Given the crisis in the Eurozone, what on earth could motivate China to buy Euro-denominated bonds? It isn't for love of Europe, you can be sure. It's all just a comment on the Greenback. As troubled as the Euro is, China sees it as having a better future than the inflated dollar. What a comedown that is for the Greenback! The Mediterranean end of the EU might be in financial trouble but -- thanks to the dummy in the White House -- the WHOLE of America is in financial trouble
Europeans were of course both surprised and pleased to hear that China has declared its intention to buy more Euro-denominated bonds. And what will it be buying those bonds with? Any greenbacks it has. It is trying to get rid of greenbacks any way it can -- while they are still worth something.
China has vowed to increase its support of the eurozone after pledging to spend billions of pounds propping up the single currency. Premier Wen Jiabao said it will keep buying government bonds – the debts of stricken European nations.
In a boost for Greece ahead of a pivotal vote on greater austerity cuts tomorrow, Mr Wen said Europe could count on his ‘unremitting’ support.
However, according to billionaire speculator George Soros, the debt crisis has pushed the eurozone to the ‘verge of an economic collapse’. It was all but ‘inevitable’ that at least one stricken member will have to exit the euro because of massive debts, the hedge fund tycoon warned.
His warning came just days after Bank of England’s Governor, Mervyn King, branded European attempts to shore up Greece as a ‘mess’.
Huge demonstrations are once again expected in Athens as the government there makes a final attempt to approve almost £25billion of cuts which are a condition of the latest bailout. If the Greek parliament does not pass the austerity budget tomorrow, the nation will receive no more support and is likely to run out of money by the middle of next month.
But the turmoil engulfing the region has not diminished China’s desire to buy up more European debt. China has foreign reserves of around £2trillion and is the largest creditor to the United States.
At the start of a three-day visit to Britain yesterday, Mr Wen said: ‘China is a long-term investor in Europe’s sovereign debt market. In recent years, we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.’
Condemning America's children to live in “Greece”
The Congressional Budget Office (CBO) has released its latest edition of the Long-Term Budget Outlook, and it makes for grim reading. The assessment needs to be read and understood by every member of both the administration and the legislature. It tells us quite simply that our fiscal policy is unsustainable. If policymakers fail to act now or act in the wrong way, they will condemn our children to live in an America unrecognizable to the Founding Fathers.
Federal debt is currently at its highest level since just after World War II, but unlike in those dark days, there is no letup in increasing public expenditure in sight. America’s welfare-state chickens are coming home to roost, as the retirement of the baby boomers “portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare and Medicaid.”
Add to this government investment in health care rising sharper than any other per-person expenditure, and we have a situation that the CBO director describes starkly on his blog, where he says, “Putting fiscal policy on a sustainable path will require significant changes relative to our historical experience in popular programs, people’s tax payments, or both.”
America’s current fiscal policy has reached a point of no return. The CBO has essentially echoed the advisory from Standard & Poor’s that I wrote about here in April, warning that things cannot go on this way.
So what are policymakers to do? Unfortunately, the current fiscal debate is between two options, of which one is disastrous and the other doesn’t go far enough. The first option - raise taxes to balance the books - would turn America into a European-style welfare state, sclerotic and indeed a repudiation of America’s founding genius. The trouble is that America already resembles the European Union internally. Industrious states like Texas (which play the role of Germany) continually bailing out welfare states, such as California (which are instantly recognizable as Greece). Massive tax increases to preserve government spending will turn the rest of America into one giant California. There will be no other nation willing to bail us out, unless China suddenly discovers a feeling of international bonhomie that has somewhat been lacking in its foreign-affairs history.
The other alternative - large spending cuts - represents only a partial solution. Cut are a necessary but insufficient condition of recovery. That is because, as the Competitive Enterprise Institute demonstrates every year in its report “Ten Thousand Commandments,” the growing burden of regulation - intrusive government without large direct spending - also represents a serious impediment to wealth creation. Indeed, internal studies suggest that our figure of $1.75 trillion in annual regulatory costs to the economy actually understates the size of the burden.
Therefore, policymakers should pursue a three-part solution to the long-term budget problem:
*Fix the problems of the past by enacting serious reform of the main expenditure programs - Medicare, Medicaid, Social Security and Obamacare (not forgetting that there is also a significant local expenditure problem in the shape of public-sector pensions).
*Solve the problems of the present by enacting significant deregulatory policies, in order to stimulate business activity, reduce unemployment and increase government revenues without increasing taxes. Such policies include the abolition of entire government departments, establishing an independent bipartisan deregulation commission, adopting the “one in, one out” principle of no new regulations without repealing older regulations, and ensuring proper review of agencies’ claims of benefits resulting from regulations.
* Wall off the future by ensuring that Americans yet to be born are not saddled with the same “terms and conditions” of the welfare and regulatory state as their forebears. To this end, the government should withdraw not just from Afghanistan, but from its adventures in regulating new sectors such as technology and domestic microfinance, to name just two.
America needs to recognize that the period of big government begun by Herbert Hoover and Franklin Roosevelt was an aberration that has led to this unsustainable situation. If we are to live up to the founding values of America, we must heed these warnings and act now.
What should we do about those food speculators oppressing the poor?
The comment below is from Britain but Obama has also demonized speculators
A number of people have been screaming recently that speculation in food is just immoral. Futures, derivatives, options, in food commodities is evil, oppresses, starves even, the poor and should thus at least be curbed if not banned outright. Oxfam, the World Development Movement, Nicholas Sarkozy, these sorts of people are leading the charge.
The the adults at the World Bank step into the conversation.
The World Bank is taking the rare step of encouraging companies in developing countries to buy insurance in the derivatives markets against sudden changes in food prices with a deal that should allow them to hedge $4bn worth of commodities.
As they say:
Robert Zoellick, World Bank president, said on Tuesday the “agriculture price risk management” tool showed what “sensible financial engineering” could do. “Make lives better for the poor.”
He added: “We have been in a period of extraordinary volatility in food prices, which poses a real danger of irreparable harm to the most vulnerable nations.”
Food prices were “the single gravest threat” facing developing countries, he added.
Quite. What the entire speculative edifice allows is the transfer of price risk from the producer and consumer to the speculators in between. So if your concern is that the poor are damaged by food price variability (which they indeed are) then the sensible thing to do is subsidise the poor's access to the speculative edifice so that they can transfer that risk of food price variability to the speculators.
Not, as the NGOs and the French President are doing, scweam and scweam that it's all evil and should be banned. Why they think it's all evil is simple enough to understand. It's something largely done by men, in offices with money, and is therefore quite clearly immoral.
Attempting to ban the very thing which is the solution to the problem you've identified appears to me to be insane: but then I don't work for an NGO. Maybe this is just par for the course for them?
Adam Smith was right: Big business is not your friend
An American maker of Internet routing gear is in deep public relations trouble. It has been accused of customizing its technology to help Communist China track members of a religious dissident group calling itself “Falun Gong.” It has resulted in a lawsuit being filed last month in federal court in California.
The lawsuit alleges that the American Internet routing company marketed its equipment by developing special training manuals to teach the Chinese government how to locate dissidents. The lawsuit also alleges that those training manuals used inflammatory language borrowed from the era of the Maoist Revolution. Finally, it contends that the company helped design the “Golden Shield” firewall that has actually been used to censor political and religious speech in China and to track opponents of the Chinese government.
The lawsuit is of great interest to me because the American Internet company named as a defendant in the lawsuit is none other than Cisco Systems. In fact, the suit also individually names Cisco President John Chambers. Readers of this column are probably familiar with Chambers because he has also been named in my last three columns. Those columns have all explored the firing of American political and religious dissident Frank Turek. That firing occurred after Turek’s religious and political speech was tracked by a manager at Cisco who promptly had him excluded from the workplace under the Cisco policy of inclusion.
Evidence of the company’s activities in China first became public in 2004, in the book "Losing the New China: A Story of American Commerce, Desire and Betrayal," by Ethan Gutmann. Since then, Cisco has disassociated itself from the marketing materials, stating that they were the work of a low-level employee. This argument is similar to the argument being made in conjunction with the Turek firing. In both cases, Cisco insists that individuals within the company are acting in a manner inconsistent with its deep commitment to tolerance of political and religious dissent.
The Falun Gong suit claims that additional Cisco marketing presentations prove that it promoted its technology to Communist China as being specifically capable of taking aim at dissident groups. The New York Times is reporting that, in one marketing slide, the goals of the Golden Shield are described as follows: To “douzheng evil Falun Gong cult and other hostile elements.” Douzheng is a Chinese term used specifically to describe the persecution of undesirable political and/or religious groups. It was widely used by the Communist Party in the Cultural Revolution led by Mao.
So the federal lawsuit essentially argues that Cisco developed and marketed the Golden Shield as a system that could a) censor Internet traffic flowing into China, and b) identify and monitor opponents of the Communist Chinese government. The suit also alleges that Falun Gong members were tracked by the Golden Shield and then apprehended.
What happened next isn’t exactly the same as what happened to Frank Turek – who was simply fired. In contrast, members of the Falun Gong were arrested and tortured with one member being beaten to death. As of this writing, another plaintiff who was arrested has since vanished and is presumed to be dead.
The lawsuit is a serious one because it states that other Cisco documents will show that it taught the Chinese Ministry of Public Security how to pursue dissidents effectively. This lawsuit was filed the very week that the Cisco Senior Director of Inclusion and Diversity Marilyn Nagel was denying that a managerial decision to monitor and track the religious beliefs of Frank Turek had nothing to do with a broader cultural problem at Cisco.
Hail Caesar: "Obama has added a war with Libya to the long list of wars the United States is involved in. He claimed authority under the unconstitutional War Powers Act to initiate hostilities. And then the sixty day limitation passed, and the war did not end. President Obama still does not seek congressional approval. ... The only thing left is for President Obama to appoint a horse to the Senate." [GWB sought and gained Congressional approval for the Iraq intervention]
Time to Ax Federal Jobs Programs: "Some policymakers are now looking at expanding job training and other federal employment programs. Even conservative House Budget Committee ChairmanPaul Ryan (R-Wis.) proposed to 'strengthen' these programs in his recent fiscal plan. Alas, the history of waste and failure in these programs argues for termination, not expansion."
Everyday Outlaws: Black marketeers and suburban farmers: "Everything is illegal these days. You know it. You’re lucky if you get through your first cup of coffee without committing a federal felony or three. Your state legislature churns out new offenses targeting you for improper swimming gear or an unlicensed lemonade stand. As we saw yesterday, mere countycrats may already be building a SWAT team to raid your unpermitted garden shed. That sucks, of course. But the silver lining is that when everything is a crime, everybody is an outlaw — and inevitably a gratifying minority of new-minted enemies of the state embrace their status, don their broad-brimmed hats, and become capital-O Outlaws."
There is a new lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc.
My Twitter.com identity: jonjayray. My Facebook page is also accessible as jonjayray (In full: http://www.facebook.com/jonjayray). For more blog postings from me, see TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, GUN WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena
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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)