. Japan is a small country in land size and Taiwan is only a small island. Taiwan and Japan both restrict food import, both have gone through a period of industrialization. Because of the policy of food import restriction, both of them can preserve their agricultural industry and be food sufficient. They do not let the cheap food import to push down the food price and so it can continue to attract people to farm. It is ultimately important for the Chinese to preserve their own agricultural industry.The problem can be solved by improving agricultural technology. I would suggest the Chinese to do the followings;1. To impose heavy import duty on food import from Brazil to protect their farmers.2. To restrict investment in Brazil to avoid the risk of nationalization as proposed by Ricardo.3. The money which is intended to be invested in Brazil should be invested in China to develop agricultural technology. Then export the agricultural technology to Brazil to earn their money. Brazilian uses better Chinese technology to produce more food to push down the food price (over supply). Chinese controls the technology! By using the new technology, China is food self-sufficient by itself.4. Never let Brazil to adopt the New Asian Currency or Yuan as their currency such that more Brazilian companies will fail. It will create more jobless Brazilian. As the supply of manpower increases, it will push down the salary and hence the cost of food production will decrease. Thus the food price will decrease. Why should the Chinese be bothered to save some Brazilian companies by letting Brazil to adopt Yuan.Lastly, the size of China is huge. In the coming several decades, China will be the world’s largest economy. It will bigger than today’s US economy. Of this large economical size, I do not think that China needs this New Asian Currency to stable their currency. Brazil may need NAC.From what you have written, it is clear to me that you wish Brazil to control Chinese’s food supply, moving Chinese’s wealth to Brazil through this New Asian Currency, and wish Brazil to control Chinese’s monetary policy or at least have a saying.A last point, as the price of oil going higher, country will depend more on their local food supply because of the rising transportation cost. It may become unpractical to transport a ton of grain from Brazil to China. Brail will become an isolated country in the southern hemisphere. Therefore, it is imperative for the Chinese to implement my plan.

  53. Ricardo C. Amaral   July 25, 2009 at 4:28 am

    Reply to Tom LloydsBy the way, what is your real Chinese name? Why do you use an English screen name? You are a Chinese from which country? Maybe Thailand, Singapore or even Taiwan?The countries that you mentioned on your posting doesn’t have the “One Child Policy” that China has had for many years; a government program designed to limit population growth.The Chinese government introduced the policy in 1979 to alleviate social, economic, and environmental problems in China. In total, the Chinese government estimates that it has three to four hundred million fewer people in 2008, with the one-child policy, than it would have had otherwise.Chinese authorities thus consider the policy as a great success in helping to implement China’s current economic growth. The reduction in the fertility rate and thus population growth has reduced the severity of problems that come with overpopulation, like epidemics, slums, overwhelmed social services (such as health, education, law enforcement), and strain on the ecosystem from abuse of fertile land and production of high volumes of waste.The one-child policy promotes couples having only one child in rural and urban areas. Parents with multiple births aren’t given the same benefits as parents of one child. Many times the parents have to pay money to the government in order to get permission to have another child.The policy is enforced at the provincial level through fines that are imposed based on the income of the family and other factors.Despite this policy, there are still many citizens that continue to have more than one child.The one child policy was designed from the outset to be a one-generation policy.Since the introduction of the one-child policy, the fertility rate in China has fallen from over three births per woman in 1980 (already a sharp reduction from more than five births per woman in the early 1970s) to approximately 1.8 births in 2008.In 2002, China outlawed the use of physical force to make a woman submit to an abortion or sterilization, but it is not entirely enforced. In the execution of the policy, many local governments still are demanding abortions if the pregnancy violates local regulations.As the one-child policy begins to near its next generation, one adult child is left with having to provide support for his or her two parents and four grandparents. This leaves the older generation with more of a dependency on retirement funds or charity in order to have support. If personal savings, pensions, or state welfare should fail, then the most senior citizens would be left entirely dependent upon their very small family or neighbors for support. If a child cannot care for their parents and grandparents, or if that child cannot survive, the oldest generation could find itself destitute.*****Tom Lloyds said: “Taiwan and Japan both restrict food import,”*****Ricardo: The rice lobby in Japan is a very old and powerful group, and by keeping the rice farms in place that has a major impact in land prices in Japan; it keep the land price at a much higher price than if they did not have these government protection of rice producers. The policy is more related to keeping an inflated land value than their concern for a stable food supply.Based on your posting I can see that you still have not grasped the issues regarding future global food production, and how that issue is going to affect China and its massive population.You also said: “The problem can be solved by improving agricultural technology.”I wonder if your plan also includes making a “new water supply on a laboratory” to use it in agriculture production.*****Tom Lloyds said: “Never let Brazil to adopt the New Asian Currency or Yuan as their currency such that more Brazilian companies will fail.”*****Ricardo: If China doesn’t have the foresight to grasp that China would be in better shape in the future by creating and adopting the “New Asian Currency’, than if China continues on its current path of massive accumulation of a declining currency such as the US dollar, then China is going to look foolish in a couple of years when it is holding trillions, and trillions of confetti.If China thinks that it is better for China to continue being just a subsidiary of the United States – by providing hundreds of billions of US dollars to support the US government deficit spending binge, and by continuing sending the goods year after year to keep a higher standard of living in the USA – then what else can I say?From the US perspective this is a very good arrangement, and China should continue its policy of sending the money and the goods until the day China wakes up.As I mentioned before on my postings, Brazil adopting the Yuan in the future is not an option, because it doesn’t make any sense from the Brazilian perspective for Brazil to adopt such a strategy.*****Tom Lloyds said: A last point, as the price of oil going higher, country will depend more on their local food supply because of the rising transportation cost. It may become unpractical to transport a ton of grain from Brazil to China. Brazil will become an isolated country in the southern hemisphere.*****Ricardo: I don’t know why you can’t grasp the importance of having a freshwater supply for a country to be able to achieve its goals in foodstuff production.The most critical resource is water, not land. Regional distribution of water resources in China does not match agricultural (irrigation) demand. While some 44% of the population and some 58% of the cultivated land are in the northern and northeastern provinces, only 14.4% of the total water resources (surface runoff and groundwater) can be found in those regions. Rivers and lakes are increasingly being polluted by the industrial and urban sectors, which increases the risk that soil on irrigated fields will be degraded and that dangerous substances (such as heavy metals) will enter the human food chain. Flood-related harvest loss is a serious threat to China’s food security. Finally, in northern China there is increasing competition for scarce water resources between rapidly growing urban and industrial consumption, on the one hand, and agricultural demand, on the other.Projects that attempt to divert water from southern rivers (such as the Yangtze) to the drought-affected North of China through canals are probably inevitable. Work on the western canal has already begun. However, these large-scale water diversion projects are extremely costly – not only in monetary terms, but also in ecological and social terms. They require high dams and water reservoirs, which may inundate huge areas of valuable cropland (such as occurred with the Three Gorges Dam project). Often large number of farmers have to be resettled in areas where the land is less fertile than in the river valleys in which they lived before.As indicated in “State of the World, 2006” by Worldwatch Institute, China faces some of the most severe environmental challenges in the world.• Of the 20 most-polluted cities in the world, 16 are in China.• About 300 Chinese cities suffer from severe water shortagesIt is also worth noting that, as the “factory of the world,” China processes all kinds of natural resources and then exports the products to the global market; the resultant pollution is left behind in China.China’s water crisisStatistics from the Ministry of Water Resources of the People’s Republic of China show that China’s per capita water resources are less than 1/3 of the world’s average and that China is one of the 20 countries suffering the most from water shortage. Zhou Shengxian, Minister of Environmental Protection, said “in 2005, the urban groundwater of half of China’s cities was seriously polluted”. At least 30 percent of the freshwater from China’s seven river systems is not even fit for irrigation and 85 percent of China’s lakes have suffered eutrophic phenomena, especially algae blooms, which reduce the dissolved oxygen content and often cause the extinction of other organisms. Water pollution accounts for half of China’s annually reported pollution. Half of the water pollutants are a result of industrial activity.Figures from both the Ministry of Environmental Protection and the Ministry of Public Health indicate over 90 million people do not have access to potable water and that over 40 percent of the potable water in rural areas does not even meet basic health and hygiene guidelines.In addition, climate change is also threatening the future of China’s freshwater supply. Greenpeace found, after three expeditions, that glaciers of the Tibetan Plateau have been retreating incredibly fast over the past 40 years. The glacier, also called the Asian Water Tower, is the source of major rivers, such as the Yangtze, the Yellow River, the Ganges, the Indus, and the Mekong. The latest report from the Intergovernmental Panel on Climate Change (IPCC) in April, 2007, indicates that 80 percent of Himalayan glaciers will disappear in the coming 30 years, threatening the potable water supply for billions of people, in China and other Asian countries.China’s agriculture and food supply crisisThe global grain crisis has already created turbulent situations in many countries. Many scientists and economists say that this crisis is the result of a series of elements, including climate change, rising oil prices, unfair international trade, pollution from chemical agriculture, and so on.The most populated country in the world, China appears to have enough for now. However, over the years, the dependence on chemical agriculture has caused harm to farmland and water resources. At present, 1.33 million hectares of farmland are seriously affected by the use of pesticide and chemical fertilizer, and freshwater from the rivers is too polluted for irrigation.If the current trend is not reversed, with the decrease of agricultural population and increase of urban population combined with the deterioration of the environment, China will soon also be struggling with the food supply crisis.China’s consumption of chemical fertilizer is the highest in the world. Only 30 percent of the fertilizer is truly absorbed by the plants. This means that nearly 70 percent of all chemical fertilizer enters water systems by surface runoff and causes algae bloom outbursts, among other things, which contributes to lake pollution. At present, over 85 percent of China’s lakes suffer from eutrophication..

  54. Tom Lloyds   July 26, 2009 at 7:42 pm

    Ricardo:I would say that Jim Rogers deserves a lot of respect from the Chinese. Whenever he is interviewed on TV, he never forgets to urge global investors to invest in Chinese water technology companies. Everyone knows that there is a water problem in China. Jim is helping the Chinese to solve the problem by moving the world’s money to China. Chinese never says to nationalize foreign investment in China as you urged Brazil to do so. It is the correct way to solve problems. You should learn from Jim Rogers.Jim does not like you. He does what he says and means. He sold his house in New York at the peak of the bubble because he saw no future of US dollars. He moves to Singapore because he wishes his daughters to learn Chinese. He believed that it would be the Chinese century. He opened a bank account in Switzerland for his daughters saving Swiss Franc. Smart guy! I know that you are still paid in US dollar as you are still working in USA. I suppose that you still own your house in US priced in US dollars. Unless you have a foreign bank account, I bet that most of your liquid assets are in US dollars. Therefore, you still align your future with USA. You claimed that the food in Brazil is tasty but you stay in US to eat French fries and junk food! What you say does not match with you have done.I also know that US dollar has problems. Your solutions of New Asian Currency by no mean a solution. You claim that Euro is great according to my understanding of your posts. With all the respect, Euro is also a flaw currency but just less flaw than US dollars. Why? Quite of a lot of those small European countries in Euro zone expect Germany to pay their bonds in Euro once the bonds matures! The German says no. It may be a crisis for the Euro. Yes, the exchange rate can be fixed by controlling the money supply through ECB. If the member countries continues to borrow without limit, Euro will be in a state of overvalue. It is perfect situation for George Soros. It is the same for your New Asian Currency, NAC. You have no idea of the corruption situation in some Asian countries which you think that should be a member of NAC zone. A corrupted country will issue bonds without limit once it has a rich boss like China to back up the NAC. Will Chinese and Japanese be that stupid? Japanese never even bother to mention that NAC after that piece of news reported on New York Times. You are the only promoter.For the Chinese, they should not be fooled! Considering the situation that Brazil and China are using the same NAC and Brazil controls China’s food supply. Whatever the Brazilian says, Chinese must listen otherwise they will cut off the supply. Brazil can demand keeping the interest rate low such that they can continue to borrow in NAC, and Chinese will pay for the bill. Now, I understand why you have spent so much time to write this kind of junk articles.Chinese is moving in the right direction. The world needs a currency which is stable in value and is independent of any single country. SDR is a smart move. This concept will allow the Chinese to move their US asset slowly to the asset in SDR without distributing the world market.I think that Chinese should say thank you for your concern and consideration of their food supply. With all the respect, your solution is nonsense. Water is a problem for the Chinese and they must solve it. Even with the food supplied from Brazil, without water Chinese cannot survive. So, Chinese must invest their money to solve their water problem and to improve their agricultural technology. They should not give their money to Brazil. Taiwan and Japan are small countries and are without big lakes and rivers. Both of them have gone through industrialization and they had serious pollution in the past. Both can maintain food self-sufficiency. Chinese should learn from them how to solve the problem. I believed Chinese can do as good as the Japanese and the Taiwanese.It is native to hand over a national security to a foreign country. Food and water supplies are vital for national security. They must be solved by the Chinese people themselves, not by any foreign countries. It is important to restrict food import such that Chinese farmer can continue to farm. If the cheap food from Brazil is dumped in the Chinese market, and the Chinese farmers give up their farmland, the situation will be serious. It only encourages more pollution and lost of farmland. Chinese must understand Ricardo’s true motive. Because of this, Japan had the gut to say no to US for importing US food.

  55. Ricardo C. Amaral   July 27, 2009 at 5:37 am

    Reply to Tom LloydsTom Lloyds said: “I would say that Jim Rogers deserves a lot of respect from the Chinese. Whenever he is interviewed on TV, he never forgets to urge global investors to invest in Chinese water technology companies. Everyone knows that there is a water problem in China. Jim is helping the Chinese to solve the problem by moving the world’s money to China. Chinese never says to nationalize foreign investment in China as you urged Brazil to do so. It is the correct way to solve problems. You should learn from Jim Rogers.”*****Ricardo: I know who Jim Rogers is, and I agree with you that he is a very smart man.But I don’t agree with his position on this specific subject.Here is what I suggested on my article regarding the freshwater system in Brazil.“Freshwater policy in Brazil should protect the entire freshwater system in Brazil including groundwater, and should keep it as a community service, and access to freshwater should be considered as a fundamental right of every person living in Brazil.The water companies in Brazil should be developed with help from the federal government and they should operate such as mutual insurance companies in the United States – they should operate as non-profit organizations and the owners of these water companies should be the communities being served by the water company system.The cost of water in Brazil should be priced according to the usage of the customers of the water companies, but a reasonable amount of freshwater should also be supplied to the poorest members of society who can’t afford the cost of these services without the help from the federal government.The water distribution system of any area in Brazil shouldn’t be allowed to be privatized under any circumstance not only today, but also in the future.Brazil should add on its constitution an amendment forbidding the privatization of any water company in Brazil, and if there is any private water company today they should deprivatize and turn it into a non-profit mutual company.The same rules should also apply to the entire sewage system in Brazil.”In my opinion, it is wrong for water companies to be run as a for profit company – with the only goal being to maximize profits.*****Tom Lloyds said: “you still align your future with USA”*****Ricardo: My future is aligned with Brazil.*****Tom Lloyds said: “I also know that US dollar has problems. Your solutions of New Asian Currency by no mean a solution. You claim that Euro is great according to my understanding of your posts. With all the respect, Euro is also a flaw currency but just less flaw than US dollars.”*****Ricardo: There is no “forever solution” regarding the international monetary system, as you seem to be looking for it.The euro is not a perfect solution, but it has been serving its purpose since the creation of the euro, and this European monetary arrangement still will be useful for many years to come.*****Tom Lloyds: “Yes, the exchange rate can be fixed by controlling the money supply through ECB. If the member countries continues to borrow without limit, Euro will be in a state of overvalue.”*****Ricardo: That is why the ECB has the option, and can raise the equivalent of the US Fed Funds rate to cool the over borrowing that is going on.*****Tom Lloyds: It is the same for your New Asian Currency, NAC. You have no idea of the corruption situation in some Asian countries which you think that should be a member of NAC zone. A corrupted country will issue bonds without limit once it has a rich boss like China to back up the NAC. Will Chinese and Japanese be that stupid? Japanese never even bother to mention that NAC after that piece of news reported on New York Times. You are the only promoter.*****Ricardo: They would issue bonds as long there are buyers for their bonds, and they would have to pay a very high interest rate to find these buyers.No different of what has been going on in California in the last few months. Usually the lenders are not supposed to be foolish if they do their homework.That is in a perfect world, but in reality they buy sub-prime junk that were rated AAA.*****Tom Lloyds said: “For the Chinese, they should not be fooled! Considering the situation that Brazil and China are using the same NAC and Brazil controls China’s food supply. Whatever the Brazilian says, Chinese must listen otherwise they will cut off the supply. Brazil can demand keeping the interest rate low such that they can continue to borrow in NAC, and Chinese will pay for the bill. Now, I understand why you have spent so much time to write this kind of junk articles.*****Ricardo: First, the purpose of adopting the New Asian Currency has to do with eliminating the foreign exchange risk between the countries that adopts such international monetary arrangement. It is a win/win situation to all members that belong to that international currency arrangement.Second, Brazil is not going to control the foodstuff supply of China. Brazil would just complement and serve as an insurance policy for China to acquire the necessary short falls to meet Chinese total demand for food.Brazil is not going to demand that interest rate should be kept lower for Brazil to be able to borrow in the New Asian Currency. You are saying that because you have no idea how the Brazilian central bank has run its monetary policy in the last 7 years; since the Lula administration adopted a very conservative policy.*****Tom Lloyds said: Chinese is moving in the right direction. The world needs a currency which is stable in value and is independent of any single country. SDR is a smart move. This concept will allow the Chinese to move their US asset slowly to the asset in SDR without distributing the world market.*****Ricardo: The SDR idea is not going anywhere. You can bet on that. If SDR were a solution then today SDR’s would be a major part of the foreign exchange reserves of most central banks.In that sense China has another alternative to evaluate in the meantime – China also can consider the “Monopoly Money” and China can exchange its US dollars for Monopoly Money – and as you want: …and is independent of any single country.I am sure that Hasbro probably will be able to accommodate any of China’s requests. And you can buy with that money railroads, water works, electric utility companies, a lot of prime location real estate and a lot more.http://www.hasbro.com/games/kid-games/monopoly/Quantities and denominations found in standard editions of the MONOPOLY game: 30 $500 Bills (orange), 30 $100 Bills (peach), 30 $50 Bills (purple), 30 $20. Bills (light green), 30 $10. Bills (blue), 30 $5. Bills (pink), 30 $1. Bills (white). Total amount of money per game = $20,580.And there is also another major advantage:Short on MONOPOLY game cash?Be as rich as you want to be and print your own money!http://www.hasbro.com/games/kid-games/monopoly/default.cfm?page=StrategyGuide/gametools*****Tom Lloyds said: “It is native to hand over a national security to a foreign country. Food and water supplies are vital for national security. They must be solved by the Chinese people themselves, not by any foreign countries. It is important to restrict food import such that Chinese farmer can continue to farm. If the cheap food from Brazil is dumped in the Chinese market, and the Chinese farmers give up their farmland, the situation will be serious. It only encourages more pollution and lost of farmland.*****Ricardo: The United States has placed its national security in jeopardy, by becoming so dependent on other countries to supply its domestic oil needs.There is plenty of customers around the world willing to buy the extra food supply produced in Brazil – and Brazil should strength its relations even further with these customers for the long-term.When there is a food shortage around the world in the future – and you can bet that food shortage is going to happen – then at that time China can ask Japan and Taiwan to help China feed its people.It seems to me that Tom Lloyds still having a hard time grasping a simple fact that was also included on my article as follows:“The policy-makers in China must be aware that the country’s rapid urbanization will affect its ability regarding local food production, since, when a country embarks on such a huge urban and economic development, there are also other costs when a new highway and road system, bridges, new manufacturing centers, shopping malls, condos, and so on are being built. Very often these economic development projects are being built where before there were farms that supported the internal food production system of that country. When you replace productive lands with roads, and with all kinds of concrete structures, in the process you are also reducing even further your future food production capabilities.”.

  56. Tom Lloyds   July 27, 2009 at 10:12 pm

    1. I said that Jim Rogers always remind investors to invest in Chinese water technology companies. I do not understand your answer related to those state water companies in Brazil means. Is it related? Jim tells the world to put their money on water technology companies not distribution companies. Come on! Those water technology companies can help Chinese to clean up the mess.2. Chinese is doing my way. They put much incentive on agriculture now. It is the right way. Here is the link you can learn something.http://www.bloomberg.com/avp/avp.htm?N=av&T=Rogers%20Sees%20Growth%20in%20China%20Infrastructure%2C%20Agriculture&clipSRC=mms://media2.bloomberg.com/cache/vF4CPjvN5Kj4.asf3. Your comments on SDR are childish.4. First there is no Asian Union as there is a European Union. Even Hong Kong, Macau, and China cannot use one single currency. Well, until the time at which your bone can beat the drum, there may be a chance of talking to integrate Hong Kong, Macau and China’s currency. Your dream is unrealistic.5. Your comments on New Asian Currency hides the fact that rich countries in this NAC zone bear the credit risk of poor countries. You never learn it. I hope that I do not need to write more to teach a person with such a low IQ this simple fact! You just wish China to pay for the debt of Brazil, and other poor countries.6. Your example of California is nonsense. If California were an independent country, California would have ton of gold in reserve to back up the California dollar as California was gold producing state. I do not know whether California protects the US dollar or the US dollar protects California as you dream.7. Water is vital to a country. If there is a problem, the country must put their resource to solve the problem. It is live and death. Your oil analogy is inappropriate. Without oil, Chinese can still live and ride the bike. Without water, even with ton of foods shipped from Brazil, no one can eat it. Therefore, now it is the time to impose quota on food import to encourage people to reserve water and not to pollute it. If the cheap food from Brazil is spread on the Chinese market, no one will have the incentive to save the water source and the farmland. It will make the matter worse.8. You never give the correct to the question: Why does the Japanese never mention your great New Asian Currency again?9. You think that if there is a problem in water, there will be a problem in agriculture. It is wrong and nonsense! Israel has a shortage of water as well. They invented the “agriculture growth to the last drop of water technology”. Chinese should develop their own agriculture technology. Their money should be used on themselves, not to give it someone else anymore.10. Even the Grand son of, the Grand son of, the Grand son of …..…..the father of Brazil refuses to live in Brazil, no wonder Brazil has food surplus. Jim Rogers’ daughters speak native Chinese. Can your kids speak native protugesee,.. sorry, how to spell the name of this unimportant language? Are you joking that your future lies with Brazil? I cannot get it, Sir!11. Why did you spend your time to write these junks? You explain that you wish to help the Brazilian technology company. I have spent so much my time to teach you that nationalization will collapse technology company because nationalization will out obstacle on international collaboration. You still cannot get it. I really doubt your motivation to write those articles.

  57. Ricardo C. Amaral   July 28, 2009 at 8:30 pm

    Reply to Tom LloydsTom Lloyds said: “I said that Jim Rogers always remind investors to invest in Chinese…”*****Ricardo: You believe that China should follow everything that your investment guru says. By the way, he does not live in China (in Shanghai or in Beijing), I understand he lives in Singapore.*****Tom Lloyds said: “First there is no Asian Union as there is a European Union. Even Hong Kong, Macau, and China cannot use one single currency. Well, until the time at which your bone can beat the drum, there may be a chance of talking to integrate Hong Kong, Macau and China’s currency. Your dream is unrealistic.*****Ricardo: Your comment shows how you are deep in the box, and you are aware of all your limitations and boundaries.*****Tom Lloyds said: “Your comments on New Asian Currency hides the fact that rich countries in this NAC zone bear the credit risk of poor countries. You never learn it. I hope that I do not need to write more to teach a person with such a low IQ this simple fact! You just wish China to pay for the debt of Brazil, and other poor countries.*****Ricardo: Brazil has a very low government debt ratio to GDP. What are you talking about?Talking about being a poor country: the last time I checked the figures regarding Brazil and China the figures looked like this:Brazil: GDP – per capita = US$ 10,100 (2008 est.)China: GDP – per capita = US$ $6,000 (2008 est.)China’s labor force is 8 times larger than Brazil’s labor force – and China’s GDP per capita is almost half of the GDP per capita of Brazil.***Brazil:Population: 198,739,269 (July 2009 est.)Labor force: 100.9 million (2008 est.)GDP (purchasing power parity) = $ 1.99 trillion dollars (2008 est.)GDP (official exchange rate) = $ 1.67 trillion dollars (2008 est.)GDP – per capita = US$ 10,100 (2008 est.)***China:Population: 1,338,612,968 (July 2009 est.)Labor force: 807.7 million (2008 est.)GDP (purchasing power parity) = $ $7.8 trillion dollars (2008 est.)GDP (official exchange rate) = $ $4.222 trillion dollars (2008 est.)GDP – per capita = US$ $6,000 (2008 est.)*****Tom Lloyds said: “Your example of California is nonsense. If California were an independent country, California would have ton of gold in reserve to back up the California dollar as California was gold producing state. I do not know whether California protects the US dollar or the US dollar protects California as you dream.”*****Ricardo: Are you serious? Or are you that thick and …?*****Tom Lloyds said: “Water is vital to a country. If there is a problem, the country must put their resource to solve the problem. It is live and death. Your oil analogy is inappropriate. Without oil, Chinese can still live and ride the bike. Without water, even with ton of foods shipped from Brazil, no one can eat it. Therefore, now it is the time to impose quota on food import to encourage people to reserve water and not to pollute it. If the cheap food from Brazil is spread on the Chinese market, no one will have the incentive to save the water source and the farmland. It will make the matter worse.*****Ricardo: Your analysis shows that you have been drinking too much of the polluted water and is already affecting your thinking.*****Tom Lloyds said: “You never give the correct to the question: Why does the Japanese never mention your great New Asian Currency again?*****Ricardo: “Japan’s shadow finance minister wants single Asian currency”http://www.asiaone.com/News/Latest%2BNews/Asia/Story/A1Story20090531-145078.html*****Tom Lloyds said: “You think that if there is a problem in water, there will be a problem in agriculture. It is wrong and nonsense! Israel has a shortage of water as well. They invented the “agriculture growth to the last drop of water technology”. Chinese should develop their own agriculture technology. Their money should be used on themselves, not to give it someone else anymore.*****Ricardo: Israel is a little country with a very small population – and that is your model to solve the water and agriculture problem in China with almost 1.5 billion people?Are you kidding? Are you that thick?*****Tom Lloyds said: “Why did you spend your time to write these junks? You explain that you wish to help the Brazilian technology company. I have spent so much my time to teach you that nationalization will collapse technology company because nationalization will out obstacle on international collaboration. You still cannot get it. I really doubt your motivation to write those articles.”*****Ricardo: More people have been contacting me lately asking me if they can publish my articles also on their websites. There are thousands of people reading my articles and many readers send me emails saying how much they appreciate all the information and new perspectives that I am giving them on these articles.If my articles are junk, then why are so obsessive about what I write?I don’t pay any attention to any material that I think it is junk. I don’t waste a second reading any stuff that I think it is junk.The only reason I am reading what you have been writing on the comments section of my article is a matter of courtesy and I have been trying to educate you – but you seem to be a lost cause. You are inside of the box and you know all your limitations and all the boundaries around you.All you can see is the world of yesterday and nothing else..

  58. Ricardo C. Amaral   July 29, 2009 at 8:41 am

    Reply to Deepak LalThere is the European Economic Community including such countries as England and Sweden – the political European Union, and there is the European Monetary Union (EMU); a monetary arrangement between the European Economic Community members that decided to adopt the Euro as their currency.And in my opinion, Russia should adopt the Euro as its currency, not for political reasons, but for the economic reasons as I described on my article.I have no doubt that the Euro still be around 30 years from now when the bonds come to be redeemed.By the way, what guarantees do you have that the bonds issued in US dollars would be worth anything 30 years from now?My article it is about restructuring the international monetary system, and I did not say: “…has proposed an Asian currency union (modelled on the euro) centred around the renminbi,”I said on my article: China should create a “New Asian Currency” similar to the Euro, and I did not say anything about this new currency being centered on the renminbi or yuan.A “New Asian Currency” means that at a certain date all the currencies of the countries that are going to adopt this new currency translate its currency into this “New Asian Currency” and at that point there is the transition period until there is only this “New Asian Currency.”A process no different than what happened with the transition period of local currencies such as the German Mark and the French Franc when these currencies merged into the Euro.This “New Asian Currency” would not be pegged to the dollar – the “New Asian Currency” would free float in the same way the US dollar and the Euro float in international markets today.*****“A new international monetary system?”By: Deepak LalBusiness StandardNew Delhi July 28, 2009http://www.business-standard.com/india/news/deepak-lalnew-international-monetary-system/365130/…the proposal being floated by a Brazilian economist for four competing currency unions, with four alternative reserve currencies, likely to succeed. Ricardo Amaral (“Brazil, China, and the New Asian currency”, http://www.rgemonitor.com) has proposed an Asian currency union (modelled on the euro) centred around the renminbi, which would also include Brazil. Russia should join the euro, and the Gulf countries should have a common currency centred on the Saudi rial. But, currency unions require some political common ground amongst the participating countries ideally, as in the US— currency union is a political union. The euro still remains fragile, because the hoped-for European political union has not yet emerged. A stable political union is necessary if 30-year bonds issued in the common currency are to be widely held. Without a political union there can be no guarantee that the common currency will be around when the bonds come to be redeemed..

  59. Ricardo C. Amaral   July 30, 2009 at 6:23 am

    Reply to Tom LloydsHere is an article on today’s Financial Times (UK) that explains why SDR’s is not a solution for China regarding its massive accumulation of US dollars.*****“Chatter about a new global currency is overblown”By Robert PozenFinancial Times (UK)Published: July 29, 2009At the US-China summit this week, Chinese officials raised concerns that the surging US budget deficit could undermine the value of China’s huge dollar holdings. These same concerns motivated the governor of the People’s Bank of China to suggest replacing the US dollar as the world’s reserve currency with special drawing rights issued by the International Monetary Fund. To be specific, he proposed that central banks be allowed to swap their dollar reserves for SDRs held in a substitution account by the IMF. SDRs represent a basket of four currencies – comprising 44 per cent US dollars, 34 per cent euros, 11 per cent yen and 11 per cent pound sterling.However, SDRs are not a realistic alternative to US dollars as the global reserve currency because there are too few of them in circulation. For the same reason, swaps of US dollars for SDRs would have limited utility….… However, these swaps would have to be of limited volume because they effectively transfer the risk of dollar depreciation from central banks to the IMF .http://www.ft.com/cms/s/0/8893be10-7c6d-11de-a7bf-00144feabdc0.html?nclick_check=1.

  60. Tom Lloyds   August 1, 2009 at 12:50 am

    Reply to Ricardo:1. Can you tell me what is the yield of long term Brazilian government bond? It is over 12% per year! Even in the middle of global recession, Brazilian government cannot lower the interest rate to the single digit level. Why? It is because the market is viewing Brazilian government carries a high risk of default rateYour number of debt ratio is meaningless to me. This default risk will pass to China if Chinese allows Brazil to adopt your New Asian Currency, NAC. ! I am sure that you cannot understand this simple concept. You do not need to reply to me. I do not want to waste my time anymore.2. Newspapers reported that in this year, Brazilian government has fired more than 300 civil corrupted servants but the government cannot put even one into jail because of the special legal system in Brazil. Corruption is serious in Brazil according to the report. You asked the Chinese to lend their money to a corrupted government for a return of guarantee supply of food. Are you nut? Who can thrust a corrupted government? China is a country, which puts a bullet into the head of a corrupted officer and requires that guy to pay for the bullet otherwise they will guarantee that they will make a mess on his head if he does not pay for the bullet. Will China be happy dealing with a government with a high level of corruption in particular that this government uses the same currency as the Chinese?3. I really doubt whether you see and understand the future. You warn the Chinese not having enough food on global warming and tell the Chinese to lend Brazil money in exchange of food because Brazil had too much food. Do you have some common sense? On global warming, countries near the equator are going into big trouble on agriculture. Brazil is one of them. I can give you some links here and please read it. http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1294&language=englishhttp://www.idrc.ca/en/ev-5544-201-1-DO_TOPIC.htmlhttp://news.mongabay.com/2006/1023-interview_fearnside.htmlBrazil is worrying their own food supply! You are treating the Chinese as a fool with an empty check! The future belongs to the countries near the north and south poles. The world’s biggest fresh water lake is just in China’s back door. Russia has a lot of unfarmed farmland. Most of the fresh water in the world is frozen in Canada. Brazil is running into trouble on global warming!4. Ricardo: Your analysis shows that you have been drinking too much of the polluted water and is already affecting your thinking.I have not drunk any polluted water. If an economy reaches a state of losing the “marginal” drop of water, which will cause a lot of pain, people within this economy will try to stop losing this “marginal” drop of water. The best way to do this is to ban food import such that this economy will reach the state of marginal drop of water earlier. It will save more water. It is only economics 101. I am completely shocked that you cannot even understand it. Even I am not an economist as you are, I know this simple economical theory.5. Why am I so obsessive about what you write? I hate to waste my time to teach you something on the Internet. I do this because I find that you try to tell the world what to do. For an example, your junk article on nationalization of PBR tell the Brazilian government to nationalize PBR at the peak of oil price. You did not understand the impact and used your family political connection to implement your plan. You always think that you are right and you know the future. In fact, you are an incapable person. You cannot even think and analyze. What you have done can affect the live of millions and you are not aware of it! The foodstuff from Brazil is another example. You thought Brazil would still have enough food. What a shame! I need to waste my time to point out all the mistakes in your article.6. If you wish to write. I can suggest some topics for you. I sold most of my US dollar at the peak of US dollar several years ago and invested in a currency which has appreciated more than 50% until today. I am smart. I can see the future! You cannot. You still stay in US and are paid in US dollar. I am not paid in US dollar long time ago. Here are the topics which you can write: 1. Why was I not so smart so Tom Lloyds and is still holding my home in US which is price in US dollar? 2. How to cook Brazilian food. I suggest these topics because you have questioned Chinese’s intelligence of holding US dollar in their reserve.7. Lastly, the money belongs to the Chinese. The Chinese earns their money with their blood and tear. Now they are spending in their own country to clean up their water system and build their infrastructure. They have their right to do so. How they spend their money is none of your business.

  61. Ricardo C. Amaral   August 1, 2009 at 10:08 pm

    Reply to Tom LloydsTom Lloyds said: “Can you tell me what is the yield of long term Brazilian government bond? It is over 12% per year! Even in the middle of global recession, Brazilian government cannot lower the interest rate to the single digit level. Why? It is because the market is viewing Brazilian government carries a high risk of default rate. This default risk will pass to China if Chinese allows Brazil to adopt your New Asian Currency, NAC. ! I am sure that you cannot understand this simple concept.*****Ricardo: The high level of interest rate in Brazil has been part of the conservative policies adopted by the Brazilian central Bank for many years. That is why Brazil did not had the economic and financial bubbles as we had in other parts of the world including the United States.When Brazil adopts the New Asian Currency the interest rate should go down in Brazil as it did in many countries that adopted the euro. The interest rate inside these countries went lower than if they had kept their old currencies.*****Tom Lloyds said: Newspapers reported that in this year, Brazilian government has fired more than 300 civil corrupted servants but the government cannot put even one into jail because of the special legal system in Brazil. Corruption is serious in Brazil according to the report. You asked the Chinese to lend their money to a corrupted government for a return of guarantee supply of food. Are you nut? Who can thrust a corrupted government? China is a country, which puts a bullet into the head of a corrupted officer and requires that guy to pay for the bullet otherwise they will guarantee that they will make a mess on his head if he does not pay for the bullet. Will China be happy dealing with a government with a high level of corruption in particular that this government uses the same currency as the Chinese?*****Ricardo: China has been accumulating trillions of US dollar assets, and it seems to me that China will continue pilling up even more in the future.The corruption that you are talking about in Brazil is about nickels and dimes; about nepotism, about giving government jobs to friends and relatives. About the Brazilian government paying the services of a butler that had been working for a Brazilian senator. All the scandal that you are talking about is related to the people who are fighting for power regarding the presidential election in Brazil of 2010.It is pure dirty politics at its lowest level, and nothing else.I hope you know what the word nepotism means.On the other hand, China is lending money to the United States by the trillions, and where all that money is going?To the money pit!!!1) About $ 2 trillion dollars for fighting 2 losing wars; the Iraq fiasco, and Afghanistan the graveyard to former superpowers.2) September 2008 – $ 800 billion bailout for Wall Street – as fast the taxpayer money went to AIG (over $ 100 billion dollars) the money was paid back to companies such as Goldman Sacks by the billions; and Goldman Sacks used that money to line the pockets of its executives by the billions of US dollars.3) The Federal Reserve under Ben Bernake’s management have been accumulating trillions and trillions of US dollars in toxic assets (about $ 13 trillion dollars) that will cost a fortune to US taxpayers. The US financial system including major banks, and other financial institutions gave garbage to the US Federal Reserve in exchange for good money.That probably can be considered the largest heist in global financial history.I would not want to deny the Chinese government from making such great investments like that. Please keep sending the cash to the US, because there are many other opportunities like that in the US; and the US government will need in the near future a ton of new money coming from China to keep a bunch of money pits going.As you said Tom: “Lastly, the money belongs to the Chinese. The Chinese earns their money with their blood and tear.”Please keep sending the money to the US that the Chinese earns with their blood and tear since as you can see that money is being very well invested in the US – according to you.*****Tom Lloyds said: I really doubt whether you see and understand the future. You warn the Chinese not having enough food on global warming and tell the Chinese to lend Brazil money in exchange of food because Brazil had too much food. Do you have some common sense? On global warming, countries near the equator are going into big trouble on agriculture. Brazil is one of them. I can give you some links here and please read it.Brazil is worrying their own food supply! You are treating the Chinese as a fool with an empty check! The future belongs to the countries near the north and south poles. The world’s biggest fresh water lake is just in China’s back door. Russia has a lot of unfarmed farmland. Most of the fresh water in the world is frozen in Canada. Brazil is running into trouble on global warming!*****Ricardo: I don’t know if you took the time to read my 4-part article about China investing $ 200 billion dollars in Brazil?Because based on your posting you continue to be completely clueless about the subject of freshwater and food supply.*****Tom Lloyds said: “Why am I so obsessive about what you write? I hate to waste my time to teach you something on the Internet. I do this because I find that you try to tell the world what to do. For an example, your junk article on nationalization of PBR tell the Brazilian government to nationalize PBR at the peak of oil price. You did not understand the impact and used your family political connection to implement your plan.*****Ricardo: The Brazilian government understand what I have been trying to say with my articles; and they are in the process of creating a new company 100 percent owned by the Brazilian government to develop the new oil fields in Brazil – and a large part of the revenues of this new company will be used to build Brazilian infrastructure – just as I described on my article.Yes, they are implementing my plan in Brazil!!!!!!.

  62. Tom Lloyds   August 2, 2009 at 6:34 pm

    Ricardo: The Brazilian government understand what I have been trying to say with my articles; and they are in the process of creating a new company 100 percent owned by the Brazilian government to develop the new oil fields in Brazil – and a large part of the revenues of this new company will be used to build Brazilian infrastructure – just as I described on my article.Yes, they are implementing my plan in Brazil!!!!!!Tom: ????? Was ist das? Können Sie Englisch lesen?Read this. You say that they are implementing your junk plan????http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLPEoeBNwanYPetrobras to Hold Stake, Operate All Pre-Salt Wells (Update1)Share | Email | Print | A A ABy Iuri Dantas and Heloiza CanassaJuly 29 (Bloomberg) — Petroleo Brasileiro SA, Brazil’s state-controlled oil producer, will have a stake in all so- called pre-salt oil fields under new rules being considered by the government, the country’s energy minister said.Petrobras, as the Rio de Janeiro-based company is known, would also be the operator of the fields even if it held a minority stake, Energy Minister Edison Lobao told reporters today in Brasilia.Brazil is preparing new legislation to govern oil and gas exploration and production in the country’s offshore pre-salt area. The region contains the Tupi field, the largest oil discovery in the Americas in the last three decades.“Petrobras’s participation will be in the auction rules,” Lobao said. “Petrobras can be the block operator even if it holds a minority stake.”……………………………………………….

  63. Ricardo C. Amaral   August 11, 2009 at 2:23 am

    Letter I received on August 8, 2009 from Mr. ManfredDear Mr. Amaral:Your suggestion that Brazil adopt the new Asian currency is an interesting one; you said that you had suggested the Euro years ago but changed your opinion. Later on in the article you write about future currency blocks where you say “and even some other currency that has not shown on the radar as yet”Do you envision a South American currency? I imagine that at this decisive moment in history it might be advantageous for South America to have its own currency (similar to the Euro).I am raising this question now because the debate is starting. Since a currency is a symbol which can unify people and nations, I see great benefits in a proper South American currency, not an Asian reserve currency for South America. This concept would require deep insight, foresight and unity. It is a vision. This is why:South America has endured exploitation for centuries which has formed (psychologically and possibly genetically) the people beyond our imagination. Replacing the US dollar as a reserve currency in South America with an Asian one would be like replacing one “conquistador” by another.Psychologically not much will change. People continue focusing on outside forces and blaming them for whatever problem comes to mind at the moment.Such a focus is a waste of time and energy and detracts them from the real problem: People need to know themselves and about the world (education), look inwards (analysis, editorials, free publication and exchange of opinions), change themselves (which means some savings or discretionary income), feel positive and in control of their lives, acquire positive self-esteem, and feel free to create new or modify existing institutions and the ways of relating to each other (freedom to associate and flexibility of contracts, and more). (This is an initial, partial list. I admit that is has not been factored well)The reason why I am writing to you about this is that I see here an opportunity for South America to move ahead. Yes, new institutions, credit, a unified currency, etc. are needed; but also widespread, positive self-esteem and a feeling of empowerment.I arrived two years ago and noticed that this seems to be lacking in Peru and Chile (I can’t speak about the other countries). Several Peruvians and Chileans have talked to me about similar issues. Even the university Santo Tomás is aware of this because they have tens of thousands of announcements on the backs of buses preaching ¡Tú puedes! However, saying it is not enough; one needs to have the experience. A South American unified currency would give collectively the people the experience of and a feeling for pride in having accomplished some independence (¡Sí, podemos!) and will free them to focus more on matters at home instead of blaming the new emperor(s).Does this idea make sense? Would you be willing to write about it? If your answer is positive, I would like to start a dialog.I am looking forward to your reply.Sincerely yours,ManfredEconomistCountry: Spain.

  64. Ricardo C. Amaral   August 11, 2009 at 2:40 am

    Reply to Mr. ManfredManfred: Later on in the article you write about future currency blocks where you say “and even some other currency that has not shown on the radar as yet”*****Ricardo: No – I don’t envision a South American currency.*****Manfred said: “I imagine that at this decisive moment in history it might be advantageous for South America to have its own currency (similar to the Euro).”*****Ricardo: South America does not have the economic foundations and structure and the necessary amount of foreign exchange reserves to create a South American mega currency. I mentioned on my articles over the years that if South America decides to create a new mega currency for South America I would suggest that the name of this new currency to be “The Bankrupt.”There is no advantage for Brazil to adopt a new currency with the other countries of South America – In that case Brazil would be better of just keeping the Real.*****Manfred: I see great benefits in a proper South American currency, not an Asian reserve currency for South America.*****Ricardo: I did not suggest that South America should adopt the “New Asian Currency.”I suggested that Brazil should adopt the “New Asian Currency.”*****Manfred: South America has endured exploitation for centuries which has formed (psychologically and possibly genetically) the people beyond our imagination. Replacing the US dollar as a reserve currency in South America with an Asian one would be like replacing one “conquistador” by another. Psychologically not much will change. People continue focusing on outside forces and blaming them for whatever problem comes to mind at the moment. Such a focus is a waste of time and energy and detracts them from the real problem: People need to know themselves and about the world (education), look inwards (analysis, editorials, free publication and exchange of opinions), change themselves (which means some savings or discretionary income), feel positive and in control of their lives, acquire positive self-esteem, and feel free to create new or modify existing institutions and the ways of relating to each other (freedom to associate and flexibility of contracts, and more). (This is an initial, partial list. I admit that is has not been factored well)*****Ricardo: My plan for Brazil to adopt the “New Asian Currency” has nothing to do with replacing one “conquistador” by another.It is based on economic reasons and what is best for Brazil regarding the coming decades.*****Manfred: The reason why I am writing to you about this is that I see here an opportunity for South America to move ahead. Yes, new institutions, credit, a unified currency, etc. are needed; but also widespread, positive self-esteem and a feeling of empowerment.… A South American unified currency would give collectively the people the experience of and a feeling for pride in having accomplished some independence (¡Sí, podemos!) and will free them to focus more on matters at home instead of blaming the new emperor(s).*****Ricardo: You should read some of the articles that I added at the end of my article about the “New Asian Currency”. If you read these articles then you would understand the reasons why I am suggesting that Brazil should adopt the “New Asian Currency.”Creating “The Bankrupt” as the new mega currency for South America is not going to accomplish any of your goals. You don’t have all the economic foundations and financial structures necessary for this new currency to be considered a major foreign exchange reserve currency.If South America decides to adopt “The Bankrupt” it will be just an empty and marginal currency without the necessary foundations necessary for that currency to be taken seriously by the international monetary system.You don’t create a new mega currency just to make people feel a positive self-esteem and a feeling of empowerment. In Brazil we have soccer tournaments that serve that purpose.Brazil has been independent of Portugal since 1822, and I doubt that there is a single soul in Brazil who still is blaming what is happening in Brazil today on what happened 200 years ago when Brazil was a colony of Portugal.Brazil is larger than Europe, and Brazil is 50 percent of South America. Besides, Brazil already has a population approaching 200 million people of whom 100 million people are destitute and live in complete poverty.Please tell me why Brazil should unite with a group of very poor countries and triple the number of uneducated people who are living in complete poverty?We are in the 21st Century and it does not matter where a country is located – that country will be able to choose any mega currency that is the best choice for each individual country based on trade and many other economic factors. Technology changed everything, and the rules for the new international monetary game has been drastically changed since the creation of the euro.The reason I changed my mind about 4 or 5 years ago about Brazil adopting the “New Asian Currency” instead of the euro has to do with what is the best economic strategy for Brazil regarding the coming decades.Please tell me what is better for Brazil regarding the coming decades. Here are your 2 choices:1) Brazil adopts the “New Asian Currency”The Brazilian economy prospers beyond imagination under the umbrella of a very stable “New Asian Currency” – a monetary arrangement among countries such as China, Japan, India, South Korea, Singapore, Thailand, Hong Kong, Taiwan, and Brazil.A new currency arrangement with a very strong, stable and state-of-the-art financial market and very low interest rate – and this financial stability help all the members that adopted this currency to develop and implement all kinds of long-term projects – it is good for local governments and to private industry as well.The currency stability and a strong financial market mean that long-term capital can be raised, and also paid in local currency.2) Brazil adopts “The Bankrupt”“The Bankrupt” would be a monetary arrangement among countries such as Brazil, Argentina, Bolivia, Paraguay, Peru, Chile, Colombia, Uruguay, Ecuador, and Venezuela.No financial stability, very high interest rate, high inflation is always around the corner, and the concept of a long-term investment boils down to just a few months in the future.If anything under such a monetary arrangement the interest rate for Brazil would be higher than if Brazil stayed with its current currency – the Real.Brazil has nothing to gain by adopting “The Bankrupt.”Sorry to disappoint you. But that is the economic reality of South America, and I know my answer is not what you were expecting.Ricardo C. Amaral.

  65. Ricardo C. Amaral   August 12, 2009 at 12:28 am

    Ricardo C. Amaral: Even the Japanese are starting to wake up. Let me translate for you what they mean by: “regional currency union”“Regional currency union” = “New Asian Currency.”This article was published on the front page of the Financial Times.*****“Japanese poll leader in attack on ‘US-led market fundamentalism’”By Mure Dickie in TokyoFinancial Times (UK)Published: August 11, 2009Yukio Hatoyama, the leader of Japan’s opposition Democratic party who is strongly placed to become prime minister after elections this month, has condemned “US-led market fundamentalism” and vowed to shield his nation from the effects of untrammelled globalisation.With the era of US unilateralism ending and worries about the dollar’s future role growing, Japan should also work towards regional currency union and political integration in an “east Asian community”, Mr Hatoyama wrote in an essay published yesterday in the Japanese magazine Voice….

  66. Ricardo C. Amaral   August 31, 2009 at 5:34 am

    Now that Japan has elected yesterday a Prime Minister and a new government that is in favor of creating a “New Asian Currency” – there is no more excuses for China.It is up to China now to get the ball rolling and get this show on the road – and make it a reality.With the results of the yesterday’s election in Japan the creation of a “New Asian Currency” has taken a big leap forward.And I hope the leaders of the Chinese government are aware of that fact.Now it is time for action, and the time for just talking is over!!!!.

  67. Ricardo C. Amaral   October 24, 2009 at 3:55 am

    Why it is taking so long for China, Japan, India, South Korea, and other Asian countries to grasp that it is time to create an Asian Union similar to the European Union – and create immediately a “New Asian Currency”?The “New Asian Currency” almost overnight would become as powerful as the US dollar, and the euro – and would split the international monetary system into 3 solid major foreign reserve currencies.Then according to each country’s long-term self-interests they would adopt one of these currencies such as Brazil would adopt the “New Asian Currency” – Russia would adopt the euro – and Mexico and Canada probably would adopt the US dollar.The Gulf states still could create the Gulf currency and become a 4th option.I wonder why it takes so long for intelligent people to grasp the obvious international monetary solution for the coming years?Last Tuesday, October 20, 2009 the Financial Times (UK) published an article “ Why the euro is not the next global currency” by Jean Pisani-Ferry and Adam Posen.The article said: “The explosion of debate on the demise of the dollar has been instructive, though vastly premature. What is striking, however, is the absence of the euro from talk of alternatives as the global currency.…This should have been the euro’s moment. It is already the second global currency…”I wonder why these guys think that if the role of the US dollar is diminished as a reserve currency it has to be replaced by another currency such as the euro and become the new international monetary system based on the euro.Why these guys think that the global economy could not function under a system based on 3 or 4 major international currencies such as the euro (30 %), the US dollar (30 %), the Gulf currency (10 %), and the “New Asian Currency” (30 %)?Why these guys can’t grasp that the world is splitting at least into 3 major trading blocks such as:1) North American Free Trade Agreement (NAFTA) including USA, Mexico, and Canada. These countries would be under the US dollar.2) European Union under the euro.3) Asian Union under the “New Asian Currency”.Why many US economists keep saying that there’s nothing out there to replace the US dollar as the global reserve currency?Because they want to keep the old international monetary game going on as long as they can, since that game gives an advantage for the United States in the international monetary game – If the US dollar is no longer the only game in town that would force the US government to put its economic and financial house in other.The truth is there is nothing set in stone regarding an international monetary system based on the US dollar.Americans don’t want to lose the US dollar special status as a global currency and as far as they are concerned the time to change the international monetary system it will be never – and they will fight to convince the rest of the world that the world can’t function if the US dollar is not the major reserve currency.I don’t know why at this point of their economic development China and Japan want to continue playing 3rd fiddler in the international monetary system when they are ready to combine forces and together they can start playing 1st fiddler?*****Brazzil Magazine – March 2, 2007“Here Is Why Brazil Should Adopt the New Asian Currency”Written by Ricardo C. Amaralhttp://www.brazzil.com/component/co…-2007/9821.html…Since December of 1998 I have been advocating and writing many articles saying that Brazil should adopt the euro as its new currency. But the world has been changing at the speed of light since then and everything is evolving very fast today.In the last two years I have changed my mind regarding Brazil adopting the euro as its new currency, because the entire ball game has changed from the Brazilian perspective in the last few years, and in my opinion, in the near future, Brazil should adopt instead the “New Asian Currency,” a new currency similar to the euro on its effort to adapt to the new global economic reality.**********“Asian nations look to ‘lead world’”By Danny Kemp (AFP) – 47 minutes agoSaturday, October 24, 2009AFP Worldwide News AgencyHUA HIN, Thailand — Asian nations discussed plans at a major summit Saturday to “lead the world” by boosting economic and political cooperation and possibly forming an EU-style community.The prime ministers of regional giants China and India also looked to foster unity on the sidelines of the summit in Thailand after months of trading barbs over long-standing territorial issues.But nuclear-armed North Korea and military-ruled Myanmar were also set to top the agenda in the royal beach resort of Hua Hin, underscoring the challenges still facing the region.The summit groups the 10-member Association of Southeast Asian Nations (ASEAN) with regional partners China, Japan, South Korea, India, Australia and New Zealand.Japan’s new Prime Minister Yukio Hatoyama said a proposed East Asian community involving all 16 countries should aspire to take a leading role as the region makes an early rebound from the global economic crisis.”It would be meaningful for us to have the aspiration that East Asia is going to lead the world and with the various countries with different regimes cooperating with each other towards that perspective,” Hatoyama, who took office last month, told the Bangkok Post newspaper.He described Japan’s alliance with the United States as the cornerstone of its foreign policy, but said the region should “try to reduce as much as possible the gaps, the disparities that exist amongst the Asian countries”.China would “doubtless” grow further, particularly economically, “but I do not necessarily regard that as a threat,” Hatoyama said.Officials said separately that East Asian nations would carry out a feasibility study for a huge free trade zone covering ASEAN, China, Japan and South Korea and a larger group involving India, Australia and New Zealand.Increased integration has been a recurring theme of the meetings in Thailand, as the rapidly changing region seeks to capitalise on the fact that it has recovered more quickly from the recession than the West.ASEAN leaders have been discussing plans to create their own political and economic community by 2015.…Chinese Premier Wen Jiabao and his Indian counterpart Manmohan Singh held “productive” talks on the sidelines of the summit Saturday but did not discuss their spat over territorial issues, officials said.…The leaders are expected to sign a host of agreements this weekend on economic and other issues including climate change, disaster management, communications and food security in the rapidly changing region.http://www.google.com/hostednews/af…QXjsojGVPPFCULQ.