Tuesday, June 21, 2011

Russia inching away from the greenback

After Obama's money printing binge has suddenly devalued it

THE Russian Central Bank will pour up to $US5 billion ($4.7bn) into the Australian dollar in a fresh wave of support for the currency, in a move to diversify its reserves and shift away from the US dollar.

The first deputy chairman of the Russian central bank, Alexei Ulyukayev, said that starting from September, the bank would hold Australian dollars for up to 1 per cent of its $US528bn in reserves.

He said at a conference at the St Petersburg International Economic Forum that the last meeting of the central bank's monetary policy committee had approved a list of banks that would buy Australian dollars. "They will place funds on deposit and buy securities (in Australian dollars)," he said. 'I expect (the start of operations) in (the northern) autumn. I cannot say more -- maybe in September, maybe in October."

A top economic aide to President Dmitry Medvedev, Arkady Dvorkovich, said Russia would continue to lower its US debt holdings. Its stock of US Treasuries has already gone down from $US176bn last October to $US125bn in April.

The comments by Russian officials come as Australian economists report increasing interest in the Australian currency by other central banks and sovereign wealth funds, amid uncertainty about the economic outlook in the US and Europe. Increasing foreign interest has powered the Australian dollar's rise from parity with the US dollar earlier this year to around $US1.06 today.

"The Australian dollar is the fifth largest traded currency in the world now. It has been backed, for some considerable time, by sound monetary policy and, because of the structure of the Australian economy, real interest rates here are high.

"If you hold the Australian dollar, you can be confident that inflation will remain reasonably controlled and real interest rates are high, which means you are going to get a good return."

Mr Murray said the dollar was also seen as a proxy for the emerging Asian nations, including China. "If you can't buy (the Chinese currency), you can buy the Australian dollar. This is one factor putting some upward pressure on the Australian dollar."

Reserve Bank governor Glenn Stevens warned Australians last week to get used to living with a strong dollar. He indicated the bank was considering raising interest rates at its August board meeting unless data showed inflation was under control.

Rob Henderson, chief economist, markets, with National Australia Bank, said he expected foreign central banks and fund managers to keep buying into Australian government bonds. "Australia is one of the world's true AAA-rated government debts at the moment," he said.

More here


Open Letter to Paul Krugman

From Donald J. Boudreaux, Professor of Economics, George Mason University

Interviewed recently in “The Browser,” you said that
if you ask a liberal or a saltwater economist, “What would somebody on the other side of this divide say here? What would their version of it be?” A liberal can do that. A liberal can talk coherently about what the conservative view is because people like me actually do listen. We don’t think it’s right, but we pay enough attention to see what the other person is trying to get at.

The reverse is not true. You try to get someone who is fiercely anti-Keynesian to even explain what a Keynesian economic argument is, they can’t do it. They can’t get it remotely right. Or if you ask a conservative,”What do liberals want?” You get this bizarre stuff – for example, that liberals want everybody to ride trains, because it makes people more susceptible to collectivism.

You just have to look at the realities of the way each side talks and what they know. One side of the picture is open-minded and sceptical. We have views that are different, but they’re arrived at through paying attention. The other side has dogmatic views.

Let’s overlook your failure to distinguish conservatives from libertarians – a failure that, for the point I’m about to make, is unimportant.

You’re able to conclude that “liberals” are open-minded thinkers while “conservatives” are dumb-as-dung dogmatists only because you compare the works of “liberal” scholars to the pronouncements of conservative popular pundits. However valid or invalid is the artistic license used by conservative celebrities such as Glenn Beck and Rush Limbaugh (and, for that matter, by “liberal” celebrities such as Rachel Maddow and Keith Olbermann) to entertain large popular audiences, you’re wrong to equate the pronouncements of conservative media stars with the knowledge and works of conservative (and libertarian) scholars.

Because, as you claim, you study carefully the works of non-”liberal” scholars, you surely know that the late Frank Knight, Ludwig von Mises, F.A. Hayek, and Milton Friedman – influential economists whom you would classify as “conservative” – were all steeped in and treated seriously the writings of Keynes, Marx, Veblen, Galbraith, and other “liberal” thinkers.

The same is true for still-living influential non-”liberal” scholars.

I’d be obliged to conclude that you in fact, contrary your claim, do not carefully engage the works of non-”liberal” scholars if you insist that “liberal” scholarship is ignored by conservative and libertarian thinkers such as James Buchanan, Gordon Tullock, Ronald Coase, Armen Alchian, Harold Demsetz, Anna Schwartz, Gary Becker, Vernon Smith, Leland Yeager, Henry Manne, Deirdre McCloskey, Allan Meltzer, Richard Epstein, Tyler Cowen, Arnold Kling, George Selgin, Lawrence H. White, and James Q. Wilson, to name only a few.

You do a disservice to scholars such as these, as well as to scholarship generally, to assert that serious thinking is done only by you and your ideological cohorts.


Prof. Boudreaux's reply exposes the dishonesty of the Jug Man's writing. He could also have mentioned that the Jug Man's claim about closed and open-mindedness is a hoary one. Psychologists have been making the same claim since at least 1950. The research they quote in support of the claim is deeply flawed however, mostly based on what students say. More careful research using general population samples has shown the claim to be wrong


The German health insurance system

In summary: Mandatory but competitive insurance for all -- paid for by BOTH employer and employee -- with a range of private but government-approved non-profit insurers

As one would expect of the richest country in Europe, Germany offers high quality healthcare, from primary care through to high-tech hospitals and good provision for chronic disease and old age.

It all dates back to Otto von Bismarck, the “Iron Chancellor” who established Germany’s social welfare system in the 1870s. He was reported to have said it was immoral to benefit from sickness, and that “insurance should be on the mutual principle (so that the healthy pay as much as the sick) and no dividends or profits should be derived by private persons”.

One could argue that these high-minded principles exist more in the imagination than reality. But Bismarck’s broad idea of a range of statutory health insurers, independent of providers, competing against each other, holds good. Insurers (also known as sick funds or mutuals) are financed by contributions from employers and employees.


The “Bismarck system” operates across most of Europe, including Austria, Netherlands, France and Switzerland, all with well-rated healthcare. The NHS’s “Beveridge system,” free at point of use and taxpayer funded, may be much loved by the British people, but arguably does not match the Bismarck system in medical outcomes and aspects of patient satisfaction.

In Germany, you don’t wait 18 weeks from referral for joint replacement. Equally, “Bismarck” countries largely avoided the high hospital infection rates in NHS units in the Noughties.

Waits in Germany remain close to nonexistent – even if economic pressures apply, as with all Western countries with ageing populations. And care for the chronic sick and elderly is regarded as far better than in Britain. If you suffer cancer or need certain operations, your insurer may have to pay for a lengthy stay at a salubrious “rehab centre” in the Black Forest. That is not in the NHS book.


With Germany spending 11 per cent of its (considerable) GDP on healthcare, one would expect good health outcomes. They are respectable, with life expectancy at 77 for men and 83 for women. The yardstick of a nation’s healthcare efficiency, infant mortality, is four per 1,000 live births, a satisfactory figure for a country with high numbers of less well-off immigrants.


The German state is as vulnerable as the UK, America or other European states to the problems of mounting healthcare bills. Indeed, it is particularly exposed because of a shrinking and ageing workforce, and falling birth rates.

That is why Chancellor Angela Merkel defied heavy opposition to push through wide-ranging changes to the state health system in 2010. One aim was to limit ever-rising taxes on employers (who to that point jointly funded the system through equal contributions). That represented a barrier to taking on staff, in turn aggravating unemployment.

Another aim was to throw the onus of meeting rising healthcare bills on insurers, and ultimately, policyholders.


From January 2011, employers have to pay 15.5 per cent of their income towards healthcare. (The previous rate was 14.9 per cent). This is a huge proportion of income by comparison with other countries, but it should be remembered that the cover is for cradle-to-grave service.

But the 15.5 per cent employers’ rate is fixed in law and frozen long term. The sums raised are ultimately distributed among scores of state registered health insurers, many quite small and trade-union based. The idea is that by freezing the employers’ income-related contribution rate, the onus falls on insurers to cope with future cost rises. Insurers will either increase premiums – arguably the most likely scenario – or slash overheads and tighten efficiency.


As with all insurance-based health schemes, the individual needs to weigh up premium against benefits. As a German government spokesman puts it: “The premium, which has to be paid by all members of a health insurance fund, is a transparent price signal. It allows the insured to compare the price and the benefit package and choose the fund with the best price-performance ratio.”

Some relief exists for people trapped in an insurance fund that hikes premiums unreasonably. If the average additional premium exceeds two per cent of a policyholder’s income, the individual is reimbursed by the state. To avoid bureaucracy, compensation is paid indirectly, by lowering the income-related contribution rate of the person in question. To cover these costs, €2 billion has been made available until 2014.

If a health fund has to levy an additional premium, or increase its premium, it must notify its members of their right to cancel their membership. Members are allowed to leave their old fund and join a new one within two months of an additional premium coming into force.


If the Merkel reforms work, the chancellor can thank her 19th century predecessor for bequeathing a system that makes competition possible.

Mrs Merkel needs success because the reforms prompted a steep fall in her poll ratings. She was roundly attacked by opposition parties, trade unions and insurers. They claimed the reforms were aimed more at raising money than cutting costs.

But Germany has at least made a serious attempt to tackle a problem that is afflicting every Western nation. Each is trying a different approach. That’s a sure sign that no one nation has the answer to the spiralling health costs of an increasingly greying and demanding populace.




White House criticized over cuts in pediatrician training: "The Obama administration’s bid to slash funding for training pediatricians at children’s hospitals is provoking intense protests from medical educators and lawmakers on both sides of the aisle. This year, the administration, as part of its 2012 budget, proposed terminating a program that provides more than $300 million a year to the 56 free-standing children’s hospitals around the country, which train 40 percent of the nation’s pediatricians and 43 percent of pediatric subspecialists. In addition, it cut $48 million from the program this month as part of the overall spending reductions for the current year that were in the budget agreement reached with Congress."

Israel will block flotilla: "Israel Navy commander Adm. Eliezer Marom issued a stark warning on Sunday for the organizers of the Gaza flotilla intended to set sail at the end of the month. 'The Navy has prevented and will continue to prevent the arrival of the 'hate flotilla' whose only goals are to clash with IDF soldiers, create media provocation and to delegitimize the State of Israel,' Marom cautioned during a graduation ceremony of the Israel Navy's submarine fighters."

Railroad resists $400 million drug war fines: "A border security program to X-ray every train rolling into the country has prompted as much as $400 million in fines against U.S. railroads, which are held responsible for the pungent bales of marijuana, tight bundles of cocaine and anything else criminals cram into the boxcars and tankers as they roll through Mexico. Union Pacific, the largest rail shipper on the U.S.-Mexico border and the largest recipient of fines, refuses to pay ... the railroad argues that it's being punished for something it cannot control: criminals stashing illegal drugs in rail cars in Mexico."

There is a new lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc.

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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)


1 comment:

commoncents said...

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Common Cents