hina and Japan plan direct currency exchange agreement

China has been pushing for the yuan to become an alternate reserve currency along with the US dollar

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China and Japan have unveiled plans to promote direct exchange of their currencies in a bid to cut costs for companies and boost bilateral trade.

The deal will allow firms to convert the Chinese and Japanese currencies directly into each other.
Currently businesses in both countries need to buy US dollars before converting them into the desired currency, adding extra costs.
It is the latest step by China as it seeks a more global role for the yuan.
"Given the huge size of the trade volume between Asia's two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations," Ren Xianfang of IHS Global Insight was quoted as saying by the Bloomberg news agency.
China is Japan's biggest trading partner. According to the Japan External Trade Organization, trade between the two countries stood at 26.5tn yen ($339bn; £218bn) in 2010.
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“Start Quote

This should encourage Japanese private investment into Chinese bonds, as well as into other Asian emerging currencies”

End Quote Takuji Okubo Societe Generale

The plans were announced during a visit to China by Japan's Prime Minister Yoshihiko Noda and after a meeting with Chinese Premier Wen Jiabao.

The two leaders also agreed to allow the Japan Bank for International Cooperation to issue yuan-denominated bonds in China, the first time a foreign government body has been allowed to do so.
At the same time, Japan said it was also looking to buy Chinese government bonds, a move that analysts believe may prove to be mutually beneficial to both nations.
"By adopting Chinese bonds as a part of official foreign exchange reserves, Japan is labelling Chinese bonds as an investable asset," according to Takuji Okubo of Societe Generale Tokyo.
"This should encourage Japanese private investment into Chinese bonds, as well as into other Asian emerging currencies. Such development in turn should help develop offshore currency trading in Japan," he added.
As for China, Mr Okubo explained that the move will help China further open up its financial markets.
The deal "is a manifest of a higher level of commitment from China to the open-up reform, which would add credibility to the ongoing offshore yuan experiment", he said.
Tripartite agreement? Along with promoting bilateral business ties, China and Japan said they had also made progress on a free trade agreement between China, Japan and South Korea.
The proposed agreement is expected to boost trade between the three nations.
"On a free-trade agreement among Japan, China and South Korea, we've made a substantial progress for an early start of negotiations," Mr Noda said.
China has been pushing for the three parties to speed up talks and proceedings on the deal, especially after Japan showed a keen interest to participate in the Trans-Pacific Partnership Agreement (TPP).
The TPP, a trade pact led by the US, includes Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam.
It is aimed at eliminating tariffs and other barriers to goods and services trade and investment among the member countries to boost growth.

STOP THIS WAR ON FREEDOM!!

Gold price ‘to hit $2,000 an ounce’

In September gold hit a record of $1,920 an ounce but an annual survey from Thomson Reuters predicts the price will rise again as investors search for a safe haven from US economic woes and low interest rates in Europe.
Gold prices are on the march again. Forecast to power past $2,000 (£1,300) an ounce later this year or in early 2013, the prices will be underpinned by fearful small investors in Germany and Switzerland buying ever more bars and coins, as well as rising demand for gold jewellery from India’s and China’s burgeoning middle classes.
The Thomson Reuters GFMS annual gold survey, published on Tuesday, reveals that global investment in gold jumped more than 20% last year to a record $80bn, pushing the price to its peak of $1,920 an ounce in September. Much of this was due to physical buying of bullion: purchases of gold bars rose by more than a third to almost 1,200 metric tonnes, particularly in China, Germany, Switzerland and Austria. East Asia accounted for 456 tonnes of the total (up 53%), western markets bought 335 tonnes (up 41%) and India 297 tonnes (up 9%).
Philip Newman, research director in precious metals at Thomson Reuters GFMS, said that with the spectre of 1920s hyperinflation haunting Germans, the last two years have seen strong growth in the number of smaller investors buying gold bars and coins. “For many years now, these German-speaking markets have had a well-developed infrastructure for consumers to buy product.”

Illustrated: The Incompetence of the Fed

Federal Reserve

Inside the Fed in 2006: A Coming Crisis, and Banter ... As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers. The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was "rising through the roof." But the officials, meeting every six weeks to discuss the health of the nation's economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation — the possibility that the economy would grow too fast. – New York Times
Dominant Social Theme: The Fed gets it right ... eventually.
Free-Market Analysis: Wow, what an article. At a time when many in the alternative media were shouting out loud about an impending financial crisis, many of the top men at the US Federal Reserve could only make jokes about desperate discounts being given out by house-builders that found themselves saddled with an ever-growing inventory they literally couldn't give away.
And who provides this information? Why, the Fed itself as part of an ongoing "openness" about its deliberations. This is, for the Fed, not a generous move but a desperate one. We've been writing about the trouble that central banking is in and the moves that will have to be made to try to counteract the growing perception that the Fed in particular is a sinecure of the vastly wealthy.
This is a direct result, in our view, of the Internet Reformation that has made it impossible for the power elite to pretend its dominant social themes are grounded in reality. The Fed didn't used to release a narrative of its deliberations. But over time, the pressure to explain this mysterious mercantilist facility has increased significantly. Tens of millions believe in the fear-based promotions of the elite, but millions do not anymore.
Central banking is a good example of just such a fear-based promotion. Invented in England some 500 years ago, the privilege of printing money for the state has been jealously guarded and incrementally expanded by a tiny pool of "central banking" until it has reached its current perfection.
The idea behind central banking in the modern age is that the world's financial system is fragile and prone to breakdown and needs a central clearinghouse to guarantee solvency. The reality is that central banks – particularly the Fed – have garnered a franchise to print money-from-nothing.
The mechanism of the Fed is presented antiseptically in textbooks but the reality is far from bloodless. The few (Anglosphere) families that control the Fed and other central banks around the world have used the literally hundreds of trillions they control to create what is popularly called a New World Order.
They have fully purchased political, military, educational and media facilities in the West and elsewhere in order to propagate the gospel of globalism. They then manipulate current events up to and including wars in order to realize their aim of global governance.
But even as they have approached their goal of apparent total control of the world's political and military processes, they have received setback after setback from an unforeseen facility: The Internet. While it is true that the US's DARPA created the Internet, it was the unanticipated creation of the personal computer that turned a private military facility into a worldwide phenomenon.
The Internet, like the Gutenberg Press before it, has allowed an unfettered exchange of information about the Way the World Works. The result has been a gradual discovery by the masses of central banking and the essential insanity of a system that gives a handful of people the ability to direct trillions to their friends and colleagues.
The inevitable result of the collision of what we call the Internet Reformation and the memes of the elite – specifically central banking – is the gradual creation of a deep dissatisfaction with the Fed and central banking generally.
The elites rely on public acceptance of its memes to govern behind the scenes. If its main methodology of control – central banking – is foundering on the shoals of public skepticism, then the larger plan to create global governance is in jeopardy as well. Without the limitless money and control that central banking provides, the plans of the Anglosphere elite to run the world are not simply in jeopardy, they are likely ruined.
And thus it is that the elite attempts damage control at the Fed, the world's most important central bank and one integral to their plans. The New York Times, one of the most prestigious of the elite's mainstream mouthpieces, presents the elements of this limited hangout. Here's some more from the article excerpted above:
"We think the fundamentals of the expansion going forward still look good," Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006 ... As the year rolled along, however, Mr. Bernanke increasingly took the view that his colleagues were too sanguine. "I don't have quite as much confidence as some people around the table that there will be no spillover effect," he said.
As for Mr. Geithner, who became Treasury secretary in 2009, his spokesman, Anthony Coley, said, "Secretary Geithner was an early source of initiative at the Fed to reduce risk and make the financial system more resilient even before 2006." ...
For the Fed 2006 began with the departure of Mr. Greenspan, who presided in January over his final meeting as Fed chairman and was then widely regarded as the epitome of a central banker, a master who had guided the American economy through almost 20 years of remarkably consistent growth.
"I'd like the record to show that I think you're pretty terrific, too," Mr. Geithner said in adding his voice to the chorus of tributes at that final meeting. "And thinking in terms of probabilities, I think the risk that we decide in the future that you're even better than we think is higher than the alternative."
[Fed officer} Janet Yellen said: "It's fitting for Chairman Greenspan to leave office with the economy in such solid shape. The situation you're handing off to your successor is a lot like a tennis racquet with a gigantic sweet spot."
We long ago predicted that any damage control the elites attempted to do regarding the Federal Reserve would probably not do much good. The system is indefensible and relied on misdirection and ignorance for justification.
We can see from these article excerpts that a weak attempt is being made to shield Ben Bernanke from the worst excesses of the Fed's extraordinary destructiveness. He is being portrayed as a far-seer who had at least an inkling of what was to occur. Alan Greenspan, within the context of this narrative, is to play the part of the villain.
Yet none of this will make any difference, we believe. It is, to use the hoary cliché, like arranging deck chairs on the Titanic. Thousands of financial writers and bloggers on the Internet were far more prescient than Fed officials when it came to the looming financial crisis. The release of Fed conversations merely confirms the inadequacy of the current system.
In fact, the basic function of central banking is impossible. It is impossible to predict the future value of money. It not feasible to set the volume and value of money either. To do so is to fix the price of money. And price fixing never works. The price fixing of money inevitably leads to ruin.
In our view, ruin is, of course, what the power elite seeks. It intends, from what we can tell, to create a massive worldwide depression (and perhaps a world war of some sort) to usher in true world government with a true global money and worldwide central bank, perhaps the IMF.
Thus, we would hypothesize that the Fed's current "limited hangout" is nothing more than a delaying tactic. The elites at this point are playing for time, and ratcheting up global tensions (see Iran) as quickly as they can.
The trouble the elite families have is that in the context of the Internet they are dealing with a process not an episode. The Internet Reformation has yet to play itself out, in our view, and the results have yet to be fully explored.
Alternatively, it could be that by exposing the Fed to yet more opprobrium via this limited hangout, the powers-that-be intend to destabilize the system of central banking in order to generate a true, international gold standard controlled by some government entity, perhaps the UN.
Conclusion: This seems far-fetched to us as well, given the troubles the elites are having creating a current monetary consensus. If they do have this in mind, it seems to us they may end up outsmarting themselves. It's happened before.

World facing worst financial crisis in history, Bank of England Governor says

The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night.

Mervyn King, Governor of the Bank of England Photo: PAUL GROVER

Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession.

Economists said the Bank’s decision to resume its quantitative easing [QE], or asset purchase programme, showed it was increasingly fearful for the economy, and predicted more such moves ahead.

Sir Mervyn said the Bank had been driven by growing signs of a global economic disaster.

“This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.”

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Announcing its decision, the Bank said that the eurozone debt crisis was creating “severe strains in bank funding markets and financial markets”.
The Monetary Policy Committee [MPC] also said that the inflation-driven “squeeze on households’ real incomes” and the Government’s programme of spending cuts will “continue to weigh on domestic spending” for some time to come.
The “deterioration in the outlook” meant more QE was justified, the Bank said.
Financial experts said the committee’s actions would be a “Titanic” disaster for pensioners, savers and workers approaching retirement. Sir Mervyn suggested that was a price worth paying to save the economy from recession.
Under QE, the Bank electronically creates new money which it then uses to buy assets such as government bonds, or gilts, from banks. In theory, the banks then use the cash they gain to increase their lending to businesses and individuals.
By increasing the demand for gilts, QE pushes down the interest rate yields paid to holders of these and other bonds. Critics of the policy say it pushes up inflation and drives down sterling.
The National Association of Pension Funds yesterday called for urgent talks with ministers to address the negative impact of lower gilt yields on pension funds. Joanne Segars, its chief executive, said QE makes it more expensive for employers to provide pensions and will weaken the funding of schemes as their deficits increase. “All this will put additional pressure on employers at a time when they are facing a bleak economic situation,” she said.
Ros Altman, of Saga, said the latest round of QE was “a Titanic disaster” that would increase pensioner poverty. As well as fuelling inflation, she said, falling bond yields would make annuities more expensive, “giving new retirees much less pension income for their money and leaving them permanently poorer in retirement”.
The MPC also voted to keep the Bank Rate at its historic low of 0.5 per cent, another decision that hurts savers. Yesterday, protesters outside the Bank’s headquarters smashed a giant piggy bank to symbolise the situation of pensioners and others forced to raid savings to keep up with the rising cost of living.
Asked about the plight of savers, Sir Mervyn said it was more important to support the wider economy than to support them. He suggested that savers would not be helped by deliberately pushing the British economy into recession. Yesterday’s decision was the first move on QE since 2009, during the global credit crisis, when the Bank injected £200 billion into the economy.
Some analysts believe that this round of QE could be less effective than the previous one, forcing the Bank to create even more money this time.
Michael Saunders of Citigroup, forecast that there could be as much as £225 billion more QE by next year. “I think they will do lots more QE,” he said. “It’s both that the economy is weak but also that the MPC’s view is that QE is not a very powerful tool, or rather it takes a large amount of QE to have much effect on the economy.”
The Bank is supposed to keep inflation near a target of 2 per cent. Inflation now stands at 4.5 per cent, and the Bank admitted it is likely to hit 5 per cent as soon as this month. The Bank’s own research shows that as well as stimulating the economy, QE pushes up prices.
Sir Mervyn insisted that yesterday’s move was still consistent with the 2 per cent inflation target, saying that the slowing economy means inflation could actually fall below that mark “by the end of next year or in 2013”.
The Governor insisted that the MPC’s decisions had been the correct response to events. “The world economy has slowed, America has slowed, China has slowed, and of course particularly the European economy has slowed,” he said. “The world has changed and so has the right policy response.”
City traders took heart from the Bank’s move to boost growth, with the FTSE 100 rising 3.7 per cent to 5,29, its biggest two-day gain since 2008.
The Bank’s decision came after mounting political pressure from ministers worried that Sir Mervyn was not reacting urgently enough to the darkening global economic outlook.
George Osborne, the Chancellor, welcomed the Bank’s move, saying: “The evidence shows that it [QE] will help keep interest rates down and boost demand and that will be a help for British families.”

20 Signs That The World Could Be Headed For An Economic Apocalypse In 2012

If you thought that 2011 was a bad year for the world economy, just wait until you see what happens in 2012.  The U.S. and Europe are both dealing with unprecedented debt problems, the financial markets are flailing about wildly, austerity programs are being implemented all over the globe, prices on basics such as food are soaring and a lot of consumers are flat out scared right now.  Many analysts now fear that a "perfect storm" could be brewing and that we could actually be headed for an economic apocalypse in 2012.  Hopefully that will not happen.  Hopefully our leaders can keep the global economy from completely falling apart.  But right now, things don't look good.  After a period of relative stability, things are starting to become unglued once again.  The next major financial panic could literally happen at any time.  Sadly, if we do see an economic apocalypse in 2012, it won't be the wealthy that suffer the most.  It will be the poor, the unemployed, the homeless and the hungry that feel the most pain.
The following are 20 signs that we could be headed for an economic apocalypse in 2012....
#1 Back in 2008 we saw major rioting around the world due to soaring food prices, and now global food prices are on the rise again.  Global food prices in July were 33 percent higher than they were one year ago.  Price increases for staples such as maize (up 84 percent), sugar (up 62 percent) and wheat (up 55 percent) are absolutely devastating poverty-stricken communities all over the planet.  For example, one expert is warning that 800,000 children living in the Horn of Africa could die during this current famine.
#2 The producer price index in the U.S. has increased at an annual rate of at least 7.0% for the last three months in a row.  We are starting to see huge price increases all over the place.  For example, Starbucks recently jacked up the price of a bag of coffee by 17 percent.  If inflation keeps accelerating like this we could be facing some very serious problems by the time 2012 rolls around.
#3 The U.S. "Misery Index" (unemployment plus inflation) recently hit a 28 year high and many believe that it is going to go much, much higher.
#4 Jared Bernstein, the former chief economist for Vice President Joe Biden, says that the unemployment rate in this country will not go below 8% before the 2012 election.  In fact, Bernstein says that "the most optimistic forecast would be for about eight-and-a-half percent."
#5 Working class jobs in the United States continue to disappear at an alarming rate.  Back in 1967, 97 percent of men with a high school degree between the ages of 30 and 50 had jobs.  Today, that figure is 76 percent.
#6 There are all kinds of indications that U.S. economic growth is about to slow down even further.  For example, pre-orders for Christmas toys from China are way down this year.
#7 One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with the rising cost of basics such as food and gasoline over the next year.
#8 U.S. consumer confidence is now at its lowest level in 30 years.
#9 Today, an all-time record 45.8 million Americans are on food stamps.  It is almost inconceivable that the largest economy on earth could have so many people dependent on the government for food.
#10 As the economy crumbles, we are also witnessing the fabric of society beginning to come apart.  The recent flash mob crimes that we are starting to see all over America are just one example of this.
#11 Some desperate Americans are already stealing anything that they can get their hands on.  For example, according to the American Kennel Club, dog thefts are up 32 percent this year.
#12 Small businesses all over the United States are having a really difficult time getting loans right now.  Perhaps if the Federal Reserve was not paying banks not to make loans things would be different.
#13 The U.S. national debt is like a giant boulder that our economy must constantly carry around on its back, and it is growing by billions of dollars every single day.  Right now the debt of the federal government is $14,592,242,215,641.90.  It has gone up by nearly 4 trillion dollars since Barack Obama took office.  S&P has already stripped the U.S. of its AAA credit rating, and more downgrades are certain to come if the U.S. does not get its act together.
#14 Tensions between the United States and China are rising again.  A new opinion piece on chinadaily.com is calling for the Chinese government to use its holdings of U.S. debt as a "financial weapon" against the United States if the U.S. follows through with a plan to sell more arms to Taiwan.  The U.S. and China are the two biggest economies in the world, so any trouble between them would mean economic trouble for the rest of the globe as well.
#15 Most state and local governments in the U.S. are deep in debt and flat broke.  Many of them are slashing jobs at a feverish pace.  According to the Center on Budget and Policy Priorities, state and local governments have eliminated more than half a million jobs since August 2008.  UBS Investment Research is projecting that state and local governments in the U.S. will cut 450,000 more jobs by the end of 2012.  How those jobs will be replaced is anyone's guess.
#16 The U.S. dollar continues to get weaker and weaker.  This is renewing calls for a new global currency to be created to replace the U.S. dollar as the reserve currency of the world.
#17 The European sovereign debt crisis continues to get worse.  Countries like Portugal, Italy and Greece are on the verge of an economic apocalypse.  All of the financial problems in Europe are even beginning to affect the core European nations.  For example, German industrial production declined by 1.1% in June.  There are all kinds of signs that the economy of Europe is slowing down and is heading for a recession.  French President Nicolas Sarkozy and German Chancellor Angela Merkel are proposing that a new "economic government" for Europe be set up to oversee this debt crisis, but nothing that the Europeans have tried so far has done much to solve things.
#18 The Federal Reserve is so desperate to bring some sort of stability to financial markets that it has stated that it will likely keep interest rates near zero all the way until mid-2013.  The Federal Reserve is operating in "panic mode" almost constantly now and they are almost out of ammunition.  So what is going to happen when the real trouble starts?
#19 Central banks around the world certainly seem to be preparing for something.  According to the World Gold Council, central banks around the globe purchased more gold during the first half of 2011 than they did all of last year.
#20 Often perception very much influences reality. One recent survey found that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.  If people expect that a depression is coming and they quit spending money that actually increases the chance that an economic downturn will occur.
There is already a tremendous amount of economic pain on the streets of America, but unfortunately it looks like things may get even worse in 2012.
The once great economic machine that was handed down to us by our forefathers is falling to pieces all around us and we are in debt up to our eyeballs.  The consequences of our bad economic decisions are hurting some of the most vulnerable members of our society the most.
As the following video shows, large numbers of formerly middle class Americans are now living in their cars or sleeping in the streets....