China calls for new international currency reserve to replace the dollar

In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar. Russia recently made a similar proposal.

Zhou Xiaochuan, governor of the People’s Bank of China, said a new currency reserve system controlled by the International Monetary Fund could prove more stable and economically viable. A new system is necessary, he said, because the global economic crisis has revealed the “inherent vulnerabilities and systemic risks in the existing international monetary system.”

China’s bold idea, released more than a week before world leaders are to meet in London for a global economic summit, also indicates that Beijing is worried that its huge dollar-denominated foreign reserves could lose significant value.

The New York Times

Options for a failed U.S. Economy

A recent Pravda article spells it out:

1. The United States is the largest borrower in the world, the US national debt now exceeding 11 trillion dollars, and continuing to avalanche.

2. With the government taking on the debts of corporations, the corporate debt crisis has thus become the American governmental debt crisis.

3. According to experts, there is high probability of default on US treasury bonds. Some project that the USA has already started on a plan to refuse the dollar in order to avoid debt payments.

4. One analyst concludes that a US default is likely, only after the world finds an alternative to the US dollar. The dollar’s immediate collapse is unacceptable simply because 63 percent of world reserves are saved in dollars, and that would result in a global economic collapse.

5. Analyst Dmitry Abzalov believes that the current situation with the US national debt may end with a new war. The war will destroy excessive liquidity and the current debt. A war boosts the nation’s industry, with recovery based on defense orders.

A planned program of U.S. financial concentration

Paul Craig Roberts, a former Asst Secretary of the Treasury , poses the question “Is the whole point of the bailout to supply taxpayer money for a program of financial concentration?”

Roberts agrees that Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG.

Eliot Spitzer, the former New York Governor who was set-up in a sex scandal to prevent him investigating Wall Street, pointed out that the real scandal is the billions of taxpayer dollars paid to the counter-parties of AIG’s financial deals. These payments, Spitzer writes, are “a way to hide an enormous second round of cash to the same group that had received TARP money already.”

Meanwhile CNN reports that “Veterans Affairs Secretary Eric Shinseki confirmed that the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance” . And you may recall that the Washington Post reported that the Obama team has set its sights on downsizing Social Security and Medicare.

So let's watch the plan unveil.

What of the $10 Trillion stimulus bailout?

As a result of the nation's largest corporations and banks hitting up and continuing to hit up the U.S. government for trillions in taxpayer dollars, the government is on the hook for close to $10 trillion in assorted bailouts.

As they say on the Hill, "a billion here, a billion there ... pretty soon you're talking about real money."

How real? That $9.7 trillion is more than the U.S. government spent on the Louisiana Purchase, the New Deal, World War II, the Marshall Plan and the Vietnam War -- combined.

Imagine if the government had focused on committing 90% of this toward bailing out ordinary Americans instead, in economic help or loans, and “only” gave a trillion or so to the banks and corporations: Uncle Sam could have sent every single U.S. household a check for $80,000. Now that would have stimulated the economy.