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China Says Major Shift On Dollar Policy Coming

John Browne, NewsMax Money News
Some very worrisome news came out of China this Saturday – but it got a little more than a blip in the U.S. press.

At a high-level financial conference this past weekend, China’s Premier Wen Jiabao said, “China would actively explore and expand the channels and methods for using [its] foreign exchange reserves.”

Considering that the bulk of China’s reserves are in U.S. dollars, it should send tremors about the future of the greenback.
(23 Jan 2007)

OPEC Dumps $10.1 Billion of Treasuries as Oil Tumbles

Bo Nielsen and Daniel Kruger, Bloomberg
OPEC nations are unloading Treasuries at the fastest pace in more than three years as crude oil prices tumble, sending bond yields higher.

Exporters including Indonesia, Saudi Arabia and Venezuela, sold 9.4 percent, or $10.1 billion, of their U.S. government debt securities in the three months ended in November, according to Treasury Department data. Members of the Organization of Petroleum Exporting Countries last sold Treasuries for three straight months in June 2003.

Oil producers have surpassed Asian central banks as the largest pool of global savings, accumulating an estimated $500 billion in 2006 alone, according to research by Pacific Investment Management Co. The sales during those three months mark a reversal because OPEC countries have boosted their holdings of U.S. government bonds by 70 percent to $97 billion in the past 17 months, Treasury data show.
(22 Jan 2007)

Markets misread US strong dollar policy -Feldstein

Reuters via Yahoo! Asia
A misunderstanding by financial markets of the so-called “strong dollar” mantra preached by U.S. officials is helping keep the U.S. currency overpriced and contributing to bloated external deficits, Harvard University economist Martin Feldstein said on Saturday.

Speaking on a panel on the U.S. current account deficit at the Allied Social Sciences Conventions, Feldstein outlined several factors that are holding the dollar at an overly high, and unsustainable, level.

…Financial markets are “mislead” if they think there would be government intervention or a shift in the Federal Reserve’s monetary policy to protect the dollar’s value, he said
(7 Jan 2007)
Research credit: Adam Whaley on EnergyResources

Your MasterCard or Your Life

New York Times via t r u t h o u t
Americans are increasingly living in a house of cards – credit cards.

A disturbing new report shows that with health care costs continuing their sharp rise, low- and middle-income patients are reaching for their credit cards with alarming frequency to cover treatment that they otherwise would be unable to afford.

This medical debt, to be paid off in many cases at sky-high interest rates, is being loaded onto consumer debt that is already at dangerously high levels. Many families have been crushed by the load, driven from their homes, forced into bankruptcy, and worse.
(22 Jan 2007)

Foreclosures jump 35% nationwide

MSN Money
One big factor behind the increase: rising interest rates on adjustable mortgages. Colorado posted the highest foreclosure rate last month, its ninth time atop the rankings in 2006.
Property foreclosures in December rose 35% over the year before, with one household in every 1,055 U.S. households in some stage of foreclosure.
(23 Jan 2007)
Related: US housing bust getting worse, warns Goldman