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Deutsche Bank becomes first foreign yuan clearing bank in Europe

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341–350 of 496 posts

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#341
post #146

Earlier quoted context omitted.

I'm interested to understand your theory better but right now the way you've expressed it is hard to make sense of for me.

As I said, it is fueled with ignorance and I’m sure that it is complete bullshit when examined closely but the reason I kind of find it possible is that currently the American companies have a reach that is order of magnitude bigger than the American population and their valuations as well as their profits are based on that. What America is currently doing is dismantling of the world order that made this possible, th…

You're not wrong in theory. If you're a small country, your currency's day-to-day purchasing power is influenced strongly by your imports and exports. If you have few things other countries want to buy, there's less demand for your currency, and it will go down in value as expressed in your trade partner's currency. A sustained trade deficit (more imports than exports) might mean your currency goes down and down in value. Certainly if some politicians decide to close the borders, you will export even less, but will probably still need some necessities from abroad, and you have a financial crisis.

The US is a huge whopping exception to this strong correlation between the balance of trade and currency strength. US exceptionalism is usually wrong, but in this case, the US dollar being the 'reserve currency' of the world is an incredible boon. The US has been able to sustain a huge trade deficit for decades without sky high inflation (you think it's bad now, it's nothing). In fact, foreign goods keep getting cheaper and the US dollar and services keep getting more valuable. A lot of this is because foreigners are willing to keep their savings invested in dollars (stocks & bonds, including the magnificent 7) rather than selling off their dollars to buy e.g. Chinese goods.

Also note that the tech companies make up a small portion of imports/exports.

But.. If trade restrictions (or security concerns) make it harder for the magnificent 7 to make money abroad, their profits will go down and there could also be an outflow of capital that puts inflationary pressure on the dollar, just because US stocks and bonds are less attractive - the trade deficit increasing would also contribute a bit, but it would be a much smaller effect.

An economy being propped up by foreign capital is not just a US phenomenon, the Asian Financial Crisis of 1997, Turkey 2000, Mexico 1994 - these crashes all were cause by sudden capital outflows. The proximate cause was a short term arbitrage trade, rather than those currencies being in extensive (structural) demand.

This concern is also why China doesn't let foreigners invest directly in Chinese companies. You can only buy weird derivative certificates that trade on a Hong Kong exchange and are subject to tight capital controls if need be.

Things like a domestic tax on imported goods/services (also called tariffs) are unlikely to lower the trade deficit unless there is already an industry domestically to absorb the demand.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#342

Ah, yes, the best way to react to increased authoritarianism in the US is to checks notes begin doing more business with a country that is the final word in authoritarianism.

Grow up man, we need people to grow up and see the world for what it really is before we can fix it You go against the government (for real) in ANY country you get a bullet, simple as that... That is everywhere... In USA, China, Russia, Paraguay, Laos, or wherever you go look...

False equivalence. Also funnily you left out Europe, why?

For instance, you can mock Trump and question the US all day.

You can’t do that in China. Even this website is banned in China.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#343

Earlier quoted context omitted.

I, for one, would appreciate if we could just move on past these incessantly destructive power struggles as humanity.

It's a fundamental attribute of reality. Take it up with mother nature, because power struggles exist everywhere, even in dumb systems with no intelligence. Weak things go away, strong things stay around. Weak things need to become stronger than strong things to displace them.

There's more than enough energy and resources to go around for humans to peacefully coexist "forever", albeit in lesser numbers than today. The civilization meta game is what ruins it, despite our best attempts to regulate that. And a global self destruct button helps massively... until it does not.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#344

Earlier quoted context omitted.

The yuan will never become a reserve currency as long as China maintain tight currency controls around importing and exporting it. It's very difficult to (legally) send CNY out or China. The euro is in a much better position to be adopted as an alternative, but its share of global reserves has been flat at around 20% for years. https://data.imf.org/en/news/imf%20data%20brief%20march%2027

Prior to Bretton Woods countries were well aware that no single country could be entrusted with the power granted in being the global reserve currency. It's too much power that's too tempting to abuse. But they also learned from the collapse of Bretton Woods that even orchestrated agreements with built-in penalties just don't work, because countries can simply ignore them when beneficial. So I think we're headed to a…

- no currency will dominate....

There is excellent research in "currency diversity", start with Prof B. Lietaer

https://www.youtube.com/watch?v=T9EI2PrDpmw

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#345

Earlier quoted context omitted.

One consequence of the transition to renewable energy and electrified transport, is that oil imports will start to decline. And the dollar is of course the currency of choice for that. The US economy and other countries that export fossil fuels will feel the impact over the next decade or so. The energy transition might go a lot quicker than people seem to expect. Currently about 20% of global car sales is electric.…

Demand destruction will collapse profits and accelerate the oil/dollar downfall. Saudi Arabia can profitably pump oil probably under $10/barrel. If demand drops, thats where oil should be. China with [EVs|Solar|BESS|Turbines] will replace all of the fossil fuel countries (US, middle-east, Russia). This is probably the biggest transition in the history of mankind. This is energy production, storage and all the applian…

Saudi Arabia can profit at those prices, but it can't sustain its living standards at those prices unless they pump like crazy. I recall reading that it was around 40 bucks a barrel where things would start looking not ideal for the princes.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#347
post #316
post #207

Earlier quoted context omitted.

But, how much of the extracted oil becomes ICE fuel? Because other transports cannot be converted that quick (air, sea...) and most if not all petrochemical industries will still need to exist even if all cars drive electric. So how big will be the effect of crashing fuel demand?

I would add energy generation to ICE fuel. This is about 84-86% of total I believe

This, and it's murky because a good chunk of that used directly by ICE will move over to power generation to power EVs -- it's not as if we're anywhere close to 100% renewable power even just for EVs here.

There's a good EIA graph about halfway down on https://www.weforum.org/stories/climate-action/us-fossil-fue... that breaks it down.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#348

Earlier quoted context omitted.

Saudi Arabia needs oil prices at ~$86.60/barrel to balance their budget, per Bloomberg. It is not the marginal cost to pump a barrel, but what a country needs to support their sticky spending from previously assured energy exports. Governments will collapse long before we approach low single digit oil prices on the global market. The World Is Awash With Oil and Prices Are Poised to Keep Falling - https://www.bloomber…

But China is already in decline before reaching this ascendancy. I think new models will result in new structures, not just a switch from the US to China.

A multipolar world where every pole is a decadent husk or a former (or not even former) great empire.

Yeah, sounds about right for this timeline.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#349
post #198

Earlier quoted context omitted.

they didn't say it was

The use of "nations" in that comment is not clear nor substantiated, not in the comment itself, nor in the article. So just to be clear that DB is not tied to a nation, even though the name suggests it is.

OP means the USD & US nation is not stable, hence DB looking to clear Yuan.

Re: Deutsche Bank becomes first foreign yuan clearing bank in Europe

#350
worth noting that one main reason why this didn't happen sooner is because China didn't want it to -- while the RMB as a reserve / trading currency strengthens its status and weakens the US', it also makes it harder for China to control the exchange rate, which in the past it considered to be a strategic imperative.
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