Currency Devaluations + Nifty Graph
Posted: November 5, 2010 Filed under: Global Financial Crisis | Tags: APEC, currency devaluation, trade imbalances 8 CommentsYou had to know that it was eventually coming. I can’t pass up the chance to use a nifty graph for discussing stuff surrounding economics. This is from Der Spiegel. It will show you the value of trade between the U.S., China and the Eurozone plus a few other stylized facts. One set of data is GDP which is in the table down in the left. The other set in the right corner is foreign currency reserves which is a bunch of money sitting out there with lots of places to go. That is, unless you don’t have a pile and the EU and the U.S. don’t have a pile. (China had been using its pile to purchase U.S. Treasuries. )
Here’s a bit of a primer on APEC from the WSJ. The issues of currency devaluation and QE2 are bound to come up, eventually.
Korn, noting that many Asian central banks have been intervening to defend the dollar and slow their own currencies’ rises, complained that the baht’s 11% gain this year is hurting Thai exporters by making them less price-competitive.
In one possible rift, APEC ministers from Southeast Asia countered a U.S. push to quantify the goals for reducing imbalances. At the recent G-20 meeting, the U.S. sought to specify that countries would aim to limit their current-account imbalances to 4% of gross domestic product by 2015, but the group rejected putting any numbers on what were watered down to “indicative guidelines.”
Members of the Association of Southeast Asian Nations, meeting on the APEC sidelines, were set to warn that such a move would promote protectionism and hamper free trade.
“Asean has concerns that specific targeting of the current account could lead to measures being employed that may be detrimental to the principle of free trade,” says a draft statement from the group, seen by Dow Jones.
The Asean ministers are likely to take this issue up with U.S. Treasury Secretary Timothy Geithner early Saturday.
If you’d like to learn more about Currency Devaluation and Revaluation, here’s a link to a short FAQ from the NYFED.
Under What Circumstances Might a Country Devalue?
When a government devalues its currency, it is often because the interaction of market forces and policy decisions has made the currency’s fixed exchange rate untenable. In order to sustain a fixed exchange rate, a country must have sufficient foreign exchange reserves, often dollars, and be willing to spend them, to purchase all offers of its currency at the established exchange rate. When a country is unable or unwilling to do so, then it must devalue its currency to a level that it is able and willing to support with its foreign exchange reserves.A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of a devaluation. First, devaluation makes the country’s exports relatively less expensive for foreigners. Second, the devaluation makes foreign products relatively more expensive for domestic consumers, thus discouraging imports. This may help to increase the country’s exports and decrease imports, and may therefore help to reduce the current account deficit.
There are other policy issues that might lead a country to change its fixed exchange rate. For example, rather than implementing unpopular fiscal spending policies, a government might try to use devaluation to boost aggregate demand in the economy in an effort to fight unemployment. Revaluation, which makes a currency more expensive, might be undertaken in an effort to reduce a current account surplus, where exports exceed imports, or to attempt to contain inflationary pressures.
The APEC meetings are going on now and we’re sure to get some news in the morning.
KO for KO?
Posted: November 5, 2010 Filed under: Elections, Main Stream Media, The DNC, The Media SUCKS | Tags: Olbermann suspended, Pelosi runs for minority leader, Van Hollen resigns DCCC 67 CommentsTwo breaking news stories worth front paging are sweeping blog headlines.
First, Keith Olbermann has been suspended indefinitely without pay at MSNBC for donationg to three Democratic candidates during the last election. This is from Politico.
Olbermann made campaign contributions to two Arizona members of Congress and failed Kentucky Senate candidate Jack Conway ahead of Tuesday’s election.
Olbermann, who acknowledged the contributions in a statement to POLITICO, made the maximum legal donations of $2,400 apiece to Conway and to Arizona Reps. Raul Grijalva and Gabrielle Giffords. He donated to the Arizona pair on Oct. 28 — the same day that Grijalva appeared as a guest on Olbermann’s “Countdown” show.
NBC has a rule against employees contributing to political campaigns, and a wide range of news organizations prohibit political contributions — considering it a breach of journalistic independence to contribute to the candidates they cover.
Other links:
The second breaking news story of interest is that Nancy Pelosi will run for Minority Leader. This is from Ryan Griffin
at Huffpo. Pelosi Tweeted the announcement.
House Speaker Nancy Pelosi (D-Calif.) will make a bid to be Democratic minority leader, she announced Friday via Twitter. “Driven by the urgency of creating jobs & protecting #hcr, #wsr, Social Security & Medicare, I am running for Dem Leader,” she tweeted.
Other Links:
In related news, Rep. Van Hollen is leaving his chairmanship at the DCCC.
Friday Reads
Posted: November 5, 2010 Filed under: morning reads 61 Comments
Good Morning!!!
The Seattle Times announced that Sen. Patty Murray has won re-election. It was a squeaker but she pulled through. I’m sure I’ll hear about this one from my Dad. He thinks the entire population of Seattle is nutty.
As of Thursday evening, Murray was leading Rossi by more than 45,000 votes, taking 51 percent to Rossi’s 49 percent. That’s up from a 14,000-vote lead on Election Day.
According to a Seattle Times analysis, Rossi would need to get about 54 percent of the estimated 591,000 uncounted ballots statewide to overcome Murray’s lead.
But nearly 264,000 of those ballots are in King County. Murray’s already commanding lead there has only expanded since Election Day. She took 68 percent of the 69,000 King County ballots counted Thursday.
To overcome King County’s heavy support for Murray, Rossi would have to take about two-thirds of the remaining ballots in the rest of the state. So far he’s received 53.2 percent of those non-King County votes.
That made Rossi’s task virtually impossible, even though hundreds of thousands of ballots remain to be counted statewide.
The ever bombastic Allan Grayson goes out of office as bombastic as ever according to Politico. I really like what he says, but really, talk about a little too little and a little too late. Coulda, shoulda, woulda ….
“Our strategy for two years has been appeasement, and look where it got us,” Grayson said on MSNBC. “I think Democrats want to see a fighting leadership, they want to see a fighting president — somebody who actually accomplishes good things for constituents.” As examples of what Democrats should have focused on, Grayson listed the Employee Free Choice Act, immigration reform, civil rights and women’s rights.
Grayson also took a direct shot at Senate Majority Leader Harry Reid of Nevada, recommending that Reid read William Butler Yeats’s “Slouching Toward Bethlehem,” which contains the line “The best lack all conviction, while the worst/Are full of passionate intensity.”
Maybe he’ll primary Obama? That could at least be interesting.
The media is all chatty about the new Dubya memoir. According to the those that have leaked copies or excerpts, Bush’s lowest moment of his presidency was when Kenye West criticized him over Hurricane Katrina. The response itself counted up there with my lowest moment of his presidency, but gee, doesn’t any one think that thousands of U.S. soldiers and millions of Iraqi and Afghanistani citizens’ death would be considered a really low moment? Or, how about the torture of Iraqi prisoners? Where’s the measuring stick this guy uses? How is it denominated? Inquiring minds really find the entire concept odd.
Among other things, Bush says the lowest moment of his presidency was when rapper Kanye West declared in the aftermath of Hurricane Katrina that “Bush doesn’t care about black people.” “That ‘he’s a racist,’ ” Bush told Lauer. “I resent it, it’s not true, and it was one of the most disgusting moments of my presidency.”
Bush writes, per Lauer, that he can barely think about the moment “without feeling disgust” and that it outranks people criticizing him for the war in Iraq or his efforts to cut taxes to benefit the rich.
I’d think finding out we tortured prisoners would be up there on the disgusting moments scale. Caring what Keyne West thinks about things is like a bald man obsessing on a comb.
Dr. Doom–Noriel Roubini–is out with a new column on Project Syndicate and lives up to his name. It’s my second attempt to get you interested in the currency war news too, btw. (Just-in-case you thought I’d forgotten overnight.)
The risk of global currency and trade wars is rising, with most economies now engaged in competitive devaluations. All are playing a game that some must lose.Today’s tensions are rooted in paralysis on global rebalancing. Over-spending countries – such as the United States and other “Anglo-Saxon” economies – that were over-leveraged and running current-account deficits now must save more and spend less on domestic demand. To maintain growth, they need a nominal and real depreciation of their currency to reduce their trade deficits. But over-saving countries – such as China, Japan, and Germany – that were running current-account surpluses are resisting their currencies’ nominal appreciation. A higher exchange rate would reduce their current-account surpluses, because they are unable or unwilling to reduce their savings and sustain growth through higher spending on domestic consumption.
Within the eurozone, this problem is exacerbated by the fact that Germany, with its large surpluses, can live with a stronger euro, whereas the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) cannot. On the contrary, with their large external deficits, the PIIGS need a sharp depreciation to restore growth as they implement painful fiscal and other structural reforms.
A world where over-spending countries need to reduce domestic demand and boost net exports, while over-saving countries are unwilling to reduce their reliance on export-led growth, is a world where currency tensions must inevitably come to a boil. Aside from the eurozone, the US, Japan, and the United Kingdom all need a weaker currency. Even Switzerland is intervening to weaken the franc.
So, this means, for the short term, stuff may be a little cheaper for us. However, in the long run, this rush to lower exchange rates will drag down our wages too and it will be destabilizing because no one will know how low things will go. Any time you add risk to a market, you’re going to get pull back in risk taking. That means a lot of businesses will think twice before expanding and of course that makes hiring iffy too. I’ll have some more on this later today.
I’m not sure you read this in the down page links yesterday, but Democratic Blue Dawg Heath Shuler from North Carolina says he’ll challenge Nancy Pelosi for the minority leader position. Given the number of lost blue dawg seats, I’m not sure how that will come out, but here’s a link to TPM that covers his thoughts.
Speaker Nancy Pelosi hasn’t announced whether she’ll retire, continue to serve in Congress, or even seek a leadership role in the next Congress, but already one of the House’s most conservative members is trying to undercut her. Rep. Heath Shuler (D-NC), who dodged the shellacking on Tuesday, says if Pelosi makes a play to be Minority Leader, he’ll run against her.
“If there’s not a viable alternative — like I said all along — I can go recruit moderate Members to run in swing districts,” Shuler said. “In that situation, I could do it better than she could, and that’s what it’s going to take. It’s going to take moderate candidates to win back those seats.”
Why don’t they just all re-register as Republicans and get it over with?
One last thing from Der Speigel that grabbed my attention. I think it was the headline: ‘A Settling of Accounts with Mr. Perfect’ that really did it.
To the right he is confronted by the stark hatred of the Tea Party movement. In the political center, voters abandoned Obama in droves. And on the left there are complaints that instead of Mr. Change, Obama has turned into Mr. Weakling. Young voters and African Americans are, of course, still behind Obama, but many of them didn’t even bother to cast their ballots on Tuesday.
The debacle, the largest loss of seats for the president’s party in more than half a century, isn’t just a warning for Obama. It is a demolition. For two years, Obama was allowed to hope that he had managed to capture the heads of American voters in addition to their hearts. In fact, however, he only managed to find his way to their hearts, and only for a short time.
The Country’s Lecturer-in-Chief
America, indeed the entire world, fell in love with the idea in November, 2008 of having a young, black president in the White House. Voters felt that they could be a part of the change that they so wanted — a change that Obama promised so eloquently.
But the voters’ affection evaporated quickly. Campaigns are like poetry, it is said, whereas governing is prose. To be sure, the crises Obama faced when he took the oath of office were enormous. But so too were the opportunities — like that of explaining to Americans how urgently reforms were needed.
Obama, the great communicator, turned into the country’s lecturer-in-chief. His reforms required a vision to give them an overarching structure. But instead, Obama preferred to go on about the failures of his predecessor George W. Bush, who had long retired to his ranch in Texas. Or else he analyzed how the impact of the global recession would have been far worse without him and his economic rescue team.
His advisors seem to still believe that the public just doesn’t understand how much good Obama has achieved, from health care reform to tougher regulations for the Wall Street gamblers.
They may well be right. But they are not doing the president any favors. No American without work wants to hear how the unemployment figures would be at 15 percent instead of 10 percent if it were not for the man in the White House. And no one casts their vote out of gratitude.
Read the entire thing. It reads like an Obot Obit. Okay, well, I’m still trying to sort things out on the PC and the new Blackberry. So, I’ll turn the discussion and the link suggestions over to your capable hands.
What’s on your reading and blogging list today?
Sima Dives In
Posted: November 4, 2010 Filed under: Anti-War, Elections | Tags: anti-war, election reform, peace, peace action 36 CommentsI received the opportunity to take part in a small survey from Bold Progressives late on Tuesday night. It was only three questions, and I thought I’d post my answers here to start my Introduction:
In general, what are you thinking tonight?
I am a liberal, not a progressive, although at one time those seemed the same. I think too much trust was placed in a leader who had no experience, no proven record and nothing to show for his life but a couple ghost written books and the ability to make people believe in him. I think that means we’ve had a comeuppance that was as deserved as it was cruel. I think we have to go back to work… next question.What do you think the progressive movement should do next? As in, immediately…
Go back to the basics. Start elucidating and spouting progressive and liberal ideals in easy to understand bits. Don’t go all professorial on the people, talk to them like they are friends and compatriots, because they are. We have to tease out the liberal streak that runs deep in most Americans and get it to shine.Do you think Pres. Obama and congressional Dems should fight harder for progressive policies or seek middle ground with Republicans? (Please elaborate.)
NO middle ground. Fight, Fight, FIGHT. I think the middle ground has made this defeat. I mean, Feingold lost? Why? Because he went back on his promises and was two-faced about that stupid health care bill. My Senator, Murray, is struggling. Not because she is a bad person, but because when the country wanted change to the left, real health care, a public option or medicare for all, we got big insurance’s wet dream. Murray couldn’t stop it, nor could Feingold. Obama could have, but didn’t because he is bought and sold. We need a leader that is willing to betray his or her class (always the upper class) like FDR or Johnson. Until we get that leader, it’s time to protest, even if it’s Obama’s White House we are protesting. It’s time to meet and march and get people stirred up. It’s time for anti-war pickets on every street corner. It’s time to be heard, not taken for granted. If we stand up, others will stand up with us. This will not be easy, but mark my words, it will be done, or America is going to devolve into greedy mediocrity.
In these answers I paid too much attention to health care (which worries me personally right now) and not enough to the economy, un- and under-employment, anti-war protests, women’s rights, farming problems and more. But my basic goal remains the same regardless. It’s time for me to go beyond reading blogs, beyond nodding in agreement, beyond speaking up timidly, if at all, when friends say something ludicrous. It’s time to stand up.
I’m starting with the first cause that got me truly politically active. Like everyone else in this country, I went into shock after 9/11. The event generated a huge amount of fear for me, fear not of terrorists, but fear of the horrible backlash I knew would come from our government. I watched Bush read his stupid book and thought, “He can do anything he wants now, we are doomed.”
The stupid ineffective actions taken after 9/11, the build-up to the Afghan and then Iraq wars told me I was right, we were doomed. The thought galvanized me, and I found protest groups on the Internet and made myself, shy geeky me, go to the meetings. We organized and protested twice a week right on the corner in my home-town, right by where the ferry from Seattle empties. We got honks and waves of support, we got spat on and cursed, we got nearly run over. We stood in the rain, we stood in the hot sun. Some of us travelled and got beat up by police as we marched. My very small town doesn’t beat up demonstrators, thankfully; not enough of us, and not nearly enough of them. We made signs. We went to meetings with our Congress people, and got them to change their minds about a few things concerning the potential war(s), the Patriot Act, supporting Bush blindly, and more. My Congressman acted on what we’d discussed. We shouted, we yelled. Did we make a difference? Don’t know. But it made me feel as though what I had to say was at least heard.
We continued protesting after the Iraq war started and more people joined us. Then the 2008 election rolled around. Suddenly it seemed as though all the protests died. Not in Our Name folded up and went home, I suppose they assumed the new President would do the right thing. Other peace groups just withered, but didn’t die. No-one protested on the corner any more. I admit I turned my mind and work to other things. And on the back burner these last two years the wars have simmered; killing more people, maiming innocents, sending home crippled and devastated young men and women, fuelling anti-American hatred all over, creating a servant soldier class out of our jobless youth, and more, so much more.
So it’s time to pick up the protest banners, the signs and slogans and start fighting again. Here’s a bit of what I’ve gleaned while updating my moribund peace/anti-war links and searching the Internet.
Peace Action is still at work. Indeed I still get regular emails from them.
United for Peace and Justice is still very active. They started out in 2002 as a coalition of local anti-war and civil rights groups. They recently organized days of action in October. They were in Seattle, but only a few of them. Next time, I’ll be there.
Military Families Speak Out is still going strong. They need a new director.
Courage to Resist. This is an organization that supports members of the military who refuse to go to Iraq or Afghanistan.
Voters for Peace still sends me regular emails. They have regularly scheduled events.
CodePink is still doing stuff. Their webpage’s first link is about making Hillary Clinton doing business Blackwater. I’m not impressed because they’ve always seemed really anti-Clinton to me, but there’s the link for what it’s worth.
There are many anti-war resources linked from at the Holt Labor Library.
Generally, I will be writing about farming, gardening, dirt type concerns here at Sky Dancing. There’s a lot happening with the Federal Government on the food front, and most of it is bad for family farms, but we can change that! I will also sometimes do more Anti-War posts, if people are interested. I’m going to put a bit of bio type information in the comment thread to this post, in order to not make a long post longer.






Recent Comments