Huge foreign reserves and needing donations/aid.

[Playtime]

Below is a sample of country ranking 2008 (CIA from fact book).

http://www.photius.com/rankings/economy/reserves_of_foreign_exchange_and_gold_2008_0.html
http://www.photius.com/wfb1999/banners/little_arrow.gif (http://www.photius.com/rankings/economy/reserves_of_foreign_exchange_and_gold_2008_1.html) http://www.photius.com/wfb1999/banners/alphabetic.gif (http://www.photius.com/rankings/economy/reserves_of_foreign_exchange_and_gold_2008_1.html) http://www.photius.com/wfb1999/banners/little_arrow2.gif (http://www.photius.com/rankings/economy/reserves_of_foreign_exchange_and_gold_2008_1.html)
1China (http://www.theodora.com/wfbcurrent/china/china_economy.html)$1,493,000,000,000
2Japan (http://www.theodora.com/wfbcurrent/japan/japan_economy.html)$881,000,000,000
3Russia (http://www.theodora.com/wfbcurrent/russia/russia_economy.html)$470,000,000,000
4Taiwan (http://www.theodora.com/wfbcurrent/taiwan/taiwan_economy.html)$282,900,000,000
5Korea, South (http://www.theodora.com/wfbcurrent/korea_south/korea_south_economy.html)$271,100,000,000
6India (http://www.theodora.com/wfbcurrent/india/india_economy.html)$239,400,000,000
7Brazil (http://www.theodora.com/wfbcurrent/brazil/brazil_economy.html)$178,000,000,000
8Singapore (http://www.theodora.com/wfbcurrent/singapore/singapore_economy.html)$155,300,000,000
9Hong Kong (http://www.theodora.com/wfbcurrent/hong_kong/hong_kong_economy.html)$141,300,000,000
10Germany (http://www.theodora.com/wfbcurrent/germany/germany_economy.html)$111,600,000,000
21United States (http://www.theodora.com/wfbcurrent/united_states/united_states_economy.html)$65,890,000,000


Perhaps some expert in economics etc could help answer my question.
China, Japan, Taiwan, USA have all suffered heavy damage due to natural diseasters in recent years. China is in the midst of the latest quake.

Yet all appealed for and/or received international donation/aid in financial/mateial form for reconstruction and immediate rescue work. What exactly prevents their own foreign reserves from coming into play? Are the monies unusable or some kinda of abstract measurement only?

[Alpheus]

You're using too many big words. Can you dumb down your question?

[Playtime]

You're using too many big words. Can you dumb down your question?

hm... the countries have huge reserves and yet need aid/donations to handle disasters. why?

[damagejackal]

hm... the countries have huge reserves and yet need aid/donations to handle disasters. why?

Most of the money is locked away in assets,bonds and investments which makes it harder to convert to back to its real monetary value (low liquidity).
In Japan's case most of there foreign reserves are tied in with the petrodollar buisness, if they withdraw to quickly the US dollar would crash.
China is mostly asking for provisions like tents an temporary shelters rather than cash hand outs...

[Calanen]

Most of the money is locked away in assets,bonds and investments which makes it harder to convert to back to its real monetary value (low liquidity).
In Japan's case most of there foreign reserves are tied in with the petrodollar buisness, if they withdraw to quickly the US dollar would crash.
China is mostly asking for provisions like tents an temporary shelters rather than cash hand outs...

I think they could probably get a loan though with that sort of collateral.

But donating is good for PR, and goodwill - whether China needs it or not.

[ting]

Below is a sample of country ranking 2008 (CIA from fact book).


Perhaps some expert in economics etc could help answer my question.
China, Japan, Taiwan, USA have all suffered heavy damage due to natural diseasters in recent years. China is in the midst of the latest quake.

Yet all appealed for and/or received international donation/aid in financial/mateial form for reconstruction and immediate rescue work. What exactly prevents their own foreign reserves from coming into play? Are the monies unusable or some kinda of abstract measurement only?

I think you got the question wrong. It`s difficult for me to answer since your supposition is to general and lacking in specifics. I can how ever give you a simple example.

China does not have:
-tents for 10 million people in some store house.
-thousands of medical professionals sitting idle waiting for some catastrophy.
-thousands of dogs trained in searching collapsed buildings.

And these Items are not available on ebay either.

It`s a simple question of pooling resources. If you ask more spesific questions I am shure I can come up with more specific answers.

[Playtime]

I think you got the question wrong. It`s difficult for me to answer since your supposition is to general and lacking in specifics. I can how ever give you a simple example.

China does not have:
-tents for 10 million people in some store house.
-thousands of medical professionals sitting idle waiting for some catastrophy.
-thousands of dogs trained in searching collapsed buildings.

And these Items are not available on ebay either.

It`s a simple question of pooling resources. If you ask more spesific questions I am shure I can come up with more specific answers.


okie... lets say china.
Over a trillion dollars in reserves. Yet theres been massive fund raising campaigns.

Damagejackal mentioned the risk of some kind of US$ collaspe if the reserves are drawn down, but surely a couple of billions out of a trillion wont be noticed? Of course I'm not saying people shouldnt donate freely, its a tragedy after all.

[Playtime]

Most of the money is locked away in assets,bonds and investments which makes it harder to convert to back to its real monetary value (low liquidity).
In Japan's case most of there foreign reserves are tied in with the petrodollar buisness, if they withdraw to quickly the US dollar would crash.
China is mostly asking for provisions like tents an temporary shelters rather than cash hand outs...


I was watching china's broadcast on cable. massive fundraising program with songs, speeches, VIPs, business leaders, celebrities etc etc calling for phone donations. Phone lines in mandarine, french, japanese, korean, english.
Again, I am not saying that people shouldn't donate, just wondering why such huge reserves cant be better utilised to help suffering nations.

[ting]

okie... lets say china.
Over a trillion dollars in reserves. Yet theres been massive fund raising campaigns.

Damagejackal mentioned the risk of some kind of US$ collaspe if the reserves are drawn down, but surely a couple of billions out of a trillion wont be noticed? Of course I'm not saying people shouldnt donate freely, its a tragedy after all.

The fund raising campaigns you are mentioning is probably more related to ngos who need money for their operations. It`s not about raising money for the Chinese government.

The money in the reserves will be allocated when needed without much publicity. Also remember that there is not much the money can do in this situation. One can`t buy a rubble free road;-)

[name already taken]

“central banks know that holding these low-yielding Treasury bills is just an aid program to the United States.” (http://www.rgemonitor.com/blog/setser/central_bank_reserves/)
Most of these reserves are in American Treasury bills. America needs help too apparently.

And about the definition of Central Bank reserves:
the dominant reserve held by the central banks of the world are US dollars, which are estimated to comprise 70% of CB's total reserves (http://www.usagold.com/gildedopinion/rocketschool/20050808.html)

technical definition:
Webster's dictionary defines reserves (used in a financial sense) as:
1. money or its equivalent kept in hand or set apart usually to meet a specified liability or anticipated liabilities,
2. the liquid resources (such as gold and foreign exchanges) of a nation for meeting international payments. (http://www.usagold.com/gildedopinion/rocketschool/20050808.html)

So, if China spends a substantial amount of its reserves on an unexpected disaster, someone else won't be paid in time and could become bankrupt because of this, and this bankruptcy could bankrupt somebody else and so on, and this could go as far as collapsing the world economy.

[Playtime]

“central banks know that holding these low-yielding Treasury bills is just an aid program to the United States.” (http://www.rgemonitor.com/blog/setser/central_bank_reserves/)
Most of these reserves are in American Treasury bills. America needs help too apparently.

And about the definition of Central Bank reserves:
the dominant reserve held by the central banks of the world are US dollars, which are estimated to comprise 70% of CB's total reserves (http://www.usagold.com/gildedopinion/rocketschool/20050808.html)

technical definition:
Webster's dictionary defines reserves (used in a financial sense) as:
1. money or its equivalent kept in hand or set apart usually to meet a specified liability or anticipated liabilities,
2. the liquid resources (such as gold and foreign exchanges) of a nation for meeting international payments. (http://www.usagold.com/gildedopinion/rocketschool/20050808.html)

So, if China spends a substantial amount of its reserves on an unexpected disaster, someone else won't be paid in time and could become bankrupt because of this, and this bankruptcy could bankrupt somebody else and so on, and this could go as far as collapsing the world economy.


hmm.. thanks. It does make things clearer abit.

[oldsoak]

Onething I will say - earthquakes are not unknown in the PRC, as are other disasters and they do cop a few now and again poor blighters. I wonder whether they suffer from the "not this year" syndrome that we get in the UK.

[dava]

The 'money' going around in a country is partly backed by foreign reserves, together with gold reserves and lendings to banks. These assets are all held by the Central Bank. Now if the Central Bank decided to give some billions from this foreign reserve to aid, this would mean the money aggregate would have to shrink too because less is backing it. (and it would have to shrink by a multiple of these billions given due to the money multiplicator).

This would have a negative impact on the economy. Raising the money is so much easier without any negative effects on economy.

[etlovefx]

why?
that?
short?

[etlovefx]

if that is true, why China don't ask the land back which occupied by other country?

[etlovefx]

I was watching china's broadcast on cable. massive fundraising program with songs, speeches, VIPs, business leaders, celebrities etc etc calling for phone donations. Phone lines in mandarine, french, japanese, korean, english.
Again, I am not saying that people shouldn't donate, just wondering why such huge reserves cant be better utilised to help suffering nations.
-----------------------------------
you means other suffering nations?
by now,the most biggest disasters are the China quakes and Myanmar floods,
though there are more people dead in Myanmar floods, but don't forget a fact:
China is more open than Myanmar, China is ready to receive international aim already.

[name already taken]

I was watching china's broadcast on cable. massive fundraising program with songs, speeches, VIPs, business leaders, celebrities etc etc calling for phone donations. Phone lines in mandarine, french, japanese, korean, english.
Again, I am not saying that people shouldn't donate, just wondering why such huge reserves cant be better utilised to help suffering nations.
Those reserves are already a form of help (http://www.militaryphotos.net/forums/showpost.php?p=3270050&postcount=10) to the United States.

[LaoSexMachine]

Those reserves are already a form of help (http://www.militaryphotos.net/forums/showpost.php?p=3270050&postcount=10) to the United States.

Make it seem like China is in it to help USA. They bought it as an investment. An investment to MAKE money and nothing more. So give this "help" crap a rest.

[name already taken]

Make it seem like China is in it to help USA. They bought it as an investment. An investment to MAKE money and nothing more. So give this "help" crap a rest.
But then, if United States accepts this investment, it must fit its interests in some way, no ?

[dava]

Does anyone actually read my post?
It gives a clear reason why 'foreign reserves' are unavaibale.

As to the help of China to US in form of T-bills.
Its not like its the best investment choice ever to invest in US, if chinese could, they would invest in better oppurtinities.
They are obliged to do it to offset the huge trade imbalance.
If the money wouldnt flow back to the USA in form of 'investment', the dollar would plunge.
And a plunging dollar is not good for any economy.