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September 20, 2011

When the World Was Flat

This week in football. Like had happened to all of the intercollegiate conferences over the past fourteen months in the States, off the agenda is any public discussion of the possible break-up of the euro zone , the nations using the euro for their currency. Having lost lost confidence in their European counterparts, banks in the US have started shutting European banks out of inter-bank funding markets. Speaking of globalization, eh Thomas Friedman?

In the 2011 playdowns of World Series Kick the Can, more immediately kicking Greece out was not to be spoken of. Of the European Union. Out loud.

The world was playing as if the eurozone was in some kind of neutral transition, unaware that the game was now in penalty time. In a less sophisticated continent, this would be just another week of “kick the can” from the road from one G7 weekend in Marseille along to the Wroclaw meeting of the ‘‘Eurogroup’’ finance ministers which followed seven days later, with all of the potential “irrational exuberance” by fans that their country would not be affected, and that they hoped to continue as always. If the goalkeeper stood up to expectations.

Speaking of hooliganism, the Finns are demanding “collateral” for any new loans to Greece from the central bail-out fund; the Austrians are against the Finns. Tim Geithner was there cheer-leading, urging EU policy-makers to avoid “loose talk,” in playing their variety of kick the can, with so little body contact for which Eurpean ice hockey used to be famous. Angela Merkel may only win a German vote at the end of September with opposition support, while some of her own coalition MPs in particular are fiercely opposed to taking on such a bottomless commitment to the size of the Eurozone nations. And Slovakia does not vote on the bailout until December. As one on Geithner’s team said at Marseille, “Seventy-five per cent of the dark things happening in the world economy are because of the eurozone.”

Divorce Greek-style. European Commission President José Manuel Barroso said that it was time to look at a mechanism to break apart the euro zone. So with the supposedly increased muscle since July of the European Financial Stability Facility – the central bail-out fund – the action requires parliamentary approval for each member nation’s contribution, which still is by no means a certainty. Almost as taboo as the notion of dismantling the currency itself, LIBOR rates have risen over the past thirty days, as the European Central Banks’ dollar funding scheme to stave off the onset of another credit crunch demonstrates a coming fear in credit markets. And the air around Europe provided by credit markets seemed to be polluted, seizing-up the international banking system, one day soon. Yields on Greek debt, Spanish debt, Portuguese debt, and Italian debt continued to climb. After the discussion of ‘‘euro bonds’’ – central borrowings effectively on the back of the Germans to fund all eurozone member governments – was so far from agreement.

The European Central Bank has reported an up-tick in deposits from eurozone banks, an indication the banks feel more secure with deposits in central banks than lending to one another. “To stop financial contagion and manage the bankruptcy of the Greek government, you need to support the banking system. It’s the only solution, and it is appropriate to use European Financial Stability Facility funds,” said Jan Bureš, an economist with Československá Obchodní Banka.

Jean-Claude Juncker, the Luxembourg prime minister presiding over the Eurogroup, called at least for “verbal discipline,” if no other economic discipline. With global central bankers’ support and Amerrican cheerleading, Europe started this week trying on the surface to work as a team. “Of course, it’s not easy to speak now about increasing the funds available in that mechanism, and it will take some time.”

Bank bailouts in Europe in 2011. Bailouts for banks which dull motivation for a bank to invest responsibly. A reasonable solution, and maybe the only solution to debt contagion, “another bailout raises the specter of moral hazard, the idea that in the same way bailouts for governments decrease the motivation for responsible state spending, wrote the Prague Post. “What’s more, if governments bail out banks, it could result in sending those governments into debt.”

Mutual distrust in the times of monetary wars. Visible mistrust in the LIBOR rate since the failure of Lehman Brothers.

As a new credit crisis once again infects the economy, in a stair-step process through industries until debt is destroyed and a more sustainable economic foundation takes root. Starting with Greece, spreading to the financials in French banks, engulfing even Germany. When all those European nations were in this together. And eventually all that globalization sung about at the start of the decade, eventually phases through retail, technology companies in the United States, and the creditor in China. As commodities begin to fall, signaling deflation in Europe. I wonder now what the asking price for Durty Nelly’s, the oldest pub in Ireland, in the middle of no where. It had been ten million euros in January 2010.

Back home as another NFL season got underway after a labor dispute, with the NBA still on strike, each political party is still playing kick the can over American debt. And those in the know had worries from belief that European banks are sitting on crippling losses on their government bond holdings. And in this version of sport, it was like watching the NHL All-Star game, with so little close checking by so many participants. And US government officials were heard in Marseille seeking to shift blame for America’s domestic performance onto the influences from Europe.

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September 30, 2010

The Deceit in the Decade of the Aughts

Filed under: Nebraska,news — baseball91 @ 3:40 AM
Tags: ,

My sister reported this week that the accident which my mother had had two years ago driving to a post-season baseball game, a rear-end accident, really was not my mother’s fault. Because it seems, my sister was driving. I have not inquired yet of the reasons why the deception. I did not recall if the accident was two or three years ago, only that it was during the Bush Administration when the Twins were playing Oakland, and Frank Thomas had hit a home run to decide the outcome that day–game one of the opening post season.

There has been a lot of deception around the past few years. About bailouts. And banks and money laundering. In an era when an American government was not all that different than the Mexican government. In an era when we wondered which Heisman Trophy winners had received payment, and who was using steroids, in post season baseball which allowed a wild card team to go the farthest in the post season, for an extra round of television ratings. In the decade of war which started over weapons of mass destruction.

The Bush Administration talked only about the upfront costs of the War in Iraq which mostly were handled still five years after the war began by emergency appropriations. By the time we went to war, costing $12 billion a month but not in the budget, Bush and Congress — even though the United States already had a massive deficit—cut taxes. So the war had to be funded by more borrowing. And thus the low interest rate policy and quantitative easing.

So budgets seemed to have, because of the War on Terror, mostly hidden items. So that the collapse of the banks was blamed on sub-prime loans, but when the fault lies also with the votes of Congress to go to war in Iraq, based on the theory of weapons of mass destruction which had never existed. Funding of war is now running at a monthly $16 billion if you include Afghanistan.
All of these wars, with quantitative easing and little or no economic sacrifice. The hallucinations back home about the war in Iraq. The war in Afghanistan. Or the drug wars. Easy money. And banks laundering the money to fund it all. And all the costs hidden in the defense budget, and for national security, in the war on terror which my Congressperson, prior to 2006 “shoulder to shoulder” with Mr. Bush, has witnessed over her ___years. Though I think she has been around since the 1990s, I will have to look. Apparently, like my mother across the river, she even had approved of bailouts.

In elections when no one asks about the deception. Journalists do not ask— perhaps more conscious than ever about the financial condition over the precipice of their own employer— when they are allowed to question candidates during the debate. If any of these television news people were journalists.

Yeah, my sister reported this week that accident which my mother had had two years ago when, it seems, my sister was actually driving. It was time to inquire the reasons why the deception. Because the deceptions were becoming a way of life here. Overall, according to a new report from the Congressional Research Service, the U.S. has spent $1.1 trillion on the wars in Iraq and Afghanistan. Between 2009 and 2010, the average monthly expenditure of the war in Iraq fell $1.8 billion to $5.4 billion. While in Afghanistan, monthly expenditure was $5.7 billion, up 63% compared to the unhidden expenses in the prior year’s budget. And if it was anything like when the Shriners’ convention came to town, or with the Super Bowl when politicians promised a seven-fold spending result for each dollar expended, in the derivative world with no real regulation, was this war costing $7 trillion? On top of the bailouts? Two years later?

My mother called in the wake of the news about all of her deceit in this auto accident. She wondered if I wanted to attend a meeting with her at Wells Fargo Bank on Monday. Yeah, the bank which had acquired Wachovia. Wachovia, with all of the bad sub-prime loans which still are not resolved. Wachovia which made a lot of money, hundred of millions, in money laundering for drug lords in Mexico. But she liked her banker, who seems like a nice guy.

A lot like the subsequent president, my mother still has not spoken about all of the deceit in the two or three years since the car accident. Maybe I had become like too many Congressmen and Congresswomen, and I don’t want to know. In the case of the accident, I don’t think the deceit involved more than the family circle. All I knew was it was really was not my mother’s fault, just a tap, and no one believed that the other driver was injured, or if she really had more than $200 in damage.

I don’t understand a lot these days. About how it became some how a cause of patriotism to die upholding the wars of deceit. Too many have not inquired the reasons for the wars of deceit. Some attribute the cost to the War on Terror. The ones which have allowed wiretaps and water torture, encroaching upon the highest ideals of the Founding Fathers.

Mostly I think we had allowed ourselves to be deceived. By institutions. Academic ones. Religious ones. Political ones. By people who seemed like nice guys. Older popes. Even Pulitzer Prize winning economists from Princeton, telling us how to avoid a decade long depression, without ever looking at all this deceit around.

The anger at Mother Church. The one based in Rome. At all the deceit. With all of his complicity, why this pope had gone to the United Kingdom at this point in history. Accepting an invitation from the queen, herself a head of state and head of a religion. A Protestant herself, inhabiting castles and ivy towers. As the Irish could just hang their heads. About why this guy was in charge. And why did he not just go away? But when the same electorate would choose his successor. As the Irish could just hang their collective heads.

Yeah, my sister reported this week that accident which my mother had had two years ago, when it seems, my sister was driving. And my mother bailed her out. This sister does not drink. Or so we think. A lot like that original bailout vote which failed, the accident happened at mid day. And a lot like Republicans and the Democrats, I was not quite ready to forgive either of them. As Obama and Congress — even though the United States already had a massive deficit from the wars stemming from deceit— were in discussions once again about continuing the tax cuts. And when it also seemed patriotic to fund such wars. Because now everyone needed jobs.

While the Jews around the world were getting ready for the Day of Atonement this weekend, I was not quite ready. In a world with less and less belief, I still needed a few more weeks.

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May 11, 2010

Using the American Express Card

They were careless people, Tom and Daisy—they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made. —F. Scott Fitzgerald, The Great Gatsby

If it was not bad enough when taxpayers are liable for the recent $23.7 trillion the Fed and Treasury handed out. Now comes word that the Federal Reserve Bank is participating in the rescue of the Greek government, along with the International Monetary Fund, the Japan Central Bank and the European Central Bank. The New York Times noted today that the sovereign debt crisis came on after an admission that the level of Greek debt was much higher than previously reported, due to bad management. The value of the euro, dropping from US $1.36 on January 21st to US $1.26 by the end of last week, was eroded by the debt issues of Greece, Portugal and Spain.

With the inability of these nations to share a single treasury, tax system or budgetary authority, the euro is largely a concept. A crisis, which centered seemingly on the recognition of the illusion of the currency, when those European countries lacking a coordinated financial backing for the euro, controlled by the independent European Central Bank much like the Federal Reserve, was resolved Sunday on nearly a one trillion dollar rescue fund to deal with the European debt problems.

While Americans argue about offering health care coverage to illegal immigrants, The Federal Reserve Bank was offering more than good words to these European political problems. This news is not going to play well in Peoria.

May 1, 2010

Where Are You When We Need You, Paul Revere?

Did you notice that Zygi Wilf was, after his purchase of the Minnesota Vikings, as lucky now as Prince Charles? Except for the issue of waiting, with so little hostility directed at the overall process of royalty. “If you got a bill in the mail every year for seven bucks — that’s the cost of a beer at new Target Field — would you consider that a worthwhile contribution for keeping your pro football team?” writes David DeLand in the St. Cloud Times.

Would they ever put the question to the voters in England. About the cost of Buckingham Palace? Or a new house every thirty years? Or about just continued public subsidies to The Royals? In a nation that never believed in royalty, would they ever put the question to Minnesotans?

Where, by the way, had the Kansas City Royals come up with the money to refurbish their stadium, Mr. DeLand of the sports department?

Did you have to be in the souvenir business to notice that licensing fees in the NFL went to the NFL. The NFL that never paid for new stadiums, like was required in Europe. MLB was late to the game over this concept of licensing fees, by about five or ten years. When, beginning in the 1970s and ever since, it was all about the cost of the official logos on your purchases.

Licenses and licensing fees. Driver’s licenses. Fishing licenses. The revenue always went to a government body. Except when it came to sports authorities. In these parts, the local NFL franchises never paid for new stadiums. The one that was demanded in the late 1970s, with a dome. The father of the mayor of Saint Paul spent a lot of time seeing that the bill was passed. Yeah, in a day before there seemed to be franchise rights sold for elected office, which too many politicians somehow had passed along. Since the days of the Kennedys. The Cuomos. The Bayhs in Indiana. All those bleeding hearts. And the Bushes. And the Clintons. Now with their organized ways to show up at every car crash. Or hurricane. Like they cared.

When public service was now something else. About only power. Too many thoughtless if not clueless sons and daughters of politicians. Jock sniffing for votes. Trying to run a show that a Prince Charles could only envy. With real power.

The NFL that never paid for new stadiums, like was required in Europe. Or out east. With too many politicians seeking autographs instead of tax revenue from these athletes. There should be a national tax on MLB and the NFL, for revenues raised to pay for the next sports stadium they felt they needed. And yes on the Player’s Association and the NFL Players’ Union, who got something like 55% or more of the revenue.

Prince Charles could envision himself in the picture, as the role model for local baseball people as they made trips to other fiefdoms in the kingdom of MLB, to view their new palaces. Though Prince Charles had been able once to send his wife, when he was married to a blonde, when he tired of it all.

There was a day when kings and queens gave everything away for free. For loyalty. Before the politicians and manufacture’s reps entered the picture, with blackout rights. Did you notice all the hostility directed at the Goldman Sachs who, like all the reptile oil salesmen at the reptile oil emporium, were making so much? And the ensuing jealousies there. Over money and good looking blondes.

Note all the ambivalence of the audience, the ones watching for free, about these thugs who had no investment in the game. Or the carpetbaggers, with only manufacture’s reps working for them as reptile oil salesmen at the reptile oil emporium, until they acquired the local NFL franchise, and entered the picture.

”There’s a critical mass of legislators, fans and business leaders,” said Lester Bagley, the Vikings’ Vice President of Public Affairs and Stadium Development. “Who believe this is the year.” Were they the ones on the bicycles at rush hour, tying up traffic? Mostly on Fridays?

“We know that this is a tough discussion, and the economy is tough,” Bagley said. “But we think we have a good story to tell: What we bring to the community.”

His current neighbor across the street is Hennepin County Medical Center, a hospital in the community that was really bleeding, where they seemed to think 2010 was the year for them. Or hope. Like a lot of Viking fans. With bleeding hearts, over politics and sport. This was finally the year? But at HCMC, those fans would die, actually die, unless something was done about the budget issues. This year.

Just as the Prince’s Foundation for Integrated Health, yeah under Prince Charles, was being shut down for fraud, the Redcoats were coming. One if by land. Two if by sea. Or maybe by bike. Or ambulance. Camouflaged in purple.

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January 28, 2010

The State of the Union

When credit card companies gave you zero percent rates….giving away product, charging nothing. Now the government is doing the same. For banks,getting zero percent rates so they could keep operating. As the banks were not extending anyone credit.

By Congressional Act, the Federal Reserve was founded in 1913 specifically to combat financial panics, including runs on banks. Since the Fed, when the economy was overheated during the subprime mortgage boom, did not regulate interest rates to dampen the ardor of member banks for mortgages as it could have, Ron Paul was calling for greater Congressional control of this private entity.

When would the banks get hit by the government by the over the limit fees, like those banks charged their customers on their credit cards?

The system….when the affluent paid the least, and the poor paid the most. For free checking accounts. Unless you had less than $800 in your account, and the bank charged you a monthly fee of $12. At banks, or at your dental clinic, it was all the same. The poor were charged the most. Unless you paid Delta Dental who got a special discount, and the rest were left to pick up the slack. At the banks, U S Bank in Minneapolis, the poor were paying for the rich.

And there were no more free toasters. Nor free checking. Ending TCF’s long-time “totally free” checking account, the regional bank TCF Financial Corporation plans to begin charging maintenance fees to customers with checking accounts, CEO Bill Cooper said in a conference call with investors on Thursday. The rationale was prompted by new federal regulations which likely will reduce revenue from overdraft fees.

Milton Friedman’s fundamental flaw was his fixation on the business cycle as expressed by the stock market, rather than looking at the whole economy with its wide range of meta-finance concerns such as agricultural economics, labor economics, population economics, and the economics of war, pollution, and development. The current administration did not seem to recognize the ongoing fundamental flaw. There was little real difference between the Republican and the Democratic leadership, under the influence of the lobbyists who paid both parties.

January 3, 2010

And the Winner Is…………

Filed under: Journalism,Journalists,Media,movies,Music,Nebraska,newspapers — baseball91 @ 11:16 PM

There has been a dearth of engineering and math majors pouring forth from universities over the past generation, as evident by the number of news article championing various compact disc, books, movies, as the best of the decade. It was the start of the No Child Left Behind generation.

It still takes 365 days to celebrate an anniversary. And the anniversaries are not numerically counted until the second one. Ten years make up a decade, and from my count I thought we had one more year to go!

Newspapers all over the country this week have written of news stories, movies of, books of, compact discs of the decade.

December 3, 2009

Those Numbers Concerning Sexting

An Associated Press-MTV poll has found more than a quarter of young people have been involved in some form of sexting — sharing by cell phone or online sexually explicit photos, videos and chat — despite the sometimes grim consequences involving conviction in some states for those who do it, with lifelong registration as a sex offender.

This news story comes this week as I heard Rick Steves do a travel show on public television. He said that the most compelling moment of his piece was when an Iranian woman crossed the street to tell him that she did not want her daughter to grow up to be like Britney Spears. That, Steeves said, was the universal human conflict in the secular world. It was the same conflict which defined American politics.

It was 12 months ago that I wrote this piece. Read it again in light of todays’ Associated Press-MTV poll about sexting.

In the age of abundance, with an abundance of ideas, in the ongoing age of ideology, comes a story about a survey by the Minneapolis-based Search Institute –an organization that foster in “all sectors of society a healthy development and thriving among children and adolescents” –of a group of young people who are “spiritual,” who are not at all religious. A newly released Search Institute survey of 6,853 young people ages 12 to 25 indicates that 55 percent of the respondents are spiritual, not at all religious. Miriam Cameron, a University of Minnesota’s Center for Spirituality & Healing professor, said the results confirm what she has observed in her classes. Nearly one-third of these young people said they don’t trust organized religion.

“Spirituality is bigger than religion,” said co-director of the institute’s Center for Spiritual Development in Childhood and Adolescence, Peter Benson. “One of the things we have to focus now is disentangling spiritual development from religious development.” According to the website, Dr. Benson became Search Institute’s president in 1985. Prior to 1978, he was chair of the psychology department and chair of the program in human development and social relations at Earlham College in Richmond, Indiana. He hold a Masters in the psychology of religion from Yale University. In an age of ideology, I wonder the reason it is, the basis that Yale offers a Master’s program in the psychology of religion, so that years later we can get these survey results. It sounds like Dr. Benson’s focus is funding his own program, and creating a need along the way, with the help of corporate sponsors.

Most students pay tuition to listen, read, and study what the experts have to say. Except those on scholarship. “We’re not paying enough attention to what our kids are saying,” Gene Roehlkepartain, co-director of the institute’s Center for Spiritual Development in Childhood and Adolescence said. “We need to listen more and talk less.” Yeah, Gene Roehlkepartain. Buy you kid another Ipod. You were not supposed to worship your kids, Gene. Why are kids, ages 12 to 25, being asked this nonsense? Your kids might not like taking physics or calculus either. These are the years you are supposed to have passed on a tradition that they had to learn. My 30-month old niece does not like to eat vegetables. Or potatoes. She has to anyway. Yeah Gene! How can we disentangle God and His history, from religious development, from spiritual development? Can we hold class outside?

Nearly one-third of these young people said they don’t trust organized religion. Do they provide locks at their church? What did they lose? Was it another kid or organized religion that stole their cellphone? What else did they not trust? Were any other questions ever asked?

If you ever were looking for an arsonist, you started focusing on 3 factors: Motive. Opportunity. Accelerants. Search Institute mission statement is collaborating with partners (foundations, corporations, schools, communities, faith-based organizations, and other systems) to broaden and deepen commitments, capacity, and effectiveness in fostering healthy development and thriving among children and adolescents.
In this case the Search Institute, Center for Spiritual Development in Childhood and Adolescence who funded the study, hopes to profit from their own survey, based upon their website. This was not exactly the Gallup Poll, where surveyors had disinterest. Search Institute would seem to aim at a secular society, to add to the divison between religions, serving “all sectors of society, including K–12 and higher education, faith communities, youth-serving organizations, social-service organizations, families, businesses, and the public sector.”

According to the news article, “The disconnect between spirituality and religion” was clear in the comments from young people. Drawing a line between spirituality and religion, University of Minnesota senior David Horn said, spirituality ‘doesn’t make distinctions, and religion is all about making distinctions.’” It sounds like the issue once again is relativism. Religion was providing an absolute moral authority. Distinguishing right from wrong. And this did not seem fair.

Or maybe the young, educated in secular schools without any religious training, are ignorant about specific belief, and the history of a belief. Even by the time they get to college and are thought to be the best and the brightest. Serving “all sectors of society,” the survey either shows the need in society for more teaching of theology and philosophy, or the need to encourage ignorance. Most Doctors of Divinity spend time actually studying theology and philosophy before they are allowed to teach and preach.

Speaking as the daughter of a minister, Miriam Cameron said she doesn’t think religions needs to feel threatened by the growth of spirituality. “Not at all. Many of my students equate religion with dogma and spirituality with harmony. Spirituality works well with most religions. The only ones it doesn’t work with are the angry people who say that everyone else’s image of God is wrong. … The spiritual view of God is much more inclusive.” Dr. Cameron’s viewpoint seems to include an American culture bias and fails to see the dimension of spirituality that is fueling the growth of Islamic fundamentalism. From my reading, Islamic dogma was not responsible for the growth of Islamic fundamentalism in Iran, as one example. Dr. Cameron seemingly does not believe there can be anger among those of the New Age “spiritual,” not religious. Dissecting her comment, she mixes apples with people and oranges, when she begins to discuss angry people in the midst of th discussion of spirituality and religions.

Few religious professionals would equate dogma with theology.

One of the things I came away with studying history, was that the human condition remains unchanged. Two hundred years ago there were slaves in this country. Actually in a lot of places. A lot of people never really asked the “why” question. My conclusion is that the basic human condition involves a degree of laziness. There were slaves because landowners were lazy. That laziness, to one degree or another, was still around.

“If that’s the way they really feel,” said the director of youth ministry for the Lutheran Church-Missouri Synod, Terry Dittmer, said, “it means that we have some serious questions that we need to ask ourselves.” It is the Missouri synod’s fault? Or maybe Mr. Ditmer is looking for a new response in the growing secular world.

Imagine there’s no countries, it isn’t hard to do, nothing to kill for or die for, and no religion too. Mr. Lennon, I don’t have to imagine much any more.

The Center for Spiritual Development concluded its report with a suggestion that the place to start is with conversations, asking young people open-ended questions such as, “What is most important in your life?” and “What does being spiritual mean to you?” I actually would start with the basics. Like asking about God before asking what spiritual meant. Like asking about the Greatest Commandment. Do you know God? Do you want to know God? Do you want to make an academic commitment to study God? You might have to buy a book and actually spend some time.

In other news, according to Josephson Institute, a Los Angeles-based ethics institute, which surveyed 29,760 students over the past year at 100 random high schools nationwide, 30 percent of U.S. high school students have stolen from a store and 64 percent have cheated on a test. That is a lot of stealing. I wonder if this was by the same nearly one-third of the young people who said they don’t trust organized religion.

These surveys give me pause to quote a high school biology teacher: “If ignorance is bliss, ’tis folly to be wise.”

Perhaps those grim consequences involving conviction in some states for those do sexting, with lifelong registration as a sex offender, will call the question as to public policy that keeps some sins subject to public notice to neighbors. Where there is no registration kept on those convicted of homocide.

November 12, 2009

The Buck

Filed under: Banking,Business,currency,euro,Minnesota,Nebraska,TARP — baseball91 @ 3:18 AM

The New World Order was here. Timothy Geithner met with Japanese Finance Minister Hirohisa Fujii this week in advance of the Asia-Pacific Economic Cooperation forum in Singapore on Thursday. On Wednesday, the dollar was trading just below 90 yen. Last month, a prominent Japanese currency strategist predicted the dollar could fall as low as 50 yen by next year. Geithner and Fujii paid lip service to the U.S.’ strong dollar policy, knowing full well that a weaker dollar is in the best interests of both countries for the time being, despite its very real and painful side effects.

Marketplace.com’s Lisa Twaronite reports quotes Bank of Tokyo-Mitsubishi UFJ strategist Naomi Fink,
“I have no doubts that Geithner defends a ‘strong dollar’ as a large economy would if it wishes to avoid flight from its assets as it increases its balance of debt. Yet like it or not, exports are actually less relevant than they were a year ago.”

“Exports comprised about 12% of the Japanese economy as of the second quarter, compared with about 16% at their peak, Fink said in an email interview. Consumption has risen to nearly 60% from about 54%, due to the reduction in exports and investment. Oil and most other commodities are traded in dollars, meaning a weaker dollar lowers Japan’s imported energy and materials costs. Naomi Fink said, ‘So perhaps the message here is that Japan should focus on domestic consumption and investment as to find a home for a greater volume of U.S. exports, thus narrowing the United States’ trade deficit?’ Fink added that in her view, it was ‘hard to see this happening,’ leaving a stronger Japanese currency as the most likely way to keep Japan from leaning on its old export crutch. ‘Japan might not wish for a weak dollar, but will probably have to bear with it, if it is to face the reality of reduced dependence on exports to the U.S.,’ said Fink. With the combination of fewer exports to the U.S. and lower oil imports and prices, the relevance of the U.S. dollar to Japanese trade has thus been reduced by default.”

“A stronger yen, while it adds to deflationary pressure here, can also help the newly Democratic Party of Japan achieve its goal of shifting the country away from a reliance on exports in favor of domestic-demand-led growth. While a weak dollar could in the long term bring down the U.S. trade deficit significantly by shifting consumption away from imports and by encouraging exports as they become cheaper on world markets, while at the same time discourage overseas investors on U.S. assets.”

The 21-member finance ministers’ meeting was the opening act for President Obama’s first state visit to Tokyo with Japanese Prime Minister Yukio Hatoyama before he heads to China. And then there was the Chinese yuan. Obama said on Monday that “currency, along with a host of other issues, will come up. I am confident that both the United States and China can arrive at a broad set of policies that encourages trade that benefits both countries, that allows ongoing economic growth.”

Economists say that Beijing artificially holds the value of the yuan down to make Chinese exports cheaper, American goods more expensive for Chinese consumers, with limited access to Chinese markets. Obama plans to raise the issue of their currency with Chinese officials in Beijing next week, a potentially disruptive topic for foreign exchange markets.

At their Pittsburgh summit in September 2009 the Group of 20 leaders aimed policies to ease the massive trade imbalance between China and the U S which has led to imbalances in the world economy by contributing to trade surpluses in China, big trade deficits in the United States, and cheap Chinese exports to the United States.

China’s relatively low-valued currency remains a focus of the financial markets. With their own high unemployment in Guandong in the important export regions from a slump in activity, there are no signs China will allow its currency to strengthen. The trade sector continues to be a drag on growth.

“We expect calls for yuan revaluation to be soundly rebuffed,” said Carl Weinberg, chief economist at High Frequency Economics. In the summer of 2008, before the September 2008 financial crisis blew up, China re-pegged its currency to the dollar. The key question is whether and when China will resume letting its currency strengthen. With the Chinese investment earned from exports put into U.S. government bonds, branding China a currency manipulator could anger a crucial U.S. creditor. There are no signs of any painful adjustments in the United States as to whether Mr. Obama will begin to cut spending or raise taxes to finance his goals.

Mr. Obama said say that the two countries share a common interest in delivering sustainable growth that will help rebalance the global economy. “They have a huge amount of U.S. dollars that they are holding, so our success is important to them. The flip side of that is that if we don’t solve some of these problems, then I think both economically and politically it will put enormous strains on the relationship,” he said.

September 29, 2009

Performance Enhancement After Affects

Tsunami warnings. Times of panic. When the water recedes.

Money-market funds are no longer insured by the US Treasury. When the Reserve Primary Fund share price fell last September a bit below a dollar, the U. S. Treasury stepped in offering protection against losses, to prevent a “run” by money-market depositors. Commercial banks paid premiums for federal deposit insurance for such protection to the federal government which they are required to have. That money-market fund protection continued in the panicked climate of the last 12 months but came to a stop Friday.

On September 3, 2009, Chris Oliver wrote a piece about the biggest movement in gold which might have gone little noticed by currency traders. The Hong Kong Monetary Authority, which functions as the territory’s unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year, the Hong Kong government said in a statement. Local newspaper reports said the Hong Kong Mercantile Exchange had signed an agreement to use the depository for its physical settlement and storage needs. According to its International Reserves and Foreign Currency Liquidity statement, the Hong Kong Monetary Authority reported $63 million in physical gold reserves as of July 31, 2009, thought to be stored in London.

A newly built 3,660-square-foot depository, located at the city’s main Chek Lap Kok Airport,will serve as a “storage facility for local and overseas government institutions. The facility would support Hong Kong’s emergence as a Swiss-style trading hub for bullion and would lessen London’s status as a key settlement-and-storage center, Chris Oliver wrote. Marketing efforts will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility, according to Raymond Lai, finance director with the Hong Kong Airport Authority. Managing director at Scotia Capital, Sunil Kashyap, said the facility was the first with official government backing in the region. Martin Hennecke, a financial advisor with the Hong Kong-based Tyche Group, said, “Central banks are increasingly aware of the importance of having gold reserves at time of financial crisis and having it easily available at their own disposal,” and this could be appealing to regional central banks unnerved after watching the global financial system teeter on verge of implosion last year.

Management firm Value Partners planned to launch an exchange-traded gold fund that will use Hong Kong instead of London as a repository for the gold backing the fund, a local newspaper reported. Traders said the new depository facility could foster new financial products, such as exchange-traded funds based on precious metals. “Having a central government-sponsored vault would create a situation where you could conceivably look at Hong Kong as being a hub, where metal could be traded for the region,” said Sunil Kashyap.

China has always shown a respect for the American dollar which comes from the history of the dollar. Now however, a larger interest is growing in China not to fall prey to wide currency fluctuations. Exports which have until now needed a reasonable balance in foreign accounts, a major share made up of the U S dollar. Paul Volcker spoke last night on the Charlie Rose show of the need in China to avoid social tension that is directly linked to currency.

The moves by the Fed last October are now starting to look a lot like a patient weened off steroids. It was not just the American electorate looking at how all the newly minted money was going to be paid for. It was either through tax increases or budget cuts. If the dollar was going to maintain any kind of value.

September 6, 2009

In the Shadows of Those Cloakrooms

Twelve months ago, there was talk of a revolution coming in the financial markets, which was financially supported by the 3500 lobbyists in Washington, for both parties. There was a new form of fascism in those stories at the time. That is if “fascism” was a word about comforts, with government offering instruction how all of us could live easier. With the help of former Goldman Sachs officers in government, government was now deciding, 12 months later, who were saved, which among us were rescued, at least amongst financial institutions. The free market had been replaced.

If the revolution in the financial markets was not enough, how did you feel as Congress was coming back from summer recess, from all the dog and pony shows, to address not the health care crisis but how, with a nation with an aging populace, to pay for health care. At a point in time when government through Medicare had not exactly been covering the cost of new technology in hospitals, was not paying a fair share. Yet health care itself had never been better.

In the debate, there are people who desire government to decide all of the issues of health care. How much to pay medical institutions, when government was not, had not been, reimbursing hospitals the true cost of taking care of patients with Medicare. Government now wanted to mandate the amount of reimbursement for all procedures, and somehow distribute the cost throughout the entire population in the form of premiums. People who thought government was honest seemed to support the concept. Did they know about the 3500 lobbyists in Washington who had been working for more than a generation to make sure the system was not fair? How had these health care reform supporters felt about the bailouts? (In the case of my Congressional Representative, Betty McCollum supported both the bailout and health care reform.)

Like in those financial bailouts, government was now deciding, if Betty McCollum got her way, who would be saved, which among us would be rescued, amongst both health care institutions, and their patients. Suddenly aware that government knew it had the power to print money, increase property taxes in the states, and if the need were come, to confiscate everything, now they would decided every health care procedure. We had yet to hear specifics how Washington would replace those Blue Cross Blue Shield claims people to make the same kind of every day decisions with all the love and care I found when I went to renew my license plate tabs.

The timing was not real good in September 2009, less than 12 months after the revolution in the financial markets. Not when this discussion seemed more like elective surgery. With a lot of swine flu around. I hoped the vote might be postponed for 6 to 12 months. Until the patients had a lot more strength. Until the president had the courage to introduce the specifics of a bill himself, with some accountability, rather than rely on Congress or the 3500 lobbyists in Washington to take the citizens to a health care destination. Congress had not done a very good job dealing with triage in the last crisis, but that might have been due to a president who just wanted to get out of office after creating the mess himself rather than actually lead.

I wonder if somewhere in those August dog and pony shows from New Hampshire to Montana, if the president heard someone ask when he might introduce the actual legislation that might work. If Congress had spent the time to approve his appointment so he had enough staff to work on a bill.

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