China Paper: U.S. Has Plundered Global Wealth with Dollar

Very interesting, and indeed frightful, story on Reuters this weekend. This won't get much attention state side, but effectively the newspaper quoted is essentially a mouthpiece for the "state".

• The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.
• The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.
• The People's Daily is the official newspaper of China's ruling Communist Party. The Chinese-language overseas edition is a small circulation offshoot of the main paper.
• Its pronouncements do not necessarily directly voice leadership views. But the commentary, as well as recent comments, amount to a growing chorus of Chinese disdain for Washington's economic policies and global financial dominance in the wake of the credit crisis.
• "The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University. Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington's sole concern had been protecting its own interests.
• Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.
• "How can Europe and Asia grasp each other's hands and together confront the once-in-a-century global financial crisis sparked by the U.S.; how can they construct a new equitable and safe international financial order?" he said. "The world is waiting for this Asian-European meeting to achieve big results in financial cooperation."

Considering the following statistics the long term implications of this type of commentary could be quite dire indeed. This is a warning shot over the bow - where they take it from here in terms of implantation over the next few years means very much, as we are indeed hostage to our creditors. The U.S. is still too much of the world GDP from said creditors to go "cold turkey", but it sets up a plethora of fascinating potential outcomes in the 5-15 years ahead.

Out of the $9.7 trillion of foreign-held U.S. securities of all types, $1.2 trillion was held by Japan, $922 billion by China, $921 billion by the U.K., $740 billion by bank depositors in the Cayman Islands, $703 billion by depositors in Luxembourg, $475 billion by Canada, and $396 billion by Belgium. Middle East oil-exporting countries held $308 billion.

Out of long-term U.S. Treasury securities held by foreigners, Japan had $553 billion and China had $467 billion. Middle East oil exporters held $79 billion.

We've highlighted in the past how domestic decisions in our financial realm have created a growing discontment across the world with the U.S. [Sep 18: Views of US from Abroad] & [Sep 27: Interesting Reactions Worldwide - What Years of Neglect and Lack of National Policy is Creating]