Posted on 10/08/2009 1:56:47 PM PDT by mojito
Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China.
The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by China’s decision to in effect re-peg the renminbi to the dollar since July last year.
Simon Derrick, at Bank of New York Mellon in London, said: “Other Asian central banks outside China are naturally looking to aggressively defend their competitive edge against undesirable currency strength as the dollar weakens.”
After allowing the renminbi to appreciate by about 20 per against the US dollar from mid-2005, Beijing re-pegged its currency to the greenback when export growth contracted.
The greenback hit one-year lows against a raft of regional currencies. The dollar index, which tracks its value against a basket of six main currencies, hit a 14-month low in afternoon trading in New York.
(Excerpt) Read more at ft.com ...
Obanomics = making Americans poorer every day.
how about raising the interest rate a little...
Obama’s Permanent Depression
Protecting their reserves.
And their exports. US consumers can’t buy products produced abroad with a worthless currency.
Didn’t Trotsky get a axe buried in his head? Was it Stalin sending Beria to do the dirty work?
I’m not an economics guru by any means, but I think I’ve realized the bad conundrum 0bamanomics have put us in.
1. Interest rates need to come up to make the dollar stronger;
2. Without higher interest rates, the USA will not be attractive to foreign investment;
3. Without the foreign investment, we will stay in recession longer. It might even get worse.
4. The government, though, cannot allow interest rates to rise because the debt service and the giant deficit caused by 0bamanomics becomes unsustainable;
5. So we are stuck with a weakening dollar, a weak economy, and a structural budget problem.
Thanks 0bama for that $1,400,000,000,000.00 deficit this year. Oh, I saw you wanted to reduce that figure for 2010. What, it’s going to go down to “only” $1,200,000,000,000? Great. Thanks for wrecking our country.
But that’s what you really wanted to do all along, isn’t it?
Thanks for the link; that is a good explanation of our problems. The one part that is very scary is the idea that we are monetizing all that debt. I’ve looked at the differences in how the Allies and Germany financed the war effort for WW1; there is a very good discussion in Hew Strachan’s “The First World War.” The British acted as brokers for France, Russia, and their own debt, packaging all of it and selling it as bonds on the New York market. America financed the Allied effort in WW1, and went from the world’s largest debtor to the world’s largest creditor in a few short years. However, the advantage for Britain was that the debt was “externalized;” American banks had an interest in keeping Britain solvent to recoup the loans.
Germany, on the other hand, was frozen out of the American financial market. They had no means of externalizing their war debt, so they internalized and monetized it. With some fairly short-term notes. And there were no foreign lenders to prop them up. The result was the turbo-inflation of the early 1920’s, the beginning of which was apparent as early as 1916.
It appears to me that America is passing from the British model to the German model of debt management. Foreign lenders are looking for a quiet exit out the side door before someone yells “fire!”
That’s a very good analogy. And some pertinent history.
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