Asian currencies on the up

The third quarter of 2009 has proven to be another negative one for the US dollar.  Over the period the dollar index fell by over 4%.  The only major currency to lose ground against the dollar over this period was the British pound.  Most other currencies, especially the so called “risk currencies” which had come under huge pressure at the height of the financial crisis, registered strong gains led by the New Zealand dollar, Swedish krona and Australian dollar.  Although the euro also strengthened against the dollar it lagged gains in other currencies over the quarter.

Asian currencies also registered gains against the dollar in Q3 but to a lesser extent than G10 currencies.  Asian currency appreciation was led by the Korean won, Indonesian rupiah and Singapore dollar, respectively.  The under performer over Q3 was the Indian rupee which actually depreciated against the US dollar slightly.  The reason for the smaller pace of appreciation for most Asian currencies was due mainly to intervention by Asian central banks to prevent their respective currencies from strengthening too rapidly, rather than due to any inherent weakness in sentiment.

In fact, Asian currencies would likely be much stronger if it wasn’t for such FX interventions.  A good indication of the upward pressure on Asian currencies can be found from looking at the strength of capital inflows into local stock markets over recent months.  South Korea has registered the most equity capital inflows so far this year, with close to $20 billion of flows into Korean equities year to date but in general most Asian stock markets have registered far stronger inflows compared with last year.   

For the most part, balance of payments positions are also strong.  For example, South Korea recorded a current account surplus of $28.15 billion so far this year, compared to a deficit of $12.58bn over the same period last year.  This is echoed across the region.  Although surpluses are expected to narrow over coming months due mainly to a deterioration in the terms of trade, the overall health of external positions across the region will remain strong and supportive of further currency appreciation.  

The outlook for the final quarter of 2009 is therefore likely to be positive for Asian currencies, with the US dollar set to weaken further against most currencies.  Some risk will come from a potential reversal in global equity market sentiment but overall, further improvements in risk appetite will support capital inflows into the region.  Capital will be attracted by the fact that growth in Asia will continue to out perform the rest of the world and yet again only interventions by central banks will prevent a more rapid appreciation of Asian currencies.

DEFLASI

Suatu keadaan dimana merupakan kebalikan dari inflasi.Deflasi adalah keadaan dimana jumlah persediaan uang terlalu sedikit.Situasi ini akan mengakibatkan bahwa nilai uang akan meningkat sementara kebutuhan tidak terpenuhi.Sebab deflasi karena upah buruh dan keuntungan perusahaan sedikit yang menyebabkan daya beli masyarakat rendah.

Sejarah Deflasi

Deflasi didahului oleh masa ekspansi kredit yang besar dan masa boom ekonomi. Seperti biasanya, ekspansi kredit di samping untuk peningkatan konsumsi, juga akan berujung di peningkatan aktifitas-aktifitas spekulasi, mal-investement. Akibatnya akan terjadi bubble, penggembungan harga pada objek yang dispekulasikan. Objek yang dispekulasikan yang bisa real-estate, bisa pula saham, atau apa saja. Proses spekulasi dan bubble ini tidak bisa berlangsung terus. Ekspansi kredit yang diperlukan semakin lama semakin besar dan harus lebih cepat untuk mempertahankan bubble itu sendiri. Akhirnya, ekspansi kredit tidak lagi bisa memenuhi tuntutan untuk bisa mempertahankan bubble dan bubble akan mengempis atau pecah. Misalnya untuk real-estate. Mula-mula harga masih terjangkau. Makin banyak orang ikut berspekulasi menimbulkan permintaan (semu) meningkat dan akan memicu kenaikan harga. Pelaku ekonomi di sektor real-estate merespons dengan makin menjamurnya pembangunan perumahan dan apartement.

Tenaga kerja yang terserap di sektor ini semakin banyak. Harga terus meningkat, akhirnya harga rumah menjadi tidak terjangkau lagi dan banyak orang tidak mampu membeli. Dengan kata lain pada harga tersebut penawaran lebih tinggi dari permintaan. Dengan kata lain: oversupply. Kalau bubble itu terjadi di sektor industri, tahap ini adalah tahap over kapasitas. Pada saat ini ada dua alternatif. Yaitu, aktivitas spekulasi ini harus berhenti dan bubble mengepis karena pasokan rumah /apartemen melebihi permintaan. Atau ekspansi kredit terus berjalan dengan memberikan kesempatan kredit kepada orang yang tidak mampu. Dan ini akan membuat bubble semakin membesar tetapi pada hakekatnya suatu saat akan berhenti bila tidak ada lagi yang bisa/mau mengambil kredit. Artinya bank tidak mau mengambil resiko untuk memberikan kredit dan konsumen/spekulator tidak berani mengambil kredit karena resiko gagal dan peluang berinvestasi sangat beresiko. Nasib dari semua bubble akhirnya akan sama saja. Kata kuncinya adalah yang disebut spekulasi adalah membangun kapasitas dan supply diluar jangkauan permintaan. Dengan kata lain: over kapasitas, over supply.

Gagal bayar banyak terjadi pada akhir dari bubble. Aktifitas spekulasi terhenti, dan para pelaku ekonomi mulai menyelesaikan hutang-hutangnya, baik dengan cara membayar atau dengan cara menyatakan bangkrut dan ngemplang hutang (default). Babak berikutnya secara umum harga barang (terutama barang yang tadinya dispekulasikan) mulai menurun karena permintaan lebih kecil dari penawaran, stok melimpah sebagai akibat ulah spekulasi dimasa boom. Karena harga cenderung menurun, maka orang merespon dengan menahan diri untuk menunda konsumsinya/pembelian. Pikirannya ialah bahwa nanti harganya toh lebih murah. Dengan demikian kecenderungan menabung meningkat. Keadaan seperti lingkaran setan, harga turun memicu orang semakin menunda pembelian; dan penundaan pembelian semakin membuat harga turum. Persoalan menjadi semakin parah.

Tadi dikatakan bahwa secara umum harga-harga turun, karena tidak semua barang harganya turun. Uang, emas (uang sejati), bond yang bagus (bond pemerintah yang didukung tabungan rakyat yang tinggi misalnya) nilainya naik.

Secara ringkas proses deflasi yang paling sering terjadi diawali dengan ekspansi kredit (inflasi), dilatar belakangi dengan banyak unsur spekulasi. Tetapi spekulasi tidak bisa berlangsung terus dan akhirnya spekulasi berhenti karena dibangun diluar jangkauan permintaan dan para pelaku ekonomi harus bersih-bersih, sebagian kapasitas harus dimusnahkan. Hutang harus diselesaikan; baik dengan dibayar atau dengan pemutihan alias gagal bayar (default), artinya inflasi berbalik arah menjadi deflasi, kontraksi kredit.

G-20, what's up? (Who will lead the world economy out of the recession?)

With the American economy at the epicenter of the crisis, it is going to be a difficult paradox to look at the United States as the savior of the world at large. That is the question most of economic experts are asking after the last London G-20 summit in April.

That being said and before President Obama can hope to save the world economy, he must address its own country obvious problems of the still-raging unemployment. He must clear the cloud-covered zone where giant banks navigate right now. He must lead on the new green economy. And more importantly, he must find a way to revive the American consumption

But after being through this near-depression episode, will the American consumer recover from that trauma? In the mean time, it’s important to keep in mind that the world economic growth since the Asian crisis in the 1990’s has been sustained thanks to the voracity of US consumers. They have been the best customer for everything from toys and toilet paper made in China and Turkey to plasma televisions, cars and various furniture from South Korea and Japan in recent years, just to name a few. And the last but not the least, the long-lasting scare as a result of that trauma is that Americans lost $11.2 trillion in wealth last year and are in no mood to go on a big spending spree.

In the middle of this situation, what should be expected from other countries around the world, looking for leadership, is something like a bold result… Some statement saying…Well…After assessing the current world economic situation (I mean…the current economic mess) here is what we have finally agree on:

Number One…Put regulation in place and monitor giant banks global activities

Number Two…Let’s engage in a responsible path to green economy because there are not only great opportunities and unexploited wide segments there; but also, we can R-E-A-L-L-Y save the environment that way without mortgaging the future of the Human Kind

Number Three, we have been on the moon, we can go from one place to another in a plane, we can communicate via cell phone, we can cure some many diseases…we can do all these things we nowadays take for granted…We can do all that and all of the sudden we cannot agree on a new way to live in a more peaceful world, cleaner planet, get wealthier and healthier in the same time?

Come On Guys!!! What’s up G-20? The group of 20 major economies…

Can’t you (political leaders and central bankers) put aside your divisions and embittered policies to revive the world economy, revive the mechanism of global growth and prevent the world from another economic calamity?

Now that the US administration is operating from an obvious weaker position -compared to previous crisis, all the new kids on the table added to France, the British Government and especially China, are pushing their own issues. 85% of the world economy is worrying about the fate of…let’s see…20 countries? Don’t you think that you…the 20 major economies would be better off if you put in place a strategy that allows you to share the burden with another…let’s see G-5 or G-10 countries from around the world? Are you looking for a solution for what I just underscored?

First step: Find a viable and honest solution to the Israel-Palestine ageing conflict. And force both parties to abide by the general rule

Second Step: Progressively and hardly bring to an end the current economy based on the voracious consumption of oil. And in the same time, implement the resolution from the next Copenhagen Summit on the Environment.

Third Step: Stop the bigotry towards cultures from around the world. Stop the dishonesty towards poor countries. Stop foraying, plundering, ransacking, looting ”Poor” countries lead by dictators who, most of the time, happen to be the G-20 best friends.

Now, even though the last series of arguments appear to be obvious for any kind of leader, let alone a G-20 leader, this blog is not a place where naïveté is a motto. It is therefore obvious that the Obama administration has been working on seeking a commitment by the other 19 leaders to address global economic imbalances between debtor nations led by the United States, and nations with trade and current account surpluses – China, Germany and Japan. But, as you can easily imagine, a gang of nations like China and Germany are again such an idea. They see it as a mechanism to attack their trade surplus policies. Considering the fact that the IMF is the new monitoring body; and since the United States continue to dominate that international body; the gang has also criticized that proposal. And By the way, even if the IMF is the new Cop, what enforcement measures can they really put in place for the good of the world economy? Honestly?

Is the Obama administration going to have the guts to challenge the top wealthiest American consumers by adding taxes? Otherwise, how would his administration create revenues for the employment financing of the working middle class that is going to lag. Can he afford to cut social services without losing his political base?

On the other hand, can Germany and other G-20 European economies afford to put in place the structural changes they have promised to follow up without creating more working-poor people?

On the financial front, the Obama’s request for more stringent capital by the banks by the end of 2010 and the implementation of this measure by the end of 2012 is also seen as an attack by America. France and Germany are willing to take advantage of the current Wall Street decline in prestige and promote their own banking systems, instead.

As to China, American propositions continue to be seen as an underhanded ploy to shift attention from the US massive fiscal deficit.

All in all, what is to be expected from this last week Pittsburg G-20 Summit? In other words, what’s up G-20? Are you definitely going to take us out of this mess? Apart from appointing the IMF for monitoring your little capitalistic games,

First, is there a basis for an internationally coordinated response to any eventual economic crisis without ripping of tax payers?

Second, since we are living in a more interconnected world and given the fact that the current capitalist system is rooted in a nation state system that firmly stands in contradiction with other countries interests, how is the G-20 going to prevent the world from more frustrations and setbacks? Feel free to make us know the outcome as soon as possible.

Obamacare Socialism Threatens Americans with "$25,000" Or Up to "1 Year in PRISON," While Diane "Unsure About Investigating ACORN Child-Prostitution-Rings" Feinstein Invokes "Pearl Harbor" to Starve San Joaquin Valley For "Interior"

URGENT NEWS ALERT: According to Fox News Channel’s Neil Cavuto, “the taxpayer may be charged with a MISDEMEANOR with a PENALTY OF UP TO $25,000 and not more than ONE YEAR IN JAIL.” Cavuto then went on to say that “a key DEMOCRATIC STAFFER” had confirmed “in a hand written note that Americans who FAIL TO BUY HEATH INSURANCE and CAN’T AFFORD the additional $1,900 dollars, will then face a $25,000 fine, or 1 YEAR IN PRISON.”

Gee, that sounds like Obamacare Socialism at the point of a Democratic Gun to me. How come I didn’t hear ANY of this kind of rhetoric against Americans who disagree with their sinister, anti-Free-Market-Entrepreneurial Capitalism agendas and their anti-American values of less government intrusion, less government spending (estimates put price tag around $1,000,000,000,000), and less taxation – especially for the middle class – before the election?

The second headline concerns the Trifecta Leftist Triangle of Nancy Pelosi, Barbara Boxer, and Dianne Feinstein – all Left Coast Socialist Elites who want to “Totally Transform America” into the imagine of what Hugo Chavez, their hero, is trying to do in Venezuela – by SMASHINGS the RIGHTS and the will of the people here.

I called Dianne “I have no desire to investigate ACORN International Child Prostitution Rings in America” Feinstein’s offices in Washington D.C. and San Francisco to inform her of my new middle name for both her, Barbara Boxer, and EVERY OTHER POLITICIAN IN WASHINGTON D.C. who does not favor a thorough and complete, VIRTUOUS investigation of ALL ACORN activities concerning all alleged and real crimes associated with this ORGANIZED CRIMINAL ENTERPRISE (OCE).

I also called both of her offices to inform her about my utter disdain for Diane “ACORNICPRA” Feinstein’s recent invocation of “Pearl Harbor” in her fight alongside Obama’s Interior Department to starve the people off their land in the San Joaquin Valley, the valley that feeds not only Americans, but many poor nations around the world. I informed the San Francisco office that  what she and the Obama Administration is doing is reminiscent to me of what Stalin’s (and ALL communist regimes) government did by starving people of their land, and that I was dedicating the rest of my days to try to make sure the Democratic Party is NEVER a Majority Party in America again.

I also informed both offices that I would call Governor Shwarzenegger’s office and insist that the governor make good on his word that he would try ALL POSSIBLE LEGAL MEANS AVAILABLE to TURN ON THE WATER in the San Joaquin Valley . But I also included the idea of using THE NATIONAL GUARD to remove any Interior Department personnel to end the “crisis” that the “federal government” has created.

Here is what the Governor of the state of California said recently about what the Obama Administration and Democrats on Capitol Hill are doing to the people who have lived for GENERATIONS on land they now have to sell to FEED THEIR FAMILIES and pay their bills:

“We have a TERRIBLE CRISIS ON OUR HANDS. And this is a CRISIS not because of some disaster, it is a CRISIS SELF-INFLICTED – something that the FEDERAL GOVERNMENT is doing TO US,” governor Shwarzennegger said to the people of California at a rally held there hosted by FNC’s Sean Hannity.

Shwarzenegger even said that the feds are basically saying to Californians “do whatever YOU want – YOUR ON YOUR OWN,” and the feds are “not gong to help us.”

So, I’m asking all concerned – but especially Californians – to call the governor’s office and ask him to use EVERY AVAILABLE LEGAL TOOL at his disposal – even the use of the California National Guard - so that the water is turned back on again in the San Joaquin Valley. Here’s what the governor promised:

“I think that I MADE IT VERY CLEAR that I WOULD DO WHATEVER IT TAKES to MAKE SURE we TURN ON THE WATER AS QUICKLY AS POSSIBLE so we can go back to do the farming, produce the food, and CREATE JOBS - because THAT’S THE NUMBER ONE PRIORITY FOR ME,” promised Shwarzenegger.

This is quite the opposite from what is coming from Dianne “ACORNICPRA” Feinstein, whom my young children are now aware of.

“Water is a huge, complicated and difficult issue. And NO ONE – NO ONE – has tried harder to sort out the problems,” Feinstein recently said in the Senate. “So, in a way, this is a KIND OF PEARL HARBOR on EVERYTHING WE’RE TRYING TO DO – which is to work together to put INTERIOR IN THE LEAD (and you thought she was going to say Californians or The American People) – not to handcuff Interior. And so THAT’S WHY I objected to the Amendment (apparently HR 2996 – The Department of the Interior Appropriations Act).

It seems the Communis/Marxist/ Black Liberation Theology/”Social Justice” crowd has had their agenda to take over America from within for many years now, but the plans got all jammed up when it didn’t go according to their time-table, and The American People woke up from years of deception and manipulation from the Democratic Party Apparatus in America.

Sen Baucus, who chairs the latest Obamacare Socialism Hearing now taking place in the Senate, has callously and intentionally tried to stifle free-speech and any opposition to their demented Socialist Control Freak Schemes by joining with the Obama/Czars Administration in starting gag-order legal action against a private company that DARED to oppose their lies and tell their customers that health care reform now being considered MAY negatively affect their ability to get many of the benefits they now enjoy with Medicare Advantage. The Democrats on the Baucus Committee also SHOT DOWN attempts by Republicans (on PARTY-LINE VOTES) to make sure every American is guaranteed  the right to keep their current doctor and health insurance plan – and virtuously EVERY OTHER REPUBLICAN Amendment – including making sure there is real Medical Malpractise Liability Reform enacted (one Democrat voted for this).

In other news, Congressional Democrats KILLED  an Amendment by procedural tactic that would have imposed CONGRESSIONAL OVERSIGHT on all CZARS appointed by the Obama Administration – even though earlier they had indicated that they would. It seems some arm-twisted by the White House “changed” their minds.

Quote of the Day: “Look, the reality is the American People DON’T WANT this big PELOSI plan” their “government takeover of health care.” – Governor Bobby Jindal of Louisiana

Fox News Poll: If you were sick, what kind of health care insurance would you prefer?

• Privately-Run – 62%
• Government-Run – 20%

Sept. 15,16 2009

Please do NOT go back to OK. Keep informed and ‘fighting mad’ by standing up and making a stand to make sure our children do not inherit what the Cuban health care system has done TO the Cuban people for many, many years now.

Thank you for all of your hard work in defending the Truth and fighting for justice,

777denny

View This Poll
answers

US CO2 Emissions Fall for Second Year in a Row

US DOE’s Short Term Energy Outlook (STEO) is out.[1] Not surprisingly, total U.S. electricity consumption was down 4.4% in the first half of 2009 compared to 2008, because of the impact of the recession on industrial electricity sales—we made less stuff!

As a result, carbon dioxide (CO2) emissions from fossil fuels are down by 6.0% in 2009 (U.S. Carbon Dioxide Emissions Growth Chart).  This is the second year in a row that CO2 emissions have fallen in the US. But as the economy recovers and natural gas prices rise, the Department expects 0.9-percent increase in CO2 emissions in 2010.

US DOE said CO2 emissions from coal-fired power plants fell almost 10% because low natural gas prices encouraged fuel switching.  EIA projects monthly Henry Hub natural gas spot price will average $2.32 per thousand cubic feet (Mcf) in October 2009, the lowest monthly average spot price since September 2001. And, as you might expect, such low gas prices are causing new record highs at the end of this year’s injection season (October 31) to more than 3.8 trillion cubic feet (Tcf) in an effort to lock in the cost savings ahead of the expected rise in natural gas prices.   The STEO projects Henry Hub annual average spot price to rise from $3.65 per Mcf in 2009 to $4.78 in 2010 but how much it will go up depends upon the fuel demand for power generation and the pleasantly surprising continued growth of U.S. natural gas production from unconventional gas sources like shale formations.

Lower fuels costs should result in lower electricity retail prices year-over-year for the first time since early 2003 with the STEO projecting annual average 2010 residential electricity price of 11.4 cents /kWh or about 2% lower than the 2009 average.

Other factors helping to reduce both fuel consumption and emissions include the addition of 102 wind farms totaling 8,400 MW with another 300,000 megawatts of wind projects are proposed. [2] Solar projects also grew rapidly but the solar industry hit a financing speed bump during the recession because of limits on capital access.

While the growth in renewable energy capacity was impressive, don’t forget that those 8400 of wind capacity that came on line are the equivalent of only 8 typical sized coal plants.  And that represents the biggest challenge to renewable energy today.  Can we scale the additional of renewable energy sufficiently—and cost effectively enough—to continue the emission reduction process without more onerous government mandates?

But remember, our insurance policy is natural gas combined cycle generation along with the growing supply of domestic gas from unconventional sources.

What’s missing?

If the US is truly serious about reducing greenhouse gas emissions, it can be accomplished by the continued growth in renewable energy. But we also need to see growth in construction of baseload nuclear power and the use of natural gas fired combined cycle generation to reduce the market share of coal in the overall fuel mix.

Waxman-Markey is primarily driven by imposing a political solution to a market economics problem.  It is industrial policy of the worst kind locking the US into a rigid Washington-driven formula rather than letting the market adapt to changing conditions with a fuel mix and technology mix that works.

[1] http://www.eia.doe.gov/emeu/steo/pub/#Overview

[2] http://tonto.eia.doe.gov/cfapps/STEO_Query/steotables.cfm?periodType=Annual&startYear=2006&startMonth=1&endYear=2010&endMonth=12&tableNumber=24

Onward Through the Fog

I wasn’t going to post this weekend. It seems I’ve only been posting on weekends lately and I try to only post if I have something to say, but I feel the need for another “tech break” – a break from Facebook, Twitter, the blog, surfing, the news, etc…but here I am late on Sunday night posting…I guess I have something to say.

Excuse me if posts become even more sporadic – my brain is going in a million different directions and I need to focus on my Spanish lessons (before I lose interest and give up) and I want to take some writing classes. You know there’s a recession when you and your spouse are both talking about going back to school. One good thing about a recession is that it forces us to look inward and figure out what makes us happy. it inspires people to better themselves and appreciate things more. I think this economic downturn will turn out to be one of the best things for the United States. Since last year, I know several people who have decided to teach and become certified. I also know several people who got their real estate licenses when everyone was getting out of the business. Recessions, not drawn-out wars, are also good for military enlistments, but despite the never-ending wars in Iraq and Afghanistan, I know several people who have joined, or are joining the military soon.

I won’t be joining the military, teaching or selling houses, but I do want to do a few things to better myself and further my career. Learning Spanish is something I’ve always wanted to do (I should’ve stuck with it in school) and bilingual employees are always in demand. Also, I really want to be that blond guera (or gringa) who busts out with some perfectly-accented Spanish that shocks everyone. I also want to take some writing classes, because if I could do one thing that I loved and get paid for it, I would write and I need to get better (one reason for the blog – it’s good practice.)

There are a lot of changes going on in the country and the world right now. It’s an exciting, somewhat scary time – there seems to be change everywhere. My in-laws are in the process of moving to Seattle. My father-in-law got a new job there and they will be in Seattle full-time by the end of the year. It’s so exciting to have a new city explore – a new part of the country to learn about. We had dinner at their house tonight and their mutual excitement made me excited for them – and made me a little jealous, but that’s a good thing, because it will inspire me to move on, move up and onward through the fog, as they say.

Why Mr Volcker Is Right

    This past thrusday, former Federal Reserve Chairman Paul Volcker testified before the house’s committee on Banking and Financial Services. The testimony called for several changes to existing regulation and amongst the most “radical” is his affirmation that commercial banking should be separated from investment firms. Basically, chaiman Volcker advocates a return to Glass Steagall, the act repealed in 1999 that broke down the barriers between banks, insurers and trading firms.     Among the other recommendations, chaiman Volcker advises that Americans should not return to “business as usual” and encourages more regulation of financial derivatives, stricter reporting requirement for hedge funds and the moral hazards of the “too big to fail” ongoing policy.      In my opinion, Paul Volcker is absolutely on target and his comments raised many eyebrows in the investment community. His testimony was not carried live on CNBC, (surprise anyone?).     The issue of excessive risk taking by banks and insurance companies is at the heart of this crisis (AIG and CITI?). his assertion that commercial banks should not take on such elevated risks is my opinion a crucial aspect of the regulatory reform we desperately need. Good to hear that there is at least 1 individual close to the President who has not lost his common sense…

Why China"s Currency Tangos With The USD

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) –

by Brian Twomey

(

Contact Author

|

Biography

)

One of the ways China’s economic rise was accomplished was to by

pegging

its currency, the Chinese yuan (also known as the renminbi) to the U.S. dollar and instituting trading arrangements between the …

by Brian Twomey
(
Contact Author
|
Biography
)

One of the ways China’s economic rise was accomplished was to by
Pegging
its Currency, the Chinese yuan (also known as the renminbi) to the U.S. dollar and instituting trading arrangements between the Two nations. China’s trade with the United States began in 1985 with imports to the U.S. totaling almost $4 million, according to the
U.S. Census Bureau
. This number has Grown each year since that time. In 2008, imports from China totaled $337.8 billion.

How Pegging a Currency Affects an economy
From 1985 to 2008, U.S. exports to China have been equivalent to about One-third of China’s exports to the U.S.. So the Chinese peg to the dollar has been quite beneficial For China’s exporting businesses. In addition, Pegging the yuan to the dollar made investors much more confident in China’s Currency. Without the peg, China’s economic rise would have been much slower because the yuan was nearly worthless compared to all leading economic nations of the world. (Take a look at the controversy around cheap imports in
Do Cheap Imported Goods Cost Americans Jobs?
)

In particular, the Chinese accomplished its fast economic rise by pegging its yuan to the dollar at a very low rate. China does not price its currency based on interest rates because interest rates are not a monetary tool used by the Chinese, unlike other leading nations. Instead, China prices its currency based on Chinese banks’
reserve requirements
. Rather than appreciating or depreciating the yuan based on an interest rate, or allowing the yuan to Float freely on the open market, the Chinese hold their currency price steady based on a
Fixed Exchange rate
regime. Increasing reserve requirements serves to reduce the amount of currency in the economy and decreasing requirements increases the amount of money available For use. (Learn about Fixed and Floating Exchange rates in
Currency Exchange:
Floating Rate Vs. Fixed Rate
.
)

The Yuan/Dollar Relationship
One of the arguments against a yuan/dollar relationship is that it appears that China benefits more than the United States. Manufacturers in the U.S. often put pressure on Congress to lobby China to appreciate its currency, citing the difficulty of competing against artificially cheap Chinese Goods as a reason For change. Year after year, new bills are introduced by Congress demanding that China appreciate its currency so the yuan/dollar balance is more equalized. They claim the Chinese are protecting their trade superiority and the U.S. is Forced to pay the price.

The problem from China’s perspective is that appreciating the yuan could mean less Foreign investment in

China

, deflation, lower wages and unemployment in the country. Fewer exports will also diminish China’s supply of dollars For investment, both inside and outside the country.

China

argues that the currency peg is meant to foster economic stability and abandoning the peg could result in an economic crisis.

When Undervalued Is a Good Thing
Some benefits of an Undervalued yuan for the U.S. include lower prices for consumers, lower inflationary pressure and lower input prices for U.S. manufactures that use Chinese inputs. Alternatively, an Undervalued yuan hurts

U.S.

industries that compete with cheap Chinese goods, thus hurting production and employment in the

U.S.

Also, a low yuan makes

U.S.

exports more expensive to Chinese consumers and reduces exports to

China

.

As of 2009, the yuan/dollar mid-point was pegged at 6.8339. This means that one U.S. dollar = 6.8339 Chinese yuan. As with any commodity, if the demand for yuan increases or decreases, the central bank has to respond accordingly by supplying or removing currency from the markets to restore equilibrium and maintain the peg. The Chinese central bank will buy or sell either dollars or yuan to maintain the desired balance.

Usually, central banks will buy or sell their own currency to maintain the peg, as it’s U.S. dollars the Chinese wish to accumulate through
balance of trade
with the United States. Appreciating the yuan means the Chinese would accumulate less in foreign reserve dollars and disrupt the economic stability they have grown accustomed to since they began trading with the

United States

and the outside world. (For more insight, see
What Is The Balance Of Payments?
)

The Bottom Line

China

finds itself in a unique situation. Calls for China to appreciate its currency places the country in a no-win situation with trading partners due to fear of inflation at home and the possibility of earning less in foreign reserves. Yet the yuan/dollar peg must be maintained for both sides due to the abundance of trade each side maintains. (For additional reading, Take a look at
Global Trade and The Currency Market
.)

by Brian Twomey
,
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Biography
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Brian Twomey is a currency trader and an adjunct professor of Political Science at Gardner-Webb University.

First week back at work reflections

I started back to work this week as PR/Communications manager for GreenPath Debt Solutions, headquartered in Farmington Hills.
What a great group providing debt counseling, foreclosure and bankruptcy education to those who need it. A dedicated group of individuals. I’ve posted the URL on my page here.
My first week was a whirlwind of in-house interviews, training, shadowing counselors on calls.
Yet, my biggest growing pain was just the idea of going back to work and getting into the groove after being out of work for nearly a year.
My boys (ages 4, 6, certainly missed having me around and in all honesty, I missed them terribly too this week.
My wife is doing some subbing at Grosse Ile schools as a stand-in para-professional and well, the dog, is spending most of the days in the basement while we are both working.
But I feel blessed to be back at work while unemployment still rages at about 15 percent here in Michigan.
I’m going to continue my crusade of providing unemployment and social media tips on my blog in the hopes of helping and inspiring others in their search of employment.
It is a tough time but we will make it. This job came like a bolt out of the blue. I really believed that I would be going into 2010 without employment. But as the saying goes it’s when you least expect it.
So let’s go on together and make the best of it all! Come on along!

The Power of Capitalism

Never, in the history of mankind, has a nation been as wealthy as when it is free.  Free to allow markets to provide to its citizenry the choice of products at a price that reflects their value.  When governments restrict this choice, restrict this trade and restrict these rights, the people of those nations suffer, become less free and less wealthy.  In short, they are worse off than they otherwise would have been.

Proof of this, as if it needed to be proven yet again, has been demonstrated in such remote places as Kenya.  Mobile phones are being used as means to transport and transfer money.  This allows people the opportunity to spend, sell and save capital and, without surprise, increases their well being.

All this without, I dare say IN SPITE OF, government regulation.

ONCE the toys of rich yuppies, mobile phones have evolved in a few short years to become tools of economic empowerment for the world’s poorest people. These phones compensate for inadequate infrastructure, such as bad roads and slow postal services, allowing information to move more freely, making markets more efficient and unleashing entrepreneurship. All this has a direct impact on economic growth: an extra ten phones per 100 people in a typical developing country boosts GDP growth by 0.8 percentage points, according to the World Bank. More than 4 billion handsets are now in use worldwide, three-quarters of them in the developing world

Extending mobile money to other poor countries, particularly in Africa and Asia, would have a huge impact. It is a faster, cheaper and safer way to transfer money than the alternatives, such as slow, costly transfers via banks and post offices, or handing an envelope of cash to a bus driver. Rather than spend a day travelling by bus to the nearest bank, recipients in rural areas can spend their time doing more productive things. The incomes of Kenyan households using M-PESA have increased by 5-30% since they started mobile banking, according to a recent study.

Less restriction, more freedom.  Bring on the free market!

U.S. Economy: Existing-Home Sales Unexpectedly Fall

By Bob Willis

Sales of existing U.S. homes unexpectedly fell last month for the first time since March, signaling the housing recovery will be slow to gain speed.

Purchases dropped 2.7 percent in August to a 5.1 million annual rate, the second-highest level in the last 23 months, the National Association of Realtors said today in Washington. The median price dropped 12.5 percent from August 2008. A government report showed unemployment claims declined.

Stocks fell on concern the housing market remains dependent on government tax credits and purchases of housing debt by the Federal Reserve. The central bank yesterday said it would extend its program to buy $1.25 trillion in mortgage- backed securities, as well as $200 billion in agency debt, through March while noting that “housing-market activity has increased.”

“The improvement in the housing market is not going to be a smooth rise, but a choppy, upward trend,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York, who projected sales would fall. “The real test will be if the market can weather the end of government stimulus.”

The Standard & Poor’s 500 Index fell 1 percent to close at 1,050.78. Treasury securities rose, sending the yield on the 10-year note down to 3.37 percent at 4:16 p.m. in New York from 3.42 percent late yesterday.

Unexpected Drop

Existing home sales were forecast to rise to a 5.35 million annual rate, according to the median forecast of 74 economists in a Bloomberg News survey.

Figures from the Labor Department today showed that the number of Americans seeking unemployment benefits unexpectedly dropped last week to the lowest level in two months, signaling the job market is healing. Claims fell to 530,000 from 551,000 the prior week.

The housing recession that crippled the economy is easing as foreclosure-driven price declines, tax credits to first-time buyers and near record-low borrowing costs have helped stabilize demand. Sales had reached a 4.49 million pace in January, their lowest level since comparable records began in 1999. Even so, unemployment at a 26-year high indicates more Americans may lose their homes, swelling the glut of unsold properties.

Purchases of existing homes were up 3.4 percent compared with a year earlier. The median price decreased to $177,700 from $203,200 a year ago.

Inventories Plunge

The number of unsold homes on the market dropped 11 percent to 3.6 million in August. At the current sales pace, it would take 8.5 months to sell those houses, the fewest since April 2007.

A seven months’ supply is usually consistent with stabilization in prices, NAR chief economist Lawrence Yun has said in recent months.

The market is “close to a self-sustaining recovery” where home values stabilize or start increasing, Yun said in a press conference. The drop in sales runs counter to figures on pending purchases and signals that low appraisals and slow underwriting remain obstacles to sustained gains, Yun said.

The NAR’s pending sales data are considered a leading indicator because they are tabulated when a contract is signed. Figures on purchases of existing homes represent closings, which may take place a month or two later.

Single-Family Houses

Today’s report showed sales of existing single-family homes fell 2.8 percent to an annual rate of 4.48 million. Sales of condominiums and co-operatives decreased 1.6 percent to a 620,000 rate.

The Commerce Department may report tomorrow that purchases of new houses rose in August to the highest level in 12 months, according to a Bloomberg survey.

Fed policy makers yesterday repeated they will keep the benchmark lending rate near zero “for an extended period,” while noting that the economy had strengthened. They also said they will slow central bank purchases of mortgage-backed securities and agency debt as they extend the program by three months.

The Obama administration’s $8,000 tax credit for first- time buyers, which is due to expire at the end of November, combined with the plunge in prices as foreclosures climbed, have helped lift sales this year. The Realtors’ group and National Association of Home Builders have lobbied to extend the credit on concern demand will wane after it lapses.

Government Credit

Treasury Secretary Timothy Geithner told reporters on Sept. 17 that the administration would take a “careful look” at extending the credit and called signs of stabilization in the U.S. housing market “very encouraging.”

Growing demand has prompted builders such as KB Home to get back to work. Housing starts rose to a nine-month high in August, the Commerce Department reported last week, indicating residential construction may soon add to growth after subtracting from gross domestic product since 2006.

Prices, which most economists forecast would be the last component of the market to turn, have begun to improve. The Federal Housing Finance Agency’s home-price index for purchases was up 1.1 percent in the three months through July, the best performance since early 2006.

“We’re seeing a firming of prices in a number of markets, not all,” Eli Broad, founder of Los Angeles-based homebuilder KB Home, said yesterday in an interview with Bloomberg Television. “I think we have bottomed out in many markets.”

Nomura Investors Are Cool to Plan to Raise Capital

HONG KONG — Shares in Nomura Holdings were set to slump on Friday after the Japanese brokerage surprised investors and analysts with plans for a giant share sale intended to improve its capital base and fund investments in Japan and abroad.

Nomura announced late Thursday it would raise up to ¥511 billion, or $5.6 billion, by selling about 800 million shares — its second share sale in six months, and is its largest equity sale ever.

Nomura bought the Asian, European and Middle Eastern operations of collapsed banking giant Lehman Brothers last year. Nomura said in a statement that it would use the cash from the new share sale to make investments in various subsidiaries and “strengthen the company’s business foundation in Asia (including Japan), Europe, and the U.S.”

By late morning Friday in Japan, Nomura’s shares were untraded and those of other financial institutions slumped in Tokyo on concerns that Nomura’s move could signal another round of share issues by other banks and brokers in anticipation of tougher capital rules.

“The share sale is huge and will cause dilution,” said Azuma Ohno, a Tokyo-based analyst at Credit Suisse told Reuters. “Nomura needs to explain how it will offset the loss by showing clearly how to boost its overseas business.”

Nomura has had to contend with high integration costs of the Lehman acquisition, as well as one of the toughest economic backdrops in Asia, as Japan’s economy — the world’s second-largest after the United States — is struggling to emerge from recession.

Although Japan’s banks mostly steered clear of the toxic U.S. mortgage-related assets that dragged many of their counterparts in other regions to their knees, they were badly hurt by the post-Lehman slump in Japan’s stock market. That has forced them to raise capital and revise downward the value of their sizeable stock holdings.

“Investors are increasingly wary major financial companies will enter another round of equity sales,” said Tsutomu Yamada, at Tokyo-based kabu.com Securities Co. told Bloomberg News. “With non-performing loans increasing, Japan’s financial sector is like a hanged man whose legs are being pulled.”

Shares of Mizuho Financial Group slumped 4.9 percent on Friday morning. Mitsubishi UFJ Financial Group dropped 6.1 percent, and Sumitomo Mitsui Financial Group fell 5.1 percent.

Together, these three so-called megabanks have raised about $19 billion by selling shares since the end of December.

The Nikkei 225, Japan’s benchmark index, sagged 2.9 percent by late morning.

Nomura Investors Are Cool to Plan to Raise Capital

Emphasis on Growth Misguided

 

http://www.nytimes.com/2009/09/23/business/economy/23gdp.html?_r=1&emc=eta1

Many thanks to reader Mark Hall for bringing this NY Times article to my attention (see above link).  It seems that at least one world leader, French President Sarkozy, has questioned the value of using GDP (gross domestic product) as a measurement of economic performance, correctly observing that boosting GDP seems to do little to reverse the deteriorating trend in labor market conditions. 

Among the possible casualties of the Great Recession are the gauges that economists have traditionally relied upon to assess societal well-being. So many jobs have disappeared so quickly and so much life savings has been surrendered that some argue the economic indicators themselves have been exposed as inadequate.

In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.

The article goes on to note that the study was commissioned by Sarkozy.  But, as pointed out in the article, while the study’s authors challenge the wisdom of using GDP to guide economic policy, they don’t really offer an alternative. 

Indeed, the difficulty comes in turning these general principles into new means of measurement. The report notes that its authors concur on the big picture, but diverge on the methodologies to be employed when it comes to factoring in the value of a better education and cleaner skies.

The old mode of measurement has taken a beating, and yet the new one, it seems, is still a work in progress.

I am reminded of the work of W. Edwards Deming, father of statistical quality and process control and the “Total Quality Management” concept.  One of his fourteen points for improving a company’s performance was to eliminate management by objectives.  His point was that if you focused on all of the important little things, the big things would take care of themselves. 

The same philosophy can be applied to the economy.  Using the two examples provided above, if cleaner skies are important, then focus on that.  If better education is important, then focus on that too. 

Nothing is more important to a healthy economy than avoiding trade deficits.  So make that a key measurement, not GDP.  Nothing is more important to maintaining a healthy labor market than avoiding per capita consumption-destroying over-crowding.  So focus on stabilizing the population at a sustainable level.  Measure unemployment, but be honest about it.  Measure per capita purchasing power while being honest about inflation. 

Just do what’s right and the economy will take care of itself.

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Sarah Palin takes on Hong Kong

From the New York Times:

HONG KONG — Sarah Palin, in what was billed as her first speech overseas, spoke on Wednesday to Asian bankers, investors and fund managers.

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Jeff Topping/Agence France-Presse — Getty Images

Jonathon Stone, the chairman and CEO of CLSA Asia-Pacific Markets, with Sarah Palin at a meeting in Hong Kong on Wednesday.

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The latest on President Obama, the new administration and other news from Washington and around the nation. Join the discussion.

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A number of people who heard the speech in a packed hotel ballroom, which was closed to the media, said Mrs. Palin spoke from notes for 90 minutes and that she was articulate, well-prepared and even compelling.

“The speech was wide-ranging, very balanced, and she beat all expectations,” said Doug A. Coulter, head of private equity in the Asia-Pacific region for LGT Capital Partners.

http://www.nytimes.com/2009/09/24/us/politics/24palin.html?_r=2&hp

That economic cycle's a bitch

Mulberry S/S 10

I’ve been obsessively observing every single runway show from every GENIUS designer. (By GENIUS designer I mean… my top 20) Carousel horses? check! Balloons? check! Overly gorgeous models? check! check! check! Designers are coming up with incredible ideas to make us look at fashion as fun again. Maybe spending more than $100 bucks on a dress is not the choice at hand when it comes to these tough times. But looking and feeling fucking great is kinda priceless, no? It’s an economic debacle because WE made it so. If people are scared to buy, retail crashes and if retail crashes hundreds of people are jobless and scared to buy as well! Vicious cycle. So buy for buying sake, because happiness does not come with a savings account.

If you got it, buy it! If you don’t make it!

Promotores Inmobiliarios: ¡Transparencia!

Cristina Vallejo

El mercado inmobiliario es poco transparente, poco claro. No es porque quienes en él actúan sean especialmente perversos, aunque a veces tengamos tentaciones y razones para pensarlo. Lo es por su propia naturaleza: dos inmuebles no son nunca comparables. Ni en el mismo bloque son iguales el primero y el último piso. Por eso, determinar cuánto cuesta un piso, cuánto ha bajado o cuánto ha subido es especialmente complicado.

Cuando los pisos suben como la espuma, no hay problema: los promotores ganan, los bancos se hacen de oro y los ciudadanos corrientes se sienten (pobres de ellos) partícipes de la bonanza. Nadie se plantea estas dudas existenciales.

El problema empieza cuando las cosas comienzan a no ir tan bien. Los promotores se ponen nerviosos: ven que no cierran operaciones, pero niegan que vayan a bajar los precios. Pasados unos meses, siguen sin vender nada, pero aseguran que la culpa no es suya: ya han bajado los precios todo lo que pueden (un 20%), aunque en el Salón Inmobiliario de Madrid vimos descuentos de hasta un 50% en los stands de las grandes inmobiliarias cotizadas. “¿Cuánto quieren que bajemos el precio? ¿Es que no se dan por satisfechos nunca?”, le espetaba un promotor a Hermann Montenegro, consejero delegado de la gestora Axa REIM. Montenegro explicó: “La vivienda ha bajado, hay descuentos, no lo negamos. Lo que ya no tenemos tan claro es respecto a qué precios se están aplicando las rebajas. Y la falta de transparencia es una de las razones por las que los inversores no vuelven al mercado”. Pero, además, según este experto, las rentabilidades exigidas en España van a ser mucho mayores que en los países de nuestro entorno, lo que significa que los inversores van a exigir caídas de precios mucho más importantes.

En momentos en los que nada está claro, los inversores profesionales constituyen una buena referencia para el resto de los mortales. Si ellos, que tienen mucha más información y mucho más dinero que el particular, aún no están apostando por el mercado inmobiliario, usted, tampoco lo haga.

José Manuel Galindo, presidente de la patronal del sector, pidió, para ser más solventes a ojos de la banca y conseguir financiación más fácilmente, otro sistema de valoración de sus activos en el balance, como el Gobierno estadounidense le permite a su banca. Esto es, en definitiva, un maquillaje de las cuentas. Se quejan, también, de la competencia desleal de la banca. A su juicio, los bancos financian sus pisos, pero no los de los promotores. Seguro que es así. También es verdad que las entidades financieras asumen menos riesgos vendiendo sus propios inmuebles. Pero Alberto Manrique Navas, director de negocio promotores de Caja Madrid, matiza: “Nos interesa desprendernos de todos los inmuebles cuanto antes, por lo que, en ocasiones, hemos vendido a pérdidas. Y las condiciones de financiación para las restos de promociones son más atractivas que las que aplicamos a nuestros inmuebles. Estamos igual de interesados que los promotores en vender sus pisos porque, de lo contrario, nos los vamos a tener que quedar las entidades financieras”. Bueno, también los bancos ahora están purgando sus errores.

Possible on-line employment

Well hello everyone!

It’s been quite some time since I’ve posted here  – just been kind of busy – if that’s what you can call it. Anyways,  I came across this site West at Home and thought there might be some form of employment in it for someone (no promises though, as I have not tried this site myself – I have wireless, and you cannot take their training unless you have a DSL or Cable connection).

Anyway here is where you can apply;

http://apply.westathome.com/

And to be honest, I think it is minimum wage, or less, but again you’d have to check for yourself  (I always laugh at those really big bucks, quick schemes, you here about).  This might be good for someone stuck at home, or who just want to make some extra money – a little extra moolah – hey! hey! hey! Ya never know!

And if anyone out there is familiar with this company, or have had any experiences with it,  please feel free to leave a comment.  That would  be great!

And I will keep an eye out for any other similar sites.

Please make sure you read these sites carefully – it would break my heart if any one was scammed. (Gawd!! I’m blowing my nose right now  at the thought of it!!) And DO NOT! I repeat DO NOT pay any money to any of these sites – or any money making site – that is just totally bull****!

So a big Good Luck!

 

Crypto-bullshittism

The family left at 5:30 to get an early start so instead of a late post, an earlier than usual upload. But checking out the newspapers I’m questioning whether the Strib has anything to offer anymore.

“Above the fold” this morning are  seven [7] links to Vikings stories, and two more about the Twins. Local non-sports stories include the news that a local strip joint is not closing, a man who fell or was pushed off the Franklin Avenue bridge and landed on a car, Joe Califano speaking in Edina, kids looking for mentors, Marvin Windows, another story about the plane stuck overnight on the tarmac in Rochester, a widower’s tale, and lots of wire stories.

I didn’t bother to scroll down for the less important stories.

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In the real newspapers, a sudden breath of realism from the conservatives. Robert J. Samuelson does an “on the one hand/on the other hand” column on the tire tariff that leaves the reader feeling like something has to be done about China, while Ross Douthat acknowledges Bush’s fuck ups (while coming to the improbable conclusion that Bush grew in office).

Douthat’s criticism is, of course, just an opening to allow him to say emphatically that Bush wasn’t really a conservative. Yep, the President the conservatives picked in the 2000 primaries and two elections was in fact a crypto-liberal.

But I can live with that if it means the cons are waking up to the profoundly nonconservative, illiberal me-firstism of Wall Street. The ideology of money is Maoist. with all power flowing from barrel of a pen: mortgage foreclosures, interest rate hikes (for loans, not savings), fee hikes, etc. Accountants who use pens because the error is never theirs, just ours for having trusted them.

If we only learn one lesson from all of this, maybe it is that the conservatives should let actual liberals pick out out our liberal leaders in the future.

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Is any of this impacting our political views? Check out the chart Digby has up, and make sure you click on the second link.

The only people surprised by our financial meltdown are the media and lockstep Republicans. Christopher Caldwell may have called this mess ten years ago, but I listened to Sen. John Culver predict much of this back in 1980 when he told a room full of Iowa labor activists what kind of America Ronald Reagan and Chuck Grassley would give us.

Reagan and Grassley delivered, and helped bring about the deregulation that made the present mess inevitable.

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Are we experiencing any change? Committee on Oversight and Government Reform chair Rep. Edolphus Towns is demanding cooperation from Bank of America. BoA is fighting tooth and nail, and has already resorted to dumping 70,000 pages of documents on Towns’ committee.

But Paul Krugman is wondering if Obama has the stones to take on Wall Street. Good question, but Krugman forgets one thing. Wall Street’s leaders have proven time and again that they would shamelessly crash the world economy before they’d back down from their precious overcompensation.

It is the kind of impasse firing squads are made for, the sort of arrogance that cries out for rope and lampposts. If the state of Ohio can spend a week looking for a suitable vein with which to execute Romell Broom, can’t the U.S. government commit a few heavily armed U.S. marshalls to the task of seizing withheld documents. Can none of Bush’s illegal domestic surveillance be directed towards our modern day robber barons?

The WaPost looks at Congress’s sudden resolve over overdraft fees, and wonders if a backlash is brewing? If so, it can only mean one thing: bought and paid for members of Congress are running for their lives, and fear that they won’t be able to buy re-election in 2010.

The Post article, btw, focuses on Chris Dodd. At the 2007 Yearly Kos convention in Chicago, Dodd was the darling of many online progressives in attendance, Markos Moulitsas included. I hope a lesson has been learned. To date I’ve been less than impressed with the netroots’ perspicacity, and would again encourage them to butt the fuck out of local races until after the primaries.

The jokey tagline Great Orange Satan won’t be quite so funny if the Axis of Moulitsas, Stoller and Bowers turns into a lefty Club for Growth.

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Hard on the heels of severe criticism of Israel’s handling of Gaza, WaPost apologist in chief Jackson Diehl writes that Israel has been vindicated in a column so squishy soft and fact-impaired I doubt even the rightwing Israeli press would have run it. The closest Diehl comes to criticizing Israel is this:

But what of the grievous Palestinian suffering in the invasion — Israel itself counted 1,166 dead Gazans, including more than 450 civilians — and the international backlash that has caused? Just last week a U.N. commission headed by South African jurist Richard Goldstone condemned what it called “a deliberately disproportionate attack designed to punish, humiliate and terrorize a civilian population,” and suggested that responsible Israelis be hauled before the International Criminal Court on war crimes charges.

That U.N. commission is more properly known as the Human Rights Council’s Fact Finding Mission on the Gaza Conflict. Diehl refuses to use the words “human rights” in his wankfest because in Israel human rights are only for Jews, or rather heterosexual, observant Jews. For a second time I wonder why Israeli Arabs have not taken to sewing yellow crescents on all their outerwear. Yellow crosses worn by Arab Christians would be quite photogenic, imho.

It is time to disinvest in Israel. Economic sanctions applied to South Africa over Apartheid proved effective, and I think the Israelis would cave to economic hardship more quickly than the hard-headed South Africans did.

Gaza is an ongoing war crime. It is Dachau without the ovens. Israel must be shunned and American Jews must lead the fight to shame the Israelis into observing basic human rights.

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Radical rabbis aren’t the only religious scum who terrorize others.

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McClatchey:

The Merced Police Department’s Internal Affairs Division is investigating whether an officer twice used a Taser on an unarmed, wheelchair-bound man with no legs.

The man who was Tasered, Gregory Williams, 40, a double-leg amputee, spent six days in jail on suspicion of domestic violence and resisting arrest, but the Merced County District Attorney’s office hasn’t filed any charges….

Williams said he was humiliated after his pants fell down during the incident. The officers allegedly left him outdoors in broad daylight, handcuffed on the pavement, nude below the waist. Williams said the Sept. 11 arrest also left him with an injured shoulder, limiting his mobility in his wheelchair.

A handful of residents in Williams’ apartment complex said they witnessed the incident and supported Williams’ charges. A short video clip, shot by a neighbor and obtained by the Sun-Star, shows Williams sitting on the pavement with his pants down, his hands cuffed behind his back.

If this isn’t in every newspaper in the country by day’s end, I’m going to have to reconsider whether I should bother to continue reading newspapers.

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ETC.:

The scientific data on global warming grows increasingly emphatic as theories become fact

Talk jocks and rappers: flip sides of the same coin?

Glenn Beck’s foray into art crit deconstructed

Dead poets society

Green space

Caster Semenya proves to be a very complicated issue

Regulating bullets in California

Trying to make sense of it all

Saturday and Sunday nights are now reserved for reading and research. My work-a-day routine has taken a turn for the worse with a new assignment, perhaps the worst in my military career. Much more busy than before, but with nothing to really do but go through the motions and hope for the best. By far the least challenging, least rewarding assignment I’ve ever had, with perhaps the least constructive guidance and the most uninspiring and disinterested leadership.

It could be a deal breaker for me — once the organization you trust and love turns its back on you, with the cold shrug of institutional impunity, it’s time to move on. (I believe the term used in the familiar patois of my organization would be to “suck it up”. I never “suck it up” for very long. I’m not that kind of Marine.) To be fair, the USMC has invested a significant amount of time and treasure in me…all the more reason for me to wonder why it seems so passive about this investment. I took it seriously. I believe I’ve demonstrated this amply. To no avail. On a personal level, a colonel has made a deliberate decision to sacrifice my career in order to satisfy a temporary but non-urgent requirement. (We have a phrase for that: “Needs of the Marine Corps”.) So be it.

I try to remind myself that this is what happens in any large organization, when the bureaucracy tends to sacrifice purpose and creativity to process and procedure at precisel the wrong time for a useful asset. Despite the logic and actions of the individual who has condemned me to this posting, perhaps I’m after all just a number, a statistic, a check in the box, a code on some staffer’s spreadsheet back in Quantico or DC. Perhaps my perception of my own value to the organization is overestimated. Nobody is irreplaceable, after all. There are more than 200 thousand people in this organization now and its strategic focus has been stretched in unprecedented ways. Not surprising that a few of us who were once promised bright futures should languish in the inertia of what is still a government agency trying to find its way in “uncertain times” — whatever those may seem to be to the decision-makers.

Anyway, the point is that I’ve had to sacrifice a bit of personal time to maintain my commitment to what has become a passion. It is a bitter pill for wifeykins, but she is on board as long as I am careful and don’t overstretch. I’ve been in tighter spots before. I know I’ll succeed. I will balance family, friends, profession, person and passion once again. With a little moto riding and maybe some lolcats surfing in between.

Enough of the throat clearing. The markets seem nervous. We seem to be in the eye of the storm right about now. Winds have abated. The sails are slack. The tell-tails are fluttering in no particular direction. The skies seem clear, but there is an uneasy pressure and smell in the air. The light is a bit strange. “Not quite right,” as wifey would say. Ambient noise seems oddly attenuated, muffled. What will happen to the USD? What will happen to equities in the US, Europe and Asia? What will happen with crude, gold and ags? Where are the funds? Where is the real money? What is following what? Who is following who? We know the other side of the storm is coming. What will be the best course of action?

As for the who part, I think hedge funds are following the real money. In the US markets, the funds are late to the risk party and will probably get hammered (again) unless the rally extends through the end of the year. Bravo to those funds who were winners. This has been a tough year for them and we aren’t even on the final lap yet. Most of the flows are still moving out of USD and US equities to MOE — markets other than Europe. This is one of the reasons I added to the short EURUSD trade — because the flows certainly aren’t going into Europe as far as I know. There is little yield to be had there and risk aversion trading will gain substantial momentum starting in October, if not this coming week, and continue into 2010. Probably helpful for my EURUSD short, but not very much for the USDJPY long, as another unwinding of too hastily taken young carry trades will benefit both USD and JPY. Probably the former less than the latter. But when will this unwinding occur? And then at what level will it be good to get back in? (Note to self: Watch NZD and AUD, as well as treasuries.)

I would like to build a large-ish short ES position in the 1180-1100 area, but I think I’ll stay tactical for now because markets usually tend to move further than any rational explanation would allow. (One of the principles behind the Knotty positioning strategy, but I’m not well capitalized enought to execute this strategy in the futures markets and would get a margin call holding ES over a several thousand tick range!) My expectation is that the S&P could move as high as 1150, but that it will eventually retrace to 750 at least. I may also take tactical shorts 6E over the same time horizon. But what about the yen? This is what I’m trying to make sense of at the moment.

FM Fujii has made some careless but revealing remarks, and I like them. Letting economic conditions determine the value of the yen more than narrow interests and cronyism would allow me to get a better feel for general direction. Time will tell if Hatoyama’s regime can make it a reality. I don’t think Fujii’s remarks mean the yen will appreciate to wild and wacky levels, but I doubt the yen will weaken much in the near term. We certainly won’t see 100 anytime soon. (I’m still hoping for 97.40, however.) And then there is the meeting between President Obama and President Hu ahead of the G20 meeting. Both are very formidable minds from very different intellectual spaces. Wish I could be a fly on that wall. In any event, I’ll be paying attention to the buzz around that meeting.

Leading indicators coming out that will put that meeting into context as well. I’m interested in what the Fed will say about an exit strategy — or what it won’t say. I can’t imagine the Fed will extend QE much more. I just can’t imagine it. Seems something would snap. The G20 itself will probably be a sleeper. The sideshows during and after will be interesting, however. Probably lots of the typical BS from China, Russia and Japan and lord only knows from who else. And of course, our own brand of it here in the US — hard to tell which branch of government is more full of it, these days. Most of the stink will probably be about trade. China’s predatory practices vs. our protectionism, is how the MSM will probably frame it. In reality, it is China’s predatory practices and its protectionism, vs. our protectionism. This is why the US and others will have no choice but to do what they do. China itself has no choice. It cannot develop internal markets fast enough so it must engage in predatory trade. Financed by our debt. It is a matter of survival for China’s regime, which has no intention of letting go of power. I digress. Any progress between Obama and Hu in the meetings ahead of and after the G20 session will be good for risk appetite. I’ll be watching for that from a tactical standpoint.

Check out the remarks made by Almunia with respect to Chinese diversification into the euro. To sum up: “No bueno.” Developing…

'Ruled By Economic Illiterates'

Andrew Sullivan points to a wonderful article by Johns Hopkins University economics professor Steve H. Hanke on Iran’s crippled economy:

Fiscal order, transparency and control are nowhere to be found in Iran. Government expenditures are estimated to have increased – in line with President Ahmadinejad’s populist proclivities – by 55% during the fiscal 2007-08 through 2008-09 period. Price controls are widespread. These result in implicit subsidies equal to about 25% of GDP. Explicit subsidies are equal to another 5% of GDP, or about 16% of the central government’s expenditures.

…Banks are mandated to extend credit to certain favored sectors of the economy. The specific sectors and levels of credit are laid out in Iran’s five year development plan. Even things like privatization are perverted in Iran. For example, when state-owned enterprises are privatized, the majority of the shares are often purchased by other state-owned entities, such as pension funds.

Iran’s economic policies have put it in a death spiral whose speed is governed, in large part, by the price of oil.

Is FOX In Financial Trouble?

Yesterday I referenced Emptywheel’s piece on how Univision is overtaking FOX in various ratings (and how Obama is tacitly acknowledging this by blowing off FOX’s Sunday gabfest for Univision’s Al Punto), much to the open and vocal dismay of FOX and its Republican allies in Congress.

There are other signs that the FOX empire is not as strong as advertised. For one thing, it’s trying to sell off the Dow Jones Industrial Average, the nation’s premier stock market index.

It’s hard to imagine the megalomaniacal Murdochs willingly giving up the ability to control the most powerful stock market index in the world. The first thought that comes to mind is that they must be in need of liquid cash, and urgently so.

Weekend Links

Thomas Sowell gives some of his trademark common sense. This time it’s on dogs, bones, and health insurance.

Economic globalization and restrictions on American free speech.

“the president’s rhetoric was becoming CPR for the Republican Party“- George Will takes on the odds of any health care bill passing Congress and the potential political fallout.

“If Obama can’t defeat the Republican headbangers, our planet is doomed” If this guy really thinks one nation can solve global warming, he needs to talk to China, not the US. This column is a great example of why you shouldn’t write polemic editorials about stuff you have NO CLUE about.

David Brooks goes back in time to the end of the War in Europe and issues a call for humility. A really good read if you’re interested in (or horrified by) the “me culture” or what he calls “high five nation”.

End The Fed? Ok, but lets talk first!

This whole End The Fed campaign is starting to worry me.

If I were part of the rich and powerful globalist elites who control the money and it’s inflationary and deflationary status, and I wanted to destroy the U.S. dollar, the economy, and the Constitution of the United States, the most logical thing I could do would be to indeed End The Federal Reserve. Then it would be much easier to bring in a world currency.

And the way I would do it?

I would provocateur a campaign to expose the Fed (which I all but own) and then get the people angry enough at it to want to expose it, and end it.

So… the people would unwittingly do my dirty work for me!

I would then use my interest in the United Nations and its powers to institute a global currency to replace the dollar, the fiat currency that the uninformed but well-intentioned people got rid of for me.

The moral of the story is this: Ya’ll better have a replacement currency system in place before “Ending The Fed”, or else you might just inadvertently “End The USA” on accident and as a side effect of your unfocused patriotism. I am deeply concerned about so many unorganized, or more importantly un-united political action groups working so hard and for so many different purposes. Only through the unification of all of these smaller groups into one united force will we be able to do what needs to be done. We can all agree that the Fed, along with its many acronymic enforcing bodies (FBI, IRS, etc…) is the root of most of the evils that befell this once great country. Yes, the income tax is a fraud. But caution must be maintained in dealing with this, lest we all take a giant step of a cliff with no safety net and no bottom.

Misplaced and unchecked confidence in the validity and strength of our cause might be our undoing.

When Bloomberg and other “mainstream” conglomerate media corporations begin touting the necessity of exposing or ending the Fed, I know there is something more happening here… something that none of us can fully comprehend.

A very good personal example: When Rupert Murdoch of Fox fame came forward on international television and “admitted” that global warming was real and man-made… I finally knew for sure that it most certainly was not man made or real!!!

Let’s unite the factions, join together as one powerful group force, and think this through.

-Clint Richardson (realitybloger.wordpress.com)

September 18, 2009

Unemployment for August: 42 States Lost Jobs

  STATE OF UNEMPLOYMENT: 42 states suffered net job losses last month, up from 29 in July, the Labor Department said.  27  states saw their unemployment rates rise in August; 16 reported a drop. GIVING UP: In at least 6 states, the jobless rate fell, but mostly because unemployed workers gave up their job searches and dropped out of the work force. The states that experienced declines were: Georgia, Ohio, Indiana, Colorado, Kansas and Virginia. OUTLOOK GLOOMY: The nation’s unemployment rate is expected to peak above 10 percent next year, according to most economists, up from its current rate of 9.7 percent.

Bull vs. Bear

In the debate between stock market bulls and bears, it is quite obvious that the bears have all the rational arguments (chronic unemployment, record gov debt leading to higher taxes, broke consumer,  broken credit markets, uncertainty about economy once stimulus subsided, and so on). The bulls, on the other hand, offer pink and fluffy arguments that are based on hope and optimism.

The one flawed argument by the bears, though, is the claim that the market is all driven by government money. Well, that may be true, but who cares? Up is up, that’s all that matters as far as your trading P&L is concerned. There are no beauty prices for stock gains that are “justified by economic strength” vs. stock gains that “come from government-induced asset inflation”.

It is our conviction that in 2010, the current suggar bubble will collapse. But for the time being, giddiness rules. And one should also not forget how long a correct macro argument can exist before the market catches up to it. Example: In 2005 and earlier, some pundits warned of the coming real estate collapse, but it did not happen till 2007!

Are Spanish banks hiding their losses?

Posted by Izabella Kaminska

Here’s a somewhat scary view on Spain that came this week from alternative economic research house Variant Perception.

The top line: that Spain is now the hole in Europe’s balance sheet, and that misunderstanding the severity of the crisis will prove costly to investors as it could have profound implications for the European banking system. As it explains:

Spain had the mother of all housing bubbles. To put things in perspective, Spain now has as many unsold homes as the US, even though the US is about six times bigger. Spain is roughly 10% of the EU GDP, yet it accounted for 30% of all new homes built since 2000 in the EU. Most of the new homes were financed with capital from abroad, so Spain’s housing crisis is closely tied in with a financing crisis.

The impact on the banking sector will be severe. Consider this: the value of outstanding loans to Spanish developers has gone from just €33.5 billion in 2000 to €318 billion in 2008, a rise of 850% in 8 years. If you add in construction sector debts, the overall value of outstanding loans to developers and construction companies rises to €470 billion. That’s almost 50% of Spanish GDP. Most of these loans will go bad.

Spanish banks, in our view, are now facing a very bleak outlook. Spain’s unemployment rate reached over 17%; there are now four million unemployed Spaniards and over one million families with not a single person employed in the family.

We argue and will document anecdotally in this report that:

• The real estate crash in Spain is worse than is widely believed, much as the subprime problem was much worse than people believed

• Spanish banks are hiding their losses and rolling over debt to zombie companies, much as Japan did in the last decade

• Investors are deluding themselves if they believe that Spanish banks are among the strongest in the world. (This is a new theme. See Forbes’s latest “Spanish Banks In Top Form” for an example of the new fawning articles on Spanish banks.)

If we are right, Spain will soon have zombie banks like Japan and it will face a prolonged period of deflation. However, Spain will be much worse.

According to Variant, Spain’s situation is now pretty reminiscent of the early days of subprime when all the banking results still looked good, until suddenly they didn’t.

But before you can understand the weakness in the system, you have to understand the counter argument — ie, the idea that Spanish banks are among the strongest in Europe. This is based on the idea of “dynamic provisioning” according to Variant, legislation that forced banks to build up reserves against future losses, and prudent lending practice by the large private Spanish banks but which left lending to developers and buyers of second homes to the smaller regional Cajas banks.

The problem, though, is one of magnitude, which is bound to overwhelm even the benefits of  dynamic provisioning in the end. As Variant notes:

Spain’s building stocks bubble looks very much like the US bubble and other classic bubbles. It went up 10x and then went down 90%. The math is very simple.

S&P/Citi Spain Proeprty Stock Index – Variant Perception

Yet the picture above is not echoed by Spanish house prices, which are down little more than 10 per cent from their peaks:

Spanish House Prices – Variant Perception

So how can you explain the mismatch? Well, according to Variant, a lot of it comes down to plain old smoke-and-mirrors. As it says: We believe that Spanish banks are hiding their problems. We explore how they are doing this through:

1) Getting a boost from accounting changes

2) Not marking loans to market

3) Continued lending to zombie companies

4) Making 40 year and 100% loan-to-value loans

All these are good points.

On the first issue, it is absolutely true that the Bank of Spain has now moved to relax its provisioning rules.  So whereas previously banks made provision for the full value of loans above 80 per cent LTVs after two years of payment arrears, they now only need to reserve for the difference between the value of the loan and 70 per cent of the property’s market value. Variant says that for many Spanish banks, this has allowed them not to lose money this year.

In April, meanwhile, Spain’s Expansion reported that Spanish banks control 25 per cent of appraisals directly and another 25 per cent indirectly through their shareholdings. Which means they are mostly in charge of valuing the assets themselves. As Expansion reported:

This situation has placed the focus once again on the links between banks and the real estate appraisers that goes beyond in many cases a mere commercial relationship.

Which means official housing statistics are not often corroborated by anecdotal evidence, which suggest prices have already dropped between 30-50 per cent in some coastal regions.

And even if the Spanish banks came into the crisis with prudent practices, these, notes Variant, may now be changing quickly:

Spanish banks are now the largest real estate holders in Spain. They have come to own properties through many different avenues. In order to hide from the effects of the real estate crash, Spanish banks have been buying properties before the loans on them go bad and trying to dispose of them through their own real estate companies. They have also come to own dozens of thousands of homes through debt for equity swaps. Estimates put the value of property repossessed or swapped for debt by Spanish banks at about €16 billion. Consider the following: Spanish banks are now running their own real estate companies and have websites set up to move their stock. Among selling points are: pricing discounts of 25-50%, financial terms of Euribor plus 0% over 40 years, and guarantees to re-purchase the property in the future.

Death pills from IMF & World Bank

Huzaima Bukhari & Dr. Ikramul Haq

 

In recent days, the World Bank and International Monetary Fund (IMF) have suggested a number of changes in our tax statutes that are highly controversial and debatable—these intend to burden the less privileged segments of society whereas the rich will remain unaffected. Implementation of these proposals, without any public debate and assessing their impact on the poorer segments of society, will have ramifications—destroying the cherished goals of self-reliance, social justice and equitable distribution of income and wealth. The prescriptions of IMF and World Bank for our ills are not based on correct diagnosis. Their sole stress is on enhancing regressive taxes that take small portion of the big income of the rich and very large slice of the scanty income of the poor.

 

In none of its studies prepared for Pakistan, the World Bank has bothered to assess the incidence of Value Added Tax (VAT) on various income groups of society. No critical evaluation is made about what impact VAT will have on our ailing economy. The only point highlighted is that VAT—levied across the board—will generate extra revenue of Rs. 400 billion. The so-called experts of IMF and World Bank have no idea about our real tax potential which is not less than Rs. 4000 billion. Instead of suggesting restoration of progressive taxes—wealth tax, capital gain tax, estate duty, gift tax etc—that were once in existence in Pakistan, these institutions are supporting continuance of pro-rich tax policy. By levying fair and equitable taxes and withdrawing exemptions given to the rich, we can easily generate Rs. 4000 to 5000 billion per annum. But our ruling trio—crooked civil-military bureaucracy, shady politicians and greedy businessmen—resists any such move for obvious vested interests. Sadly, though understandably, the IMF and World Bank have also been working to further their cause.           

 

World Bank-funded tax reform process (sic) has failed to yield any positive results. This is evident from the fact that after five years of Tax Administration Tax Reform Project (TARP), the basic ideas (e.g. introduction of VAT and formation of Inland Revenue Service) are still being discussed. It is strange that things that had to be done in 2004 when 5-year TARP was started are at discussion stage in 2009. It confirms that from 2004 to 2009 borrowed funds of millions of dollars have been wasted. This is the sordid story of tax reforms in Pakistan. Now with the establishment of Inland Revenue Service, they think wonders will be achieved. This is just a change of nomenclature—cosmetic change. Unless mindsets of officers change, nothing will change. Process of change requires change of minds and hearts, something which is completing missing in FBR—the officers are incompetent, inefficient and corrupt, both financially and intellectually. No suggestions have been made by IMF or World Bank for curing this malady. Skilled tax administration is not possible with the existing lot sitting in FBR. 

 

In this milieu, the IMF and World Bank are insisting for enforcement of VAT that requires documentation at all levels. VAT is a specific turnover tax levied at each stage in the production and distribution process. Although VAT ultimately bears on the individual consumption of goods and services, liability for VAT is on the supplier of goods or services. VAT utilizes a system of tax credits to place the ultimate and real burden of tax on the final consumer and to relieve the intermediaries of any final tax cost. VAT is calculated by applying the applicable rate at a taxable stage to the appropriate taxable base of goods or services; it is then reduced by the VAT (as indicated on the invoices delivered to the purchaser), which has directly affected the cost of the various elements constituting the price of goods or services.

 

We wrote in these columns in 2000, “in Pakistan there are substantial deviations from pure form of VAT (as in vogue in Europe and some other developed industrial societies), because of exercise of various tax rates, exemptions and concessions for certain goods and services and specific provisions governing importation and exportation. It is therefore not VAT but VAT-type tax in Pakistan”. Now in 2009, the World Bank has just reiterated it in its “research study”—this is height of complacency. In its “research study” (sic), the World Bank did not tackle the most import issue: how VAT will be enforced in Pakistan where more than 50 per cent of economy is undocumented. IMF-World Bank experts say it will take us five years to enhance tax-to-GDP ratio to 15% [presently it is just 9%]. They are oblivious of the size of existing monstrous black economy, which if taxed at current rates, will enhance our tax-to-GDP ratio to 19 percent in just one year! Such taxation will expose the ruling trio that is the real owner and beneficiary of this black economy. Why do IMF and World Bank not suggest asset-seizure legislation to bring entire undocumented economy in tax net? They know it will end their control over our affairs—resource mobilization through these steps will make us self-reliant and end debt enslavement.   

 

The issue in Pakistan is not that of lack of revenue resources as wrongly portrayed by IMF and World Bank, but documentation of economy—ending the culture of tax evasion and fiscal frauds. The forces representing bazaar [different associations of traders], unscrupulous industrialists, absentee landlords and corrupt civil-military bureaucrats are the impediment. These segments are not ready to pay personal taxes on their colossal wealth and income—in most cases created from undeclared sources. They are not worried about VAT knowing that they can pass its burden to consumers. As under sales tax regime, they will not record honestly each and every transaction under VAT. If they will do so, their personal incomes in the process will get documented. Resultantly, they would have to pay income tax from their own “pockets”—incidence of direct taxes cannot be passed on. There has been a perpetual policy of appeasement towards these forces by successive governments—military and civilian alike. The IMF and World Bank want continuation of this policy. They have not suggested any measure to increase the share of direct taxes—presently dismally low at 23% in our total tax collection. In fact, they want that through VAT, the poor keep on paying taxes to fund the luxuries of the rulers.

 

The prescriptions given by the IMF and World Bank will not solve our problems rather further compound them. The rich and mighty segments, identified above, will pass on the burden of VAT on poor people and will still avoid personal taxation—they know how to grease the palms of the corrupt tax officials. In 1990s, IMF and World Bank caused a crushing deathblow to our industry when on their advice we introduced exorbitant sales tax rate of 21 per cent—within a short span of 2 years we had hundreds of sick industrial units. Later on rate was reduced to 18%, then 15% —again raised to 16% in 2009— but the fact remains that heavy indirect taxation has pushed 45 million Pakistanis below the poverty line. IMF and World Bank, fully aware of this fact, are still insisting on VAT. The agenda is obvious: destroy our industry and push more and more people below the poverty line. VAT will be a death pill for us. We can generate extra revenue of Rs. 800 billion by just taxing speculative transactions in shares, real estate and collossal income of absentee landlords. This taxation will also not involve any complicated enforcement issues that is the case with VAT due to constitutional distribution of taxation rights between the Centre and provinces.

————————————–

The writers, tax lawyers, are visiting professors at Lahore University of Management Sciences (LUMS).

13 going on 500?

As I search for some articles to be used on my Macroeconomics written report, a post entitled “When P500 equals 13″ caught my attention.

I thought this article would be perfect for my assignment, concluding that maybe today’s P500 bill is equal to 13 pesos of some base year. But it is not, it is somewhat much more interesting. Something related to feng shui. Upon  reading it, I immediately asked my mom for a P500 bill, checked it and eventually agree for the bill to be redesigned.

Yeah, just like that. Why?

For some reasons the yellow note has a bad luck charm.

• There are 13 people present on both sides of the bill.
• The figure 500 appears 13 times.
• The second of the four star bands, incidentally, has 13 stars.

Apparently, the yellow note has too much 13 that it symbolizes bad luck too much. And may I add Ninoy’s pose – chin resting on his hand a.k.a. the malas pose – connotes negativity.  An anonymous business man said that simple redesign of the bill may change the country’s fortune. Philippine economy is not on good position and we’re not Taylor Swift whose lucky number is 13.

Bangko Sentral ng Pilipinas must start redesigning by adding late Pres. Cory Aquino on the bill. And if you are asking “what if it did not work?” I’ll ask you back, “what if it did work?” Nothing will be lost if we tried. Besides Pres. Cory deserves to be on the bill.

You Want Savers, Not Debtors? Since When?

My new Politics Daily / Woman Up post:

It’s not often that Kansans make the national news. But one did so a few days ago in The New York Times.

His name is Ray Rucker, and he lives in Overland Park, a suburb of Kansas City. Rucker is 62 years old. He wants to work another 10 years, but he’s been laid off. And no one wants to hire him.

For 32 years I have lived just a few miles from Overland Park. So I think I can describe the mindset of a typical Kansan:

They are polite to a fault. If they have something unkind to say, they keep silent. They go to church. They vote Republican. They work hard. They hoard more than they spend. The cliche of the salt-of-the-earth Midwesterner is not far off the mark…

Read the rest on AOL: You Want Savers, Not Debtors? Since When?

German Robot Mole

RobotPig©Thermo System

A group of young German scientists founded a company in the late 1990s that today is the world leader in solar sludge drying. The star of the environmentally friendly drying process is an unusual mole, that works all day without food or complaint. The first electrical mole was built by Tilo Conrad, together with two of his fellow students from the University of Hohenheim ca. 12 years ago.

The stainless steel mole, an important part of a larger solar drying process, was patented by Thermo-System GmbH, a company founded by Tilo Conrad in 1997 in Filderstadt, Germany.

This device is now being used as a solution to waste disposal problems throughout the world.

The electrical mole is a fully automated robot complete with stainless steel mixing tools and tills. It aerates the microbiologically active sludge, thereby accelerating the drying process. The whole system is fully automated, is easily to maintain and uses very little energy.

Today, nearly 200 mechanical wallow in and shuffle through the mud to reduce sewer sludge disposal costs and protect the environment.

Source: Young Germany

© Flavia Westerwelle

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Clean Energy Centers Growing Worldwide, Not in U.S.

Clean energy technology hubs are rapidly developing all over the world, except in the United States. Business leaders who met at the Reuters Global Climate and Alternative Energy Summit acknowledged that massive government investment has created vibrant clean energy markets in countries around the world, but unfortunately the U.S. has not taken part in this trend. As The Business Insider reports, Google Green Energy Czar, Bill Weihl noted:

“Other countries, China being one of the major examples, are investing very heavily in this space across the whole innovation pipeline…from shower to power, from the idea in the shower to generating the power (in a) commercial scale enterprise.”

Just yesterday, the China Greentech Initiative released a report describing how large-scale government investment is driving a clean energy market that could be worth upwards of US$1 trillion annually.

While China is home to some of the fastest growing clean energy centers, particular in the solar industry, Denmark, Japan, South Korea, India, North Africa, Singapore, and Abu Dhabi are all directly investing in creating domestic clean energy hubs.

Executives in Silicon Valley, who have become accustomed to leadership in key technology industries like IT and semiconductors are starting to sense the shift in power.

According to Reuter’s, Weihl is calling for up to $30 billion in public funding annually for RD&D if the U.S. intends to remain a serious competitor in the clean energy race. Weihl also asserted that there is a “real danger” that the U.S., not to mention Silicon Valley, will not be a clean energy leader without this type of government commitment.

Weihl’s comments echo the Breakthrough Institute’s call for massive public funding for clean energy RD&D in order to drive private financing and make clean energy cheap. The American Clean Energy and Security Act (ACES), currently awaiting congressional approval, however, would only invest $10-12 billion per year in clean energy, broadly defined.

This investment does not stack up against long-term sustained government investment plans, like China’s pledge to inject $440-660 billion over ten years into clean energy. Instead of incentivizing U.S. companies and venture capitalists to invest in the U.S. clean energy markets, the lack of cohesive U.S. government action on clean energy RD&D is already motivating private investors to center their interest, and money, in Asia.

Currently, U.S. investment plans commit far less than the $30-50 billion that Breakthrough and business leaders, like Weihl, believe is necessary to drive the transition to a clean energy economy and make the U.S. viable in the increasingly competitive clean energy race.