Baseball91's Weblog

November 7, 2010

QE2: Setting Sail in International Waters

Navigating the news: With a lot of soul searching going on between the central banks and the treasury chiefs of the Asia-Pacific Economic Cooperation (APEC) finance ministers in advance of the Seoul G20 meeting this week, the Thai Finance Minister Korn Chatikavanij told Reuters that he is willing to implement further capital controls, either alone or in cooperation with other countries, to combat excessive inflows from ultra-easy US monetary policy. No finance minster wants their currency appreciating and the Thai baht is one of Asia’s best-performing currencies this year. Thailand’s finance minister said last Friday he accepted its currency would appreciate due to strong economic fundamentals, but
recognized the threat of as investors flooding the Thai markets, creating potential asset bubbles look for higher yields in Thai bonds and stocks,

To avoid stoking inflationary pressures, Thailand would work to avoid damage from a sudden reversal in speculative money. Those reversals like the Japanese were experiencing with a too-strong yen. Outside money and bubbles, with outside manipulators look to skim.

Searching for alternatives to the dollar due to its broad-based decline, policy options include making more use of the International Monetary Fund’s special drawing rights (SDRs), taking whatever necessary measures

This past week, the Federal Reserve Bank in essence announced a revised edition, called Quantitative Easing, Part 2. With the attempt to send interest rates down by .50 or .75 percent, comes ultra-easing monetary QE2. Maybe you caught Back to the Future, Part 2. Would we ever end up with this same cast of characters, where we were when all of this started? And would the ending seem the same?

In 2006, forty-six Filipino pesos bought one US dollar. On Friday there was short covering of the dollar as the Bangko Sentral ng Pilipinas intervened in the trading so the peso would not appreciate beyond the 42.50 peso-per-dollar level. In the words of one trader, “There was panic dollar-buying.”

This was not just sub-prime American crisis. The Fed will now will print money to buy as much as $900 billion in U.S. government bonds through June 2011—an amount roughly equal to the government’s total projected borrowing needs over that period. The Obama administration reported a few week back the federal deficit hit a near-record $1.3 trillion for the just-completed budget year. When monetary policy was used to finance war. This was about the past unfunded costs, and the ongoing present costs. Not appearing in the budgets passed each January, which were affecting currency and that neither political party talked about.

Asian countries have piled up hundreds of billions in foreign exchange reserves since the continent’s currency crisis in the late 1990s in part because they felt the funds mishandled the situation.” Japan is sitting on one trillion dollars. The Chinese government has their $2.4 trillion in reserves. Only it was not to be measured in dollars, at this point forward. America, between the credit markets and the equity markets, was about to be reinvented. And a lot like when the bank held your mortgage, in the new world order American politicians would have to learn a bit of humility when going to meetings like the one this week in Seoul.

It was two years after a calamity that resulted in this new kind of totalitarianism when people cannot buy homes and cars from a banking system, and the rest of us cannot sell. We were stuck where we were, until the foreclosures.

Timothy Geithner – whose credibility is seen in the twelve month performance of the “strong” dollar that he cheer-led last November when that dollar was worth ten percent more when pegged to the yen – declined to comment on the U.S. monetary policy stance, saying today the U.S. has an “independent” central bank. This is the Geithner, who led the New York Fed in September 2008, slowly losing face with his promises, among finance ministers of the Asia-Pacific Economic Cooperation (APEC).


Religion Blogs

Advertisements

1 Comment »

  1. Comment by baseball91 — April 26, 2015 @ 1:49 PM | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.