Une semaine marquée par la forte hausse du chômage en France

via Une semaine marquée par la forte hausse du chômage en France.

Dubai Debt Leads Bloomberg Week in Review

via Dubai Debt Leads Bloomberg Week in Review – Bloomberg.com.

As someone who follows international economics pretty closely, I’m surprised I didn’t find this Dean Baker op-ed until today. I’ve previously asked what the United States could do to convince the Chinese government to let the yuan appreciate. Baker doesn’t so much want to convince China, but rather beat China at its own game. He suggests that the US Treasury set a dollar-yuan exchange rate higher than the Chinese government and creating an incentive for Chinese firms and other individuals to use the new exchange rate.

I’m going to file this one under “interesting wonky idea that would NEVER, EVER happen”. The Chinese government flipped when the United States imposed a tariff on tires; imagine the reaction to the United States creating a new exchange rate. I’m highlighting Baker’s op-ed not because I think it’s a good idea, but proof that the problem of the yuan peg is not an easy one to solve and will require some creative thinking. Even if some thoughts won’t work.

If you have been following the recent media saliva-thon regarding The Obama’s recent trip to China, you may be under the impression that the trip was an utter failure, an abject round of grovelling and slavering, and an unmistakable sign of both Obama’s incompetence and America’s irrevocable decline.  That is the predominant message the US mainstream apparently wishes to get across, with its endless narrative of Obama as a “profligate spender coming to pay respects to his banker”.

Once we in the US agree upon a story, we tend to believe it in the face of contravening evidence (WMDs anyone?).  How else to explain our ignoring of this article in China’s (state-run) China Daily? If one takes its message at face value, this article indicates a major victory for the Obama Administration.

From the article:

The vice-foreign minister said the RMB rate’s flexibility may widen, echoing the nation’s central bank a month ago.

The announcement by Vice-Foreign Minister Zhang Zhijun comes after the People’s Bank of China, which has the power to oversee the yuan and financial institutions, said it was in the process of reforming the exchange rate system.

China is also starting to receive more international pressure to let its currency appreciate. The nation adopted the policy of loosely pegging the RMB to the US dollar since the financial recession began.

“China will increase the flexibility of the RMB exchange rate at a controllable level in the future,” Zhang said, “based on the market demand and with reference to a basket of currencies.”

China Daily is essentially the equivalent of Pravda in the Soviet Union – a state-run publication whose role is to inform the public and businessmen on official government policy (aside from the ’state-run’ part, not at all dissimilar to our US media). Of course, their articles are written in byzantine journal-ese and one won’t find the slightest breath of dissent within its pages, but over the years it has grown useful in deciphering what the Chinese leadership wishes to say publicly.

Thus the surprise. For more than two years now, China has steadfastly refused to allow its currency to appreciate, an act which nearly every other country considers cheating (or “aggressive monetary policy”). By keeping its currency pegged to the dollar at favorable rates, China puts its export market on steroids. The US has made its position on this practice abundantly clear; our Treasury Secretary castigated China for it literally on his first day, and our leading Nobel Laureates write accusatory op-eds in our state-run newspapers demanding that “something be done”.

Now, a few lines in a China Daily hardly pass for a substantive policy announcement, but one is led to think that Obama and his Chinese doppelganger had a nice little chat while he was over there, and they made some kind of agreement regarding China’s “currency manipulation”.

If China allows its currency to appreciate, they will have acceded to Obama’s central (though unstated) goal in visiting Asia. They will also have begun to do their part in reducing our monstrous and unsustainable trade deficit. However it is also clear that any currency re-valuation on the part of China will spell hardship for America’s “middle class” (that is, the bottom 95%). We depend on cheap products from China to a wholly unhealthy extent, in much the same manner as a heroin user. When inexpensive Chinese currency is no longer an option, import prices are bound to inflate. Of course, this matters little to our policymakers at the top; their interest is in preventing the further hemorrhaging of value from the dollar, thus securing their overseas investments.

So! Good news, I guess?

Dubai Shows Limits of Government Rescues, Roubini’s Das Says

via Dubai Shows Limits of Government Rescues, Roubini’s Das Says – Bloomberg.com.

L'économie du Japon montre de timides signes de reprise

via L’économie du Japon montre de timides signes de reprise.

Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses

via Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses – Bloomberg.com.

Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses

via Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses – Bloomberg.com.

Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar

via Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar – Bloomberg.com.

L'euro sur la barre de 1,51 dollar

via L’euro sur la barre de 1,51 dollar.

IMF Gets $600 Billion Credit Line to Help in Financial Crises

via IMF Gets $600 Billion Credit Line to Help in Financial Crises – Bloomberg.com.

Mexico Peso to Gain Up to 20% After Fitch Downgrade, Pimco Says

via Mexico Peso to Gain Up to 20% After Fitch Downgrade, Pimco Says – Bloomberg.com.

Il presidente americano Barack Obama, al suo primo vertice con il premier cinese Hu Jintao nel quale i due leader hanno ribadito l’importanza di ampi accordo bilaterali dall’economia alla politica, ha sollecitato la Cina a lasciare lo yuan libero di rivalutarsi.

Per Washington, infatti, la sottovalutazione dello yuan penalizza l’industria manifatturiera Usa e alimenta gli squilibri economici globali.

Ma il presidente cinese è rimasto muto sull’argomento dollaro/yuan e, nella conferenza stampa congiunta, ha sottolineato la necessità di abolire ogni forma di protezionismo, una velata critica ai nuovi dazi Usa contro alcune merci cinesi.

“Ho notato con piacere in precedenti comunicati l’impegno della Cina a muoversi verso un tasso di cambio più orientato al mercato” – ha detto Obama parlando sul podio accanto ad Hu con tre bandiere cinesi e tre americane sullo sfondo.

Fonte:
http://www.italiaoggi.it/news/dettaglio_news.asp?id=200911171012413932&chkAgenzie=TMFI

È incredibile trovare e leggere certi ridicoli articoli in internet. La rete o network che si voglia, è veramente un muro dove chiunque può scrivere quello che vuole, condizionando i navigatori, modificando la storia e le culture. Anche questo è un sistema per uccidere l’uomo e crea confusione o, nel peggiore dei casi, aspettative che non hanno nessun fondamento, proprio come la visita del Presidente degli Stati Uniti d’America in Cina.
Sappiamo tutti che da quando è salito al potere l’attuale numero uno cinese Hu Jintao la situazione dei diritti umani in Cina è peggiorata. Abbiamo saputo di molte persone che sono state arrestate, rinchiuse in prigione e nella maggior parte dei casi hanno subito violenze. I cittadini, ma soprattutto gli oppositori di Hu Jintao subiscono molta più pressione rispetto al passato, infatti l’attuale regime comunista cinese controlla i media, blocca internet e limita la libertà d’espressione.
Aspettarsi o essersi aspettati che il pur bravo Presidente Barack Obama fosse andato in Cina a cambiare le sorti dei cinesi mi sembra un pò troppo! Ho letto un’articolo che sostiene che la gente si aspettava che Obama avrebbe fatto qualcosa per i diritti umani in Cina, legittimo tutto questo, ma sappiamo tutti che non sarebbe stato possibile. È per questo gli è stato dato del fallimento! Ho letto sullo stesso articolo che si tratta di un fallimento perché in passato le pressioni esercitate da Washington hanno avuto i loro effetti: Pechino ha paura della diplomazia americana basata sui diritti umani. Ma chi scrive queste cose non si sente assurdo? Pechino ha fatto solo la sua politica che è stata quella di espandersi nel mondo e mettere nicchie di cinesi in ogni angolo del globo! I cinesi sono falsi, sono persone di basso livello e di conseguenza si sono comportati. Ed ora che sono riusciti nell’intento, che hanno quote di partecipazioni nelle più importanti società americane ed europee, per quale motivo dovrebbero essere intimoriti dagli USA?
Il Presidente americano ha detto e lasciato ai cinesi frasi importanti, parole che potrebbero avere un peso in futuro e non certo subito, come qualcuno ha sostenuto in rete. Frasi che potrebbero muovere certe coscienze ed i cuori del popolo cinese in futuro, ma probabilmente ci vorranno una, due o chissà magari più generazioni.
“We do not seek to impose any system of government on any other nation, but we also don’t believe that the principles we stand for are unique to our nation.”
“These freedoms of expression and worship, of access to information and political participation, we believe are universal rights.”
“They should be available to all people, including ethnic and religious minorities, whether they are in the United States, China or any nation.”
“That makes our democracy stronger because it forces me to hear opinions that I don’t want to hear, it forces me to examine what I’m doing.”
“We have known setbacks and challenges over the last 30 years. Our relationship has not been without disagreement and difficulty. But the notion that we must be adversaries is not predestined.”
Uno dei motivi principali del viaggio di Barack Obama, in realtà, era il tasso di cambio fra il dollaro e lo yuan, infatti sembrerebbe questa la chiave per ridurre il deficit commerciale fra Usa e Cina, un deficit che è arrivato alla cifra record di oltre 268 miliardi di dollari. Molti americani sanno che questo è dovuto al fatto che il governo cinese manipola l’attuale tasso di cambio, e che questo va ad aggiungersi a un ingiusto sistema commerciale. Come ha detto il senatore americano Charles Schumer, “l’intera crisi economica è partita con la manipolazione, da parte di Pechino, della propria valuta. Se non risolviamo questo problema, è inutile affrontare gli altri”.
La verità del – forse, chi lo sa in futuro? – non riuscito viaggio di Barack Obama è dovuto a due fattori, il primo la grande forza interna dell’attuale governo cinese che non vuole lasciare il controllo del suo destino all’Occidente, e come secondo punto potrebbe essere vero che l’attuale amministrazione americana non conosce la Cina.
Comunque le relazioni tra i due paesi non si basano soltanto sull’economia e nemmeno sui diritti umani. In passato, Hitler e Stalin non furono in grado di sciogliere il sistema democratico occidentale, e ora il Partito comunista cinese cerca di realizzare il desiderio di Lenin: fare in modo che l’imperialismo americano sia l’ultimo stadio del capitalismo. Va detto che, fino ad ora, sembra aver avuto successo. Ed è per questo che l’ultima visita in Cina di un presidente americano ha ricevuto così tanta attenzione dalla popolazione: questi non si curano soltanto di scambi commerciali e disoccupazione. La gente è preoccupata dal fatto che l’America possa essere sconfitta dalla Cina. Probabilmente è in questo dato che si vuole far passare per fallito il viaggio di Obama, mentre personalmente credo che più di quello che è stato fatto non poteva essere fatto! Il Presidente USA ha provato a forzare la mano, ma da persona intelligente ha preferito fare un passo indietro, ha mandato qualche segnale, ha lasciato qualche frase di speranza al popolo cinese, ma soprattutto ha imparato la Cina, il suo governo ed il suo popolo. Ora spetta al suo entourage preparare le prossime mosse, e queste si che sarebbero di fallimento se non andranno in “porto”, almeno parzialmente! Un fallimento per tutto il mondo Occidentale, che in futuro potrebbe sconvolgere il sistema che abbiamo conosciuto. Un passo alla volta e tutto cambia, quando succede è troppo tardi per tornare indietro. Meditate gente, meditate, ed invece di guardare il Grande Fratello, continuate a meditare.

Asia Considers Capital Controls as Inflows Threaten Recovery

via Asia Considers Capital Controls as Inflows Threaten Recovery – Bloomberg.com.

China Will Face Its Own Bubble, Pimco’s Gross Says (Update2)

via China Will Face Its Own Bubble, Pimco’s Gross Says (Update2) – Bloomberg.com.

In my last post I mentioned that you can’t simply create jobs out of thin air without spending money, because people are only going to buy X amount of stuff and use X amount of services.  All you can do is take jobs from elsewhere unless you’re willing to spend money to create “make work” jobs. 

Our jobs have gone overseas because labor is cheaper overseas.  We all know that.  Labor is cheaper because the dollar is strong.  You may not think it’s strong, but believe me, even after the economy jumped off the cliff, we were still in better shape than other countries. 

The way to bring jobs to the U.S. is to make the dollar cheaper and thus make labor cheaper.  China knows that, which is why they keep pegging the yuan (their currency) to the dollar.  This means that when the dollar goes down, the yuan goes down and Chinese labor is still cheaper.  But at least we have one thing going for us: if the dollar sinks against other currencies such as the pound, deutchmark, franc, etc., we will win against those currencies. 

And so, while we’re at it, if we spend even more money and devalue our dollar even more, we should spend it on those “make work” jobs that have been neglected for so long, such as (literally) bridge building, road repair, infrastructure repair, and even — art.  Just like the Works Progress Administration (WPA) of the Depression.  Thus, we’ll solve the job problem two ways.  Soon we’ll be swimming in jobs. 

And no, that’s something that only the U.S. government can do.  Cities cannot create jobs; states cannot create jobs.  They can’t print money.  Only the feds (or specifically the Fed) can do that.  So, don’t trash Obama or Bush II for spending us into debt.  We need to devalue our dollar in order to make ourselves competitive in the rest of the world.

–david kaye

In his recent visit to Beijing, President Barack Obama was in no position to push China around as far as letting its currency rise against the dollar.

Doing so would benefit the U.S. economy by making American-made goods cheaper in China, but the U.S. is reluctant to upset Beijing. China is the No. 1 lender to the U.S. at a time when the latest annual budget deficit hit a record $1.42 trillion. That makes for a lot of Treasurys to be sold.

Treasury Secretary Timothy Geithner, at the Asia-Pacific Economic Cooperation finance meetings in Singapore last week, repeated his mantra that “it’s very important to the United States that we have a strong dollar.” But the administration has done nothing to halt the dollar’s slide. Some have seen that as a signal that the U.S. feels a weak dollar relative to major currencies, other than the yuan, helps U.S. exports.

But with the United States reliant on foreigners to finance nearly $8 trillion in publicly held debt, it can’t openly back a weaker dollar. Doing so would cause investors to dump dollars. The dollar would sink, U.S. interest rates would likely surge and the fledgling U.S. economic recovery could risk collapse.

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Folha de S. Paulo – 19/11/2009

A PRIMEIRA visita à China do presidente dos EUA, Barack Obama, chegou ao fim sem que o principal tema de divergência entre os dois países tenha conhecido qualquer avanço. O governo americano busca convencer Pequim da necessidade de abrir mão de um dos elementos centrais de sua política econômica: o enfraquecimento forçado da moeda chinesa, o yuan, atrelado ao dólar.

Ao aferrar-se a tal mecanismo, o governo chinês procura manter intocado, mesmo após a crise econômica mundial, o seu modelo de crescimento baseado em exportações. Com o yuan fraco em relação a outras moedas, seus produtos se tornam mais baratos e competitivos mundo afora.

Do ponto de vista dos prejudicados por essa política -as indústrias de outros países-, a situação vem se agravando desde o ano passado. Para tentar reanimar a própria economia, o banco central dos EUA zerou a taxa básica de juros, inundando o planeta de dólares. Assim, também as exportações americanas se beneficiaram com o barateamento relativo do dólar e, consequentemente, de seus produtos.

Mas o que a visita de Obama explicita é que medidas autônomas dos EUA já não são suficientes para gerir sua própria economia. A peregrinação de autoridades americanas ao país asiático explicita o novo balanço de poder global, e sua frequência deve aumentar nos próximos anos.

O modelo cambial chinês limita a eficácia da política monetária dos EUA -mais ainda se vier a ser copiado por outros países. Cabe indagar se a continuidade desse atrelamento entre dólar e yuan é do interesse de Pequim, pois o sistema só funciona quando a máquina de consumo e endividamento das famílias americanas funciona a pleno vapor.

Se os prognósticos acerca de uma recuperação lenta nos EUA se concretizarem, uma inflexão “para dentro” da economia chinesa será inevitável.

Yesterday, President Obama of the US met President Hu Jinao of the People’s Republic of China for a private meeting. One of the topics of conversation would have been that of international trade imbalances.

Most countries have floating exchange rates, which means the value of their currency is allowed to fluctuate against the value of other currencies as the demand and supply for the currencies change.  In China however this is not the case, the Chinese government intervenes in the foreign exchange markets by buying dollars and selling yuan to keep the Renminbi artificially depreciated. The Chinese government  buys $30 million every hour to keep the exchange rate pegged against the dollar, and has accumulated over $2.2 trillion in reserves.  As the dollar’s value has fallen this year, the yuan has also fallen sharply.

Many criticize China’s undervalued currency as a beggar-thy-neighbour strategy for economic growth. By keeping the yuan cheap, Chinese exports become more competitive in foreign markets while other floating currencies have soared in value. The Brazilian  real has gained 42% since march, hurting its competitiveness  so much that it has been forced to implement a tax to discourage foreign direct investment.

The strategy also exacerbates the other problems caused by China’s large trade surplus.  While Chinese imports are so cheap, consumers will purchase them at the expense of buying those goods from other sources. China’s economy is primarily export led with American consumers doing most of the buying. This cannot continue indefinitely, China must save less and consume more for its own good as well as for the good of the world economy. China should want to wean itself off the American consumer to ensure stable and self sufficient economic growth in the future. A stronger yuan would help increase the purchasing power of households and raise the labour share of income which would boost domestic consumption. It would also tighten corporate profits which are a major cause of the boom in domestic savings. The effects of these changes would drastically curb China’s dependency on the American consumer and allow Americans to spend more in their own economy. Also by pegging the yuan to the dollar, China is importing US monetary policy which (with near zero interest rates) is currently too loose for the Chinese economy in its return to high levels of growth.

China’s current account surplus is expected to have fallen markedly this year. However this reduction is only temporary. The global recession caused a plunge in world trade and because Chinese exports were so much bigger than imports before this collapse, the gap between exports and imports has shrunk. Therefore this current account correction is only a temporary side-effect of the economic downturn. Work towards a permanent solution needs to begin.

A stronger Chinese currency, the Yuan, which the nation’s government indicated could happen in the months ahead, would come at an ideal time for U.S. markets.  As the U.S. economy continues its sluggish recovery, a stronger Chinese yuan would help bolster U.S. exports while offsetting the Federal Reserve’s expected increase in interest rates next year, in part to support the weakening dollar.

It is uncertain whether China will follow through on hints that it will let the yuan rise against the dollar, but the fact that Beijing is addressing the issue is reason for optimism in the West.

Manufacturers in the U.S. would benefit most because it would make their products cheaper in China, and boost their revenues from that country when it is translated back into dollars.

The US also would be able to cut its huge trade deficit with China and narrow its overall current account gap.  That would give the U.S. economy a further boost.

Information provided by CNBC.com