Central banks begin dumping dollars; Bank runs begin

american dollar toilet paper

To sum the entire stories at the bottom: TAKE ALL YOUR MONEY OUT NOW and invest it in silver bullion, or keep it under the mattress.

The press and financial markets have been very excited by this story, and probably some speculators have even a dollar or two on it. What nobody has done so far is to question the source the story The Independent – Robert Fisk. He is a journalist with a very large ax to grind and an agenda of his own. In its original story on this issue, he writes about secret meetings and agreements not publicized. Before we rush to short the USD and splurge to dump our savings in renminbi (Chinese currency), we might consider exactly Fisk’s record for accurate and dispassionate journalism. I think we should be a little skeptical about his claims.

Also, for 50 years the US Fed Reserve has maintained a 2d set of books, exporting inflation by using the dollar as a global currency. The chickens are now coming home to roost. Be ready for triple-digit inflation as all these billions/trillions of dollars re-enter the global marketplace. I’m betting that by 2010, one will need $10 US to buy one Euro.

Bank runs predicted by famous Harry Schultz Newsletter

A few months ago, the renowned financial wizard Harry Schultz warned in his newsletter that the U.S. dollar would be replaced by a reserve currency, and most likely see a bank run or financial catastrophe by the week of August 24. Why does he think so? Because the FDIC is bankrupt. The FDIC board of directors actually delayed their reported by at least 2 or 3 days.

The FDIC (Federal Deposit Insurance Corp.) is what is used to protect your bank assets. Were the FDIC go bankrupt, the federal government would have to establish a rescue plan, and unlike the other bailouts, it is absolutely necessary. Your money is protected under the FDIC, but if the FDIC goes bankrupt, it would mean that you do not have insurance for your money in the bank.

“A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said in the letter. “Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the fund balance will approach zero or even become negative.”

Dutch Bank Goes Bankrupt & People Run Banks

It was reported that a week ago Dirk Scheringa Beheer (DSB) bank of Netherlands said they had “a hacker attack” which kept their site down for days. It turns out, it is likely no hacker, but the fact that the bank was not allowing withdraws! They had a run on the bank.

Clients of independent bank DSB were unable to transfer their money electronically on Thursday, leading the company to blame a concerted attack by hackers.

But the Telegraaf claims the site crashed because too many customers were trying to shift their money following a tv programme.

Pieter Lakeman, who leads a lobby group of DSB clients who believe they have been over-sold mortgages, said on tv show Goedemorgen Nederland that people should take their money out of the bank. By forcing its bankruptcy, they could then get compensation for their losses, he told the show. The lobby group represents some 1,200 people and is currently preparing a legal claim against DSB.

Despite whatever verbal signs of support central banks may be giving the dollar, they’re in fact fleeing it.

In the second quarter of 2009, central banks put 63% of their new reserves in euros and yen. This is a huge change from past amounts.

Bloomberg: The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification.

Dollar Reaches Breaking Point as Banks Shift Reserves

Oct. 12 (Bloomberg) — Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

World leaders are acting on threats to dump the dollar while the Obama administration shows a willingness to tolerate a weaker currency in an effort to boost exports and the economy as long as it doesn’t drive away the nation’s creditors. The diversification signals that the currency won’t rebound anytime soon after losing 10.3 percent on a trade-weighted basis the past six months, the biggest drop since 1991.

central bank us dollar holdings

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

‘Flush’ With Dollars

“The world is currently flush with the U.S. dollar, which is available at no cost,” Kind said. “If there’s a turnaround in U.S. monetary policy, there will be a change of perception about the dollar as a reserve currency. The diversification has more to do with reduction of concentration risks rather than a dim view of the U.S. or its currency.”

The median forecast in a Bloomberg survey of 54 economists is for the Fed to lift its target rate for overnight loans between banks to 1.25 percent by the end of 2010. The European Central Bank will boost its benchmark a half percentage point to 1.5 percent, a separate poll shows.

Reminders of 1995

Sentiment toward the dollar reminds John Taylor, chairman of New York-based FX Concepts Inc., the world’s largest currency hedge fund, of the mid-1990s. That’s when the greenback tumbled to a post-World War II low of 79.75 against the yen on April 19, 1995, on concern that the Fed wasn’t raising rates fast enough to contain inflation. Like now, speculation about central bank diversification and the demise of the dollar’s primacy rose.

Dollar Forecasts

The median estimate of more than 40 economists and strategists is for the dollar to end the year little changed at $1.47 per euro, and appreciate to 92 yen, from 89.97 today.

Englander at London-based Barclays, the world’s third- largest foreign-exchange trader, predicts the U.S. currency will weaken 3.3 percent against the euro to $1.52 in three months. He advised in March, when the dollar peaked this year, to sell the currency. Standard Chartered, the most accurate dollar-euro forecaster in Bloomberg surveys for the six quarters that ended June 30, sees the greenback declining to $1.55 by year-end.

Original story continues at Bloomberg


DSB directors meet after bankrupty claim

Monday 12 October 2009

The board at independent bank DSB is meeting on Monday morning to discuss its reponse to claims made by the Volkskrant that the bank is on the verge of collapse.

On Monday, the paper said the Dutch central bank is poised to take over the running of DSB which it said is on the verge of bankruptcy. The paper based its claims on finance ministry sources.

Original article appears on Associated Press

One thought on “Central banks begin dumping dollars; Bank runs begin”

  1. What is the date of this article? I always like to know how long ago these were written or if they are from current date.

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