Analysis: G20 Proximity Talks Needed to Avert FX War

reply to post by Mdv2


Good post.... I don't know why you agree with free trade though? Its not that I do, but from what I have heard it was Bush Senior and then the Clintons who finally made free trade happen... and free trade has been proven not to work has it not?

I was led to believe it happened to give corporations a 'free pass' and make exponential profits which inflated the markets beyond recognition.

reply to post by carlitomoore


You mean this:

Germany's national bank, the Deutsche Bundesbank, has shown signs of irritation that the European Central Bank (ECB) has chosen to buy the state bonds of highly indebted eurozone countries.

The bankers complained that by buying the Greek bonds, the ECB was keeping their price artificially high, and other banks, notably French ones, were consequently using the opportunity to sell their Greek bonds in order to clean up their finances.

source

reply to post by Mdv2


Thats exactly what I meant, you are on the ball my friend! From your threads it looks like you have been following this for a long time.

How do you personally see it ending?

reply to post by carlitomoore


As the member posted above, I think the shunning of the United States at the IMF and ignoring it's recommendation to "punish" China is due to market manipulation. The European Union strongly believes it's currency, and markets, are being deliberately targeted by Washington influenced credit agencies and speculators. China agrees with this too.

From now to 2012, the world will undergo a painful readjustment of the markets to a more Chinese influenced than America. Already, the Chinese stock market is seen as the leading indicator for current economic trends.

reply to post by infinite


And that is the point I tried making to the member who commented on it not being sustainable. I said that there will be no global economic catastrophe, but a change in who the world leaders are. Thanks again for your input.

Originally posted by carlitomoore
reply to post by Mdv2

 

Thats exactly what I meant, you are on the ball my friend! From your threads it looks like you have been following this for a long time.

How do you personally see it ending?

It's very hard to predict the extremely turbulent monetary markets, but it's a given that no one benefits from protection measures in the long term, I believe though, that the US will finish last. They have held the world hostage for too long with their Petrodollar and its financial enemies (which includes the European Monetary Union) will grab every opportunity to 'destroy' the Dollar and prevent the Fed from replacing it by a new world currency.

June 19 (Bloomberg) -- Russia wants the ruble to be one of the world’s reserve currencies as President Dmitry Medvedev renews his push to reduce the dollar’s dominance and make Moscow a global financial hub.

“Only three, five years ago it seemed like a fantasy” to create a new reserve currency, Medvedev said yesterday in a speech in St. Petersburg, Russia. “Now we are seriously discussing it.”

thread

reply to post by Mdv2


Looks like another informative thread you have posted there.

You said no one benefits from protection measures in the long term though; In the video the guy said that Malasia benefitted from these type of measures whilst the rest of Asia was deflating, and also that Chinas' rise to prosperity is due in part with it positioning itself with the dollar and by protecting itself from foreign investments.

It would seem then that protection measures are not what the global system needs, but if a nation gets it right they will benfit from it.

Originally posted by carlitomoore
It would seem then that protection measures are not what the global system needs, but if a nation gets it right they will benfit from it.

Mdv2 will agree with me that no nation will be allowed to get away with protectionists measures. You recall the Copenhagen Summit? Under their financial scheme, no nation will be allowed to show favoritism to their own. If they do, the UN or IMF will place penalties on the nation even tariffs.

Defy the global economy and you'll be digging the grave of the nations hopes and aspirations.

reply to post by infinite

Defy the global economy and you'll be digging the grave of the nations hopes and aspirations.

And that is exactly what is wrong with free market capitalism. What is best for everyone else is not always best for you.

reply to post by carlitomoore


Capitalism is a radical system, when managed correctly. Outgoing Brazilian President Lula introduced massive pro-markets legislation and policies to create one of the fastest growing economies in the world. And guess what? President Lula is a socialist.

Capitalism can generate levels of social mobility and poverty eradication, China is a perfect example. Cannot recall statistics, but the Chinese government is lifting literally millions of people out of poverty each year. The wealth generated from the capitalist system is distributed straight into social programs.

Who'd of thought, Marxists are the perfect capitalists.

This link is mainly for infite and MDV:

One More Victory for Finance

Even as governments in individual countries are struggling to move forward on post-crisis financial reform aimed at preventing another crisis, the G20 seems to be settling for marginal modifications of the pre-existing framework for global regulation– at the centre of which are the Basel norms. The Basel norms in their various versions essentially require banks to hold capital amounting to a certain proportion of their risky assets in forms that are available and easily accessed to cover losses. Capital that was free of encumbrances and liquid to different degrees was ranked Tier I or Tier II, with each Tier required to be kept at a certain proportion of the value of risk-weighted assets.

Clearly the banking giants have once again been able to stall even limited regulatory reform by invoking the bogey of an aborted recovery if rules were tightened adequately.

This is by a guy called C.P. Chandrasekhar.

Author

From what I have seen from your posts in this thread, you have a decent head on your shoulders when it comes to finance, this article seems to be that way orientated.

Another report from the same site which discusses what this thread is about; Currency Wars.

Currency War

Guido Mantega, the Brazilian Finance Minister, said recently that Brazil is in the middle of a currency war. His preoccupation with exchange rate appreciation is not directed to global imbalances, in general, or China, in particular. A more depreciated currency provides protection for domestic production, and makes domestic goods and services cheaper for foreigners. In that view, a stable but competitive (i.e. depreciated) real exchange rate (SCRER), as Roberto Frenkel and Lance Taylor call it, would be an essential tool in the development strategy in developing countries. The message is that competitiveness of domestic markets matters for development.

The employment gains in the US of China-bashing would probably be small, but the global losses are potentially large. One of the key roles of the country with the reserve currency is to act as the source of effective demand in the midst of a crisis, and this role cannot and will not be performed by China. The solution for the employment crisis in the US depends on the debunking of the Treasury view (the view that fiscal deficits are bad and reduce private spending) and on a renewed fiscal effort at home. Keynes, not Prebisch, is what the US needs.

Author: Matias Vernengo

Author Info

Again, I have only included the first and last paragraphs to give a picture of what they are about.

It is funny just how many people are discussing this.

Why the U.S. Has Launched a New Financial World War -- and How the Rest of the World Will Fight Back

Source

Finance is the new form of warfare -- without the expense of a military overhead and an occupation against unwilling hosts.

What is to stop U.S. banks and their customers from creating $1 trillion, $10 trillion or even $50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale in the hope of making capital gains and pocketing the arbitrage spreads by debt leveraging at less than 1 per cent interest cost? This is the game that is being played today.

The above article is ten pages long and discusses the future of the worlds economy and how it is already beginning to change. Again, it is really interesting, and I think Infinite and MDV will like it. See below for author details;

Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website, [email protected]

Originally posted by carlitomoore

" Careful calibration of a U.S. dollar devaluation looks to be the only way to avert the sort of currency war flagged by Brazil and others, leaving G20 powers the unenviable task of agreeing some control of the process.

The top world economies, shaken by three years of financial turmoil, are scrambling to cap or weaken their currencies in a fight over fragile global demand for exports -- prompting retaliatory capital curbs and damaging trade rows."


Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power. Looks like the US Goverment is donig a Supurb Job of Devaluating the Dollar . My question is , When will they Stop ?

We are within two weeks of the G20 now, so I am goint to see if I can find any up to date articles. One thing I have noticed almost every day for the alst two weeks, the Hang Seng Stock Exchange in Hong Kong is rising by an average of 200 points a day?

Has anyone noticed that? Is this related to currency?

This is interesting, as the country that everyone (including Chairman of the IMF and Chairman of the Federal Reserve) expected to get out of the recession first, Canada, is actually strengthening their currency at the moment.

Canadian dollar is currently trading nearly at par with US dollar, and is expected to hold value for some time.

Pound is at nearly an all time low against the Euro (which is also strengthening) as is the US dollar, at an all time low against the Euro and nearly at an all time low against the Yen.

It seems strange that the stock market continues to strengthen (although personally, I believe it's a false rally) while currencies weaken and precious metals hit all time highs. Usually, precious metals hitting highs are signs that people are pulling out of the stock market, meaning the stock market goes DOWN, not up, but that isn't happening this time.

This appears to show that TPTB are buying TONNES (literally) of precious metals, while the rest of the poor saps keep putting their money into the stock market.

CNN actually ran a story this morning telling people why it was such a "good time to buy a house" and why people should "get into the market before it goes back to 12,000", followed IMMEDIATELY by a story about the foreclosure crisis. It doesn't make any sense to people who have even the smallest bit of knowledge about the markets.

My money is with the folks buying precious metals. I've invested in silver, which I still think has quite a bit of room to increase in value. If they're following the same playbook as 1929 (and I strongly believe TPTB are), then there will be a bigger, second crash around two years later - ie ANYTIME NOW. TPTB are investing heavily into precious metals, obviously hedging their bets towards a stock market crash happening soon, exactly what they did in the weeks running up to the crashes in 1929 and 1931.

Originally posted by carlitomoore
reply to post by Mdv2

 

Good post.... I don't know why you agree with free trade though? Its not that I do, but from what I have heard it was Bush Senior and then the Clintons who finally made free trade happen... and free trade has been proven not to work has it not?

I was led to believe it happened to give corporations a 'free pass' and make exponential profits which inflated the markets beyond recognition.

No, free trade does NOT work within NAFTA the same way it works in the EU, where it works well.

If trade was truly free, I would be able to live and work anywhere within Canada, Mexico, or the USA, and carry just about anything over the borders free of taxes regardless of where it was purchased.

All that NAFTA has done is resulted in millions of jobs being outsourced, and the USA / Canada have received the short end of the stick compared to Mexico.

If there was truly free trade, we wouldn't have a dispute over Soft Wood Lumber from British Columbia, and governments wouldn't be able to heavily subsidize their industries that are selling products within NAFTA.

reply to post by babybunnies


Thanks for your reply. A great number of people have predicted the second crash anytime now, I am looking for any triggers for it. As I have said before, I don't think it is going to leave the World in ruins, just there will be a major shift across the world markets.

Everything you mentioned is very true, and I just can't get my head around what the next play is.

Ruble revamp not shot in 'currency war': Russia

Source

MOSCOW — Russia's relaxation of its ruble trading rules is not aimed at allowing the unit to fall in value as part of any "currency war" with other countries, the finance minister said Thursday.

Russia on Wednesday widened the floating corridor of the ruble to four rubles from three by allowing it to shift by an extra 50 kopecks in either direction, a move which will give the central bank greater flexibility.

It coincided with growing fears that the world is edging close to a so-called currency war, where countries, among them emerging giants such as China, could follow 'beggar-thy-neighbour' policies to reduce the value of their currencies to boost exports and so ensure economic growth.

There are talks of this all over now, it is gathering momentum. This article is only 4 hours old.

Currency wars and QE2

Link To Source

Just as the autumn temperatures appear to be cooling off, the tensions in currency markets are really heating up!

This morning, U.S. Federal Reserve Chairman Ben Bernanke paved the way for further action to jump-start the U.S. economy. In a speech in Boston, he described inflation in the U.S. as being “too low,” and that the risk of deflation is “higher than desirable.” And fresh inflation data this morning came in below economists’ expectations. All of this adds up to what the markets have already been anticipating: another round of quantitative easing (QE2) in November, by which the Fed purchases assets like government bonds and, in this way, “creates” money.

China is, of course, complicit in the currency war as well. The Chinese renminbi, which is measured in the basic unit called the yuan, is not technically a free floating currency. Unlike the yen, the U.S. dollar, or the euro, it cannot be freely bought and sold in currency exchange markets. The Chinese government maintains a “managed float” of the currency – but is under enormous pressure to allow the value of the renminbi to rise. By keeping it artificially low, the Chinese government gives its domestic exporters an advantage.

So far, the European Central Bank has not waded into the waters of either massive quantitative easing (although the Bank of England has) or intervention in currency markets to pull back the euro. But these days, the euro is back up above $U.S. 1.40, lifted by the falling U.S. dollar. But how long will Europe tolerate a soaring euro before it may be prompted to take action? A high and rising euro is no friend to their fragile economy, either.

This international currency pillow fight is ramping up to be the single biggest issue on the agenda of any upcoming government summits. Everyone wants a weaker currency. Even the IMF is being pulled into the fray to referee.

Another article from today. This is a hot topic!

Again the Hang Seng rose by over 320 points yesterday as well as a huge rise on the Japanese markets, whilst the American and European markets dropped again.