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Posts Tagged ‘America’

QE2 is not just some opaque econo-speak that is of no consequence to the common men and women of Earth. It is about as serious a force to be reckoned with as a nuclear weapon. I don’t have the math at hand but my instincts tell me that if someone were to calculate the potential energy of a multi-trillion US dollar injection of liquidity into the world economy it would measure up to an impressive amount of megatonage.

From The Telegraph:

Currency wars are necessary if all else fails

By Ambrose Evans-Pritchard

Asian investment in plant has run ahead of Western ability to consume. The debt-strapped households of Middle America, or Britain and Spain, can no longer hold up the dysfunctional edifice. Asians must take over, or it will come down on their own heads.

The countries actively intervening in exchange markets to suppress their currencies – China, Japan, Korea, Thailand, even Switzerland, to name a few – are all too often the same ones that have the biggest trade surpluses with the US.

They are taking active steps to prevent America extricating itself from the worst unemployment since the Great Depression, now 17.1pc on the latest U6 index and rising again. Each country is doing so for understandable reasons: Japan to avoid a deflationary crisis, China to hold together a political order that is more fragile than it looks. In both these cases they are trapped because they clung too long to a mercantilist export strategy, failing to wean themselves off American demand when the going was good.

Yet this is an intolerable situation for the US. It should be no surprise that Washington has begun to retaliate in earnest, and not just by passing the Reform for Fair Trade Act in the House (not yet the Senate), clearing the way for punitive tariffs against currency manipulators.

The atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison.

Read the whole article HERE

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U.S., Lead or Get out of the Way by Conrad Black

From the September 30th issue of The National Review

Excerpt:

The U.S. shows no signs of being prepared to pay down its mountain of debt, and is every year forfeiting the natural respect it acquired in the 1940s and maintained to the end of the 20th century as the world’s undisputed leader. An American failure to prevent Iran from becoming a nuclear power will signal the end of American world leadership, whether Israel steps up to the task or not. The U.S. cannot afford to masquerade as a decisive influence where it does not have the will or judgment to assert such an influence. Unless new leadership arises in the next election to end the current-account deficit and unsustainable oil imports, reorient the country to physical production and less unproductive “services,” and redesign alliances to contemporary needs and real possibilities, it should continue the orderly withdrawal already in progress. It won the Cold War, disposed of Saddam, and can retire in good order, undefeated, to a defensible perimeter. It was the indispensable country to the West, in 1917–18, and 1939–90, but it is largely dispensable now, and is providing no discernibly useful leadership at all. If it rediscovers its aptitude for successful and innovative internationalism, it can raise its level of involvement. The trend to decentralization of national influences relieves the U.S. of the burdens of a superpower and provides regional balances that can be influenced from Washington with relatively little exertion. On the present course, it is risking a severe humiliation, and an undignified retreat into its doghouse like a chastened puppy. The current level of official amateurism, if allowed to continue indefinitely, is going to lead to needless disaster.

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