From a recent edition of the FT:

Central bank dollar reserves

Country........ Holding : %Top15
Japan..........: $820Bn : 27.2 %
China..........: $525Bn : 17.4 %
Eurozone.....: $360Bn : 12.0 %
Taiwan........: $230Bn : 7.6 %
US...............: $180Bn : 6.0 % : Top.5= 70.3%
South Korea: $175Bn : 5.8 %
India...........: $120Bn : 4.0 %
Hong Kong...; $115Bn : 3.8 %
Singapore....: $100Bn : 3.5 %
Russia.........: $ 95Bn : 3.2 % : Top10= 90.4%
Switzerland.: $ 70Bn : 2.3 %
Mexico.........: $ 65Bn : 2.2 %
Malaysia.......: $ 60Bn : 2.0 %
Brazil...........: $ 50Bn : 1.7 %
UK...............: $ 45Bn : 1.5 %

TOP 15........ $3,010Bn :

- -
The US needs to:

1/ Pay interest on its substantial Debt.

Example: At 4.0%, this $3.0Trillion in debt, requires $120Billion pa just for interest

2/ Support its huge budget and trade deficits

SO,
It is not sufficient that these Banks continue to hold dollars,
they must also add to their dollar holdings each year, or the dollar will fall

Interesting stuff. The Japanese and Chinese must have balls of steel if they are going to hold onto their dollars, it can only be a matter of time before one of these countries breaks ranks.

The question is though, can they afford to ditch the dollar?

GREENSPAN'S TERM
...has SPANned a time / when alot of GREEN was printed...



"What the chart doesn't show is that during his tenure, Mr. Greenspan has printed more dollars than all the other Federal Reserve Chairmen put together. It also doesn't quite capture the fact that the monetary growth seems to be gathering speed. For the week ending March 7, 2005, the M-3 increased another $31.5 billion and that's more than $160 billion since the last week in January. If this pace continues, we are on the road to a staggering trillion dollars plus growth in the money supply for 2005. Impressive to say the least!

This German-like solution to America's economic woes has brought about more than its share of unintended consequences including but not limited to a series of bubbles that cross the American landscape. The bond, stock, commodity, and real estate bubbles are just a few that come to mind. You blow bubbles in order to maintain the illusion of prosperity and the problem is, once you begin to inflate, it's almost impossible to stop. The distortions that are normally relieved by natural corrections don't occur and pressure builds. Sooner or later holes begin to appear in the economic dike and the only solution left is to print more and more money at a faster rate."

...MORE: http://www.321gold.com/editorials/orlandin...dini032105.html

STEVE ROACH says, "America Smells the Coffee":



Tipping points are a great concept, but virtually impossible to identify ahead of time -- let alone when they are occurring. It is only with the great luxury of hindsight that we can look back and know that the proverbial bell has rung. In my view, March 16, 2005 could end up in the running as a possible tipping point for America. Suddenly, the US has taken on a very different aura in an increasingly unbalanced world: The confluence of a record current account deficit, a disaster from General Motors, and yet another new high for oil prices all speak of an increasingly precarious role for the global hegemon. World financial markets have barely begun to sniff that out.

America’s biggest problem -- an unprecedented shortfall of national saving. The US net national saving rate -- the combined saving of individuals, businesses and the government sector (all adjusted for depreciation) -- has fallen to a record low of 1.5% since early 2002. Lacking in domestic saving, America must import foreign saving from abroad in order to keep growing... America now requires an average of $2.9 billion of capital inflows each and every business day to keep the magic going.

...MORE: http://www.morganstanley.com/GEFdata/diges...ri.html#anchor0

Pudwin,
Your:
"The question is though, can they afford to ditch the dollar?"

As Steven Roach says in his article:
"One by one, Asian central banks -- America’s financiers at the margin -- have dropped the not-so-subtle hint that they are saturated with dollar-denominated assets. From Korea and Japan to China and India -- not to dismiss Malaysia, Hong Kong, and Singapore -- there is a growing protest to massive dollar overweights in official reserve portfolios.

The standard American response borders on arrogance: “What choice do they have?” The presumption is that the US has externally driven Asian economies over a barrel -- unwilling to accept a deterioration in export competitiveness that currency appreciation might bring."

IN OTHER WORDS:
Can they afford NOT to diversify away from Dollars.
And the sooner they do, the more of their wealth they will perserve
for their future generations

Thanks. I'll have a scan through the articles tomorrow. Every time the dollar strengthens I think of the deficits the US are running and I think, "Nah, only a matter of time before it breaks though and slides". Will be interesting to see if the Dow can stay above 10,400 mark.

That is a staggering amount of bucks in Japan, China and Taiwan. What are the Japanese doing - stuffing it under their mattresses.

Hello. This needs updating. Who are the mystery Caribbean Island buyers, Bud Conrad is on about over at KitcoCasey? Hedge Funds? The federal reserve? No longer the Asian Giants, that's for sure.

I had this nightmare last night that Gordon sold all our gold cheap then bought dollars with the proceeds just before it tanked.....

But he's an economic whizz kid isn't he, we are blessed to have him.

Do the dollar holdings include the "treasuries" I wonder? The last report said the UK had $122.9BN, although this probably includes overseas people hiding their money through London, i.e. arab oil money that they don't wish to be confiscated by the US one day.

This is an interesting article:

http://www.financialsense.com/fsu/editoria.../2005/0518.html



D

Note the mysterious appearance/disappearance of Norway and its $33bn/$17bn of holdings.