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CHINA RISING

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DECORATION BY THE PERUVIAN GOVERNMENT 1972
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"China is rising while the

U.S. is declining in  Latin

America,"

Riordan Roett, a professor of international relations at Johns Hopkins University, said while visiting Sao Paulo. "China is all over this region. They are following a state-driven policy to expand their peaceful presence."

CHINA
                        
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America May Need to Find Another Financier

Asia’s Treasury Holdings

GDP: China's gross domestic product in 2008 was $7.10 trillion; U.S. GDP was $14.2 trillion.

Debt: Public debt is about 16 percent of China's GDP, while 60 percent of America's GDP is public debt.

Population: China has more than 1.3 billion people, making it the most populous nation in the world. The United States has more than 307 million.

Workers: The Chinese labor force is 807 million, the largest in the world. The U.S. work force is 154 million, the fourth-largest in the world.

Non-workers: The unemployment rate in China is about 4 percent while the U.S. unemployment rate is more than 10 percent.

Poor: Eight percent of China's population lives below the poverty line, compared with 12 percent in America.

In and out: China exports about $1.4 trillion a year -- including electronics, clothes, iron and steel, compared with $1.3 trillion for the U.S., which exports food, industrial supplies and capital goods.

China imports about $1 trillion a year, in electrical machinery, oil and fuel, and more. The U.S. imports about $2.1 trillion a year in food, supplies, consumer goods and more.

Party all the time: China has just one political party, the Chinese Communist Party. The U.S. officially has four -- Democratic, Republican, Green and Libertarian, with many others active.

Totally wired: There are 298 million Internet users in China; however, the government exerts control over access and content. The U.S. has 231 million Internet users.

Friendly skies: China has 482 airports, the U.S. has 15,095, more than any other country in the world.

BERNANKE: Economy could grow soon Fed chief thinks there is a good chance for the economy to return to growth in near-term -- but the recovery could be slow due to continued high unemployment.

BERNANKE asegura que el mundo ha pasado lo peor de la crisis y se encamina hacia la recuperación El presidente de la Reserva Federal considera que podría haber sido peor si los bancos centrales no hubiesen actuado de manera tan vigorosa

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BIG GOVERNMENT, BIG RECESSION >>> To believe Big Government explains why this extremely long recession was not even longer, we need to find some connection between the size of government and the depth and duration of recessions. There is no such connection in U.S. history, or in recent cyclical experience of other countries. On the contrary, recessions have become longer as the U.S. government (and the Fed) became larger, more expensive, and more involved in the economy. Foreign countries in which government spending accounts for about half of the economy have also suffered the deepest recessions lately, while economic recovery is well established in countries where government spending is a smaller share of GDP than in the U.S.

DR.DOOM >>> Stop Asking When The Recession Will End..Growth will be below potential for several years...productivity growth will remain under pressure as workers age, structural unemployment rises, labor skills deteriorate, and investment and innovation slow.

CRISIS INSURANCE? >>> Central banks should offer tradable insurance credits to enable financial institutions to attach a central bank guarantee to assets during a system-wide crisis, two top researchers said on Friday. In a paper presented at the Kansas City Federal Reserve Bank's annual Jackson Hole conference, Massachusetts Institute of Technology's Ricardo Caballero and Pablo Kurlat argued that such an insurance program could help prevent a financial shock from turning into a panic.

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BANK FOR INTERNATIONAL SETTLEMENTS ECONOMISTS >>> are expecting a relatively rapid rebound for countries hardest hit by the global financial crisis...expect that the worst crisis in decades will definitely leave its mark probably in the form of weaker productive capacity and investment that could last at least a couple of years.

ECONOMISTAS DEL BANCO INTERNACIONAL DE PAGOS >>> EEUU y REINO Unido se recuperarán 2do semestre de 2010

SURPRISE >>> The number of newly laid-off workers filing claims for unemployment benefits rose unexpectedly for a second consecutive week, an indication that jobs remain scarce even as other data shows the economy is stabilizing.

SOVEREIGN WEALTH FUNDS are holding on to their cash and waiting for the markets to bottom before committing more money to investments. And even when they do decide to raise their holdings, they will remain passive long-term investors and have no desire to behave in an activist manner towards their portfolio companies...Concerns have been raised about these fundswhose number and asset size have been increasingowning significant stakes in major corporations in other countries.

UNEMPLOYMENT SHOCK >>> A few weeks of unemployment dont exhaust savings and dont lead to great depreciation of skills. A year of unemployment can do both.

STIGLITZ >>> "The IMF is much better than it was in the past, absolutely. It has changed in many ways, and I think everybody needs to recognize it,'' he told me. ``It has said that it's going to give money to certain countries, at good rates, without the kind of conditionality that turned recessions into depressions."

STIGLITZ >>> "El FMI es mucho mejor que en el pasado, sin duda alguna'', me dijo. ``Ha cambiado en muchos aspectos, y creo que todo el mundo debe reconocerlo. Ha dicho que dará dinero a ciertos países con buenas tasas de interés, sin el tipo de condiciones que deprimían la economía y convertían una recesión en depresión."

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BEWARE OF CUTTING DEFICIT >>> U.S. debt soared to 110% of GDP after World War II, but the percentage was pared in half in the following decade. Post-war growth expanded GDP, which made the debt burden lighter without Draconian measures. The real potential debt crisis is posed by demographics and entitlements over the long term, not the current deficit. Growth is what's needed to reduce deficits, as the '50s and the '90s demonstrated. A premature cure for the deficit may prove worse than the disease.

TEHUACAN CRUZ ROJA >>> enfrenta una crisis financiera, advierte su administrador...recursos económicos disminuyeron drásticamente

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STIGLITZ >>> There is a need for a global reserve system...Support from countries like China should ensure orderly discussions on a new reserve system, he added. The dollar has lost 12 percent since March 5 against an index comprising the euro, yen and four other major currencies. China, the worlds largest holder of foreign-currency reserves, and Russia have both called for a new global currency to replace the dollar as the dominant place to store reserves. The current reserve system is in the process of fraying, Stiglitz said. The dollar is not a good store of value. Right now, the dollar is yielding almost no return and yet anybody looking at the dollar has to say theres a high degree of risk.

STIGLITZ >>> El Premio Nobel de Economía aboga por sustituir al dólar como divisa de reserva mundial...Recuerda que la actual crisis financiera se debió justamente al capitalismo neoliberal impulsado desde EE.UU.

"El abandono del patrón oro hizo posible que los estatistas utilizaran el sistema bancario como instrumento para una expansión ilimitada del crédito. Sin patrón oro, no hay forma de proteger los ahorros contra la inflación."...Alan Greenspan.

"El principal problema es que las autoridades están intentando solucionar la crisis de la deuda añadiendo más deuda. Por si a alguien se le ha olvidado, EEUU está experimentando una seria crisis crediticia, es decir, una crisis de deuda"...David Saied.

Desde el estallido de la crisis financiera mundial, el proteccionismo comercial parece querer resucitar. Siendo un gran importador y exportador, China enfrenta cada día más retos generados por las fricciones comerciales. ¿Por qué muchos países y regiones del mundo adoptan medidas proteccionistas durante la crisis financiera global? ¿Promoverá el proteccionismo comercial el desarrollo económico? ¿Qué puede hacer China para enfrentar este reto? La directora del Instituto de Economía Mundial de la Academia de Relaciones Internacionales Modernas de China, Chen Fengying, nos lo va a explicar. (haz clic)

HEADLINES +++ TITULARES

Buffett Says Federal Debt Poses Risks to Economy  

The U.S. must address the massive amounts of monetary medicine that have been pumped into the financial system and now pose threats to the worlds largest economy and its currency, billionaire Warren Buffett said. The gusher of federal money has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in uncharted territory.

CLICK HERE TO READ THE BUFFET OP-ED IN THE NEW YOUR TIMES

Drive for accounting convergence slows

The credit crisis is hindering as well as helping the drive to create a globally accepted set of accounting rules, and it may take intervention by world leaders to keep the effort on track....in the last several months, momentum for the reform has wavered as policymakers and politicians, especially in the United States and Europe, have responded to the crisis by stressing national autonomy or seeking to water down key parts of the rules.

Great Depression II unlikely, but oh what a debt headache

The U.S. economy appears to be stabilizing. It is estimated to have shrunk at an annual rate of just one per cent in April through June -- bad, but much better than the frightening 6.4 per cent drop in the previous quarter. Unemployment remains too high at 9.4 per cent, but job losses, too, are decelerating. Credit markets have begun to thaw. Home prices, though far from bouncing back, are no longer in free fall. Banks are again raising private capital; there may be no need to expand the $700 billion Troubled Assets Relief Program or for a big toxic assets buy-up program. So, exhale: There probably will not be a Great Depression II. The U.S. has avoided that disaster, however, only by means of a nearly unprecedented level of government intervention, of which the $1.8-trillion budget deficit, fuelled in part by TARP and a $787-billion stimulus package, is only one manifestation. The most radical therapy has been administered by the Federal Reserve, which doubled its balance sheet to just under $2 trillion in the past year. To be sure, the Fed announced last week that it will finish buying $300 billion in Treasury debt in two months, a sign that it feels the economy can get by without any new support programs. But the central bank still anticipates keeping the federal funds rate near zero indefinitely, while adding to its already astonishing stack of $542 billion in mortgage-backed securities and leaving other support programs for private-sector credit in place. Meanwhile, the Federal Housing Administration now insures $560 billion in mortgages, four times the amount it backed three years ago. With FHA, Fannie Mae, Freddie Mac and other programs, the federal government now stands behind the vast majority of new mortgages. TARP is on the hook for $549.4 billion in support to banks, AIG, automakers and mortgage relief. Then there's the $300-billion Federal Deposit Insurance Corp. guarantee of Citigroup's troubled assets, in return for which the government took a stake in the bank. And so on. In short, the U.S. economy has been saved thanks to a giant federal refinancing operation, in which Washington assumed responsibility for a huge quantity of risk that the private sector either could not or would not handle. The money for that refinancing comes not only from the savings of Americans, who invest in Treasury debt and other government bonds, but also, to an uncomfortable degree, from the governments of Japan, China and other nations. Their continued holdings of U.S. debt amount to a kind of forbearance, prompted by their own interest in a strong U.S. market for their exports. It's alarmist to underestimate foreigners' willingness to keep holding dollars; it's foolish to count on it forever. The financial future of the United States depends on winding down the government's vast commitments before global markets do it for us.

Pick-Up in U.S. GDP Growth a Temporary Phenomenon

A number of economic and financial variables have exhibited signs of improvement recently even if macro indicators are still mixed. The pace of economic deterioration has slowed significantly, and after four quarters of severe contraction in economic activity, RGE Monitor now forecasts that the U.S. will display positive real GDP growth in the second half of 2009. As discussed below, however, that does not mean that the recession in the U.S. is already over, as many analysts have argued. Indeed, all the variables used by the National Bureau of Economic Research (NBER) to date recessionary periods will continue to contract or display sub-par growth. However, RGE Monitor now anticipates that policy measures and other factors will boost real GDP growth, albeit in a temporary manner, in the second half of 2009. Yet the shape of the recovery (will it be V, U or W?) and other challenges will influence the U.S. economic outlook going forward. According to RGE Monitor, growth will remain well below potential in 2010, while the shape of the recovery will be closer to a U.

Buffett ve una mejora económica en EE.UU., pero advierte sobre su endeudamiento

El financiero estadounidense Warren Buffett considera que la economía de Estados Unidos ha mejorado y parece estar en camino de una recuperación, pero advierte en un artículo que publicó hoy The New York Times de las consecuencias de un creciente endeudamiento. "La economía de Estados Unidos está ahora fuera de la sala de urgencias y parece estar en una senda lenta hacia la recuperación", manifiesta en el texto, incluido en la sección de Opinión del diario neoyorquino. Buffett, considerado por la revista Forbes como el segundo hombre más rico del mundo, por detrás sólo de Bill Gates, agrega no obstante que siguen administrándose "enormes dosis de medicina monetaria" y que dentro de poco este país tendrá que afrontar los "efectos secundarios" de ello. "Por ahora, la mayoría de esos efectos son invisibles y pueden incluso permanecer latentes por un largo tiempo. Aun así, su amenaza puede ser tan siniestra como la que representaba la propia crisis financiera", escribe Buffett, director ejecutivo del grupo inversor Berkshire Hathaway. Recuerda que el sistema financiero estadounidense estuvo el pasado otoño a punto de un colapso que amenazaba con una depresión y señala que eso requería por parte del Gobierno "sabiduría, coraje y decisión". "Por fortuna, la Reserva Federal y funcionarios clave en las administraciones de Bush y Obama respondieron de forma más que apta a lo que se requería", afirma Buffet, que añade que también "cometieron errores" si bien considera que no podría haber sido de otra forma debido a la magnitud de la crisis. Respecto al progresivo endeudamiento de este país, indica que el déficit público alcanzará este ejercicio fiscal cerca del 13% del Producto Interior Bruto (PIB), lo que equivale a unos 1,8 billones de dólares, y que, en el ámbito fiscal, "estamos en un territorio inexplorado". "Debido a ese gigantesco déficit, la deuda neta de nuestro país está creciendo vertiginosamente", dice el financiero, que calcula que en este ejercicio fiscal aumentará más de un punto porcentual por mes y se situará en torno al 56% del PIB.

El economista jefe del FMI dice que la recuperación ha comenzado

La recuperación económica global ha comenzado, pero para sostenerla se necesitará una orientación de Estados Unidos hacia las exportaciones y de Asia hacia las importaciones, dijo el martes el economista jefe del Fondo Monetario Internacional (FMI).

Olivier Blanchard dijo que el potencial de la producción económica podría ser menor que antes de la crisis financiera. 'El cambio no será simple', dijo Blanchard. 'La crisis ha dejado profundas cicatrices que afectarán a la oferta y la demanda por muchos años'. El funcionario del FMI dijo que el consumo de Estados Unidos, que supone alrededor de un 70 por ciento de la economía estadounidense y buena parte de la demanda global, no volvería rápidamente a la fortaleza de antes de la crisis, ya que las economías de los hogares se enfrentan a billones de dólares en pérdida del mercado inmobiliario y de las bolsas. Blanchard dijo que la crisis financiera ha hecho que los estadounidenses sean más conscientes de riesgos de secuelas, que es improbable que ocurran, pero que cuando suceden tienen consecuencias devastadoras. Eso significa que los consumidores estadounidenses probablemente no vuelvan a su modelo de gastos, y que tanto Estados Unidos como sus socios comerciales tendrán que ajustarse.

Several key emerging economies are well advanced...in reaching the tipping point of global economic impact.

Dollar to Weaken as Reserve Status Erodes

[economic scenarios]

Some economists expect a powerful recovery, others a sustained but muted one. Some even say it will be neither: a fleeting rebound quickly followed by a second slump...

Health care picks up where financial crisis left off >>> The big problem with health care is the cost. It's consuming more of the economy every year.

To Sustain Gains, U.S. Must Change Tack, IMF Says

Second Wave of the Economic Depression: Hyperinflation is Likely

Inflation and the Fall of the Roman Empire

Home construction up for 5th month in a row

Llama el Rector de UNAM a no convertir la crisis financiera en crisis social

ESPAÑA: La morosidad baja por primera vez desde el inicio de la crisis financiera

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México, en "shock financiero"

Global economic council should oversee all

By Timothy Adams and Arrigo Sadun

How do you transform the International Monetary Fund, an institution until recently widely criticised for its lack of legitimacy and representativeness, on the verge of irrelevance, into the international community’s premier tool for fighting the global crisis? Simply by throwing the full support of world leaders behind it.

How do we ensure that this unprecedented support and co-ordination at the international level does not evaporate once the crisis is over? By transforming bodies such as the Group of Twenty and Group of Eight leading nations into a global economic council (Gleco). This new international body should oversee the proper functioning of the global economy and the stability of the international financial system by providing close political support and strategic guidance to all international financial institutions.

The worst economic crisis of the past 70 years has convinced even the most sceptical critics of the wisdom of having an international “fire brigade” such as the IMF with the tools and expertise to co-ordinate global economic policies and assist countries in financial distress. However, as the recent experience has demonstrated, effective policy co-ordination at the international level is possible only with the direct involvement of the world’s leaders.

Efforts to address the root causes of the financial turmoil and combat the global recession are much more effective if co-ordinated across countries. In future, a high degree of international co-operation will be even more crucial for achieving meaningful reform of financial markets and for devising effective exit strategies after the crisis. Addressing these issues in a desultory way, with a fragmented array of decision-making bodies with overlapping responsibilities is not the best way to proceed...

READ IT ALL...

Sick economy affecting Canadians' health: Canadian Medical Assn

 

The recent sickness experienced by Canada's economy may pose a threat to Canadians' personal health, results from the CMA's Ninth Annual National Report Card on Health Care indicate.

The findings, based on phone and online surveys involving more than 4,200 adults, were released Aug. 17 as the CMA's 142nd annual meeting began in Saskatoon. Results include:

- Forty percent of respondents reported feeling stressed or overwhelmed by financial concerns. That proportion rose to 51% among those earning less than $30,000 annually.

- More than half of respondents (52%) reported being worried about their personal health, compared with 27% concerned about the possibility of losing their job.

- A quarter of Canadians (23%) say the recession has affected the way they protect their personal health, with 25% delaying or cancelling dentist appointments because of financial concerns.

- Almost a quarter of respondents (23%) reported having difficulty sleeping because of financial worries.

- Nationally, 16% of respondents reported having to skip meals because of financial problems, and this increased to 28% among those in the lowest income bracket.

READ IT ALL...

The Signs Don't Point To a Typical Recovery

Economic Head Winds May Weaken Comeback

The wounded U.S. economy has shown signs of improvement in recent weeks. But many economists, who were caught off guard by the brutality of the downturn, are accentuating the negative, bracing for head winds that could cause the recovery to be weak.

Huge swaths of the financial system have been damaged, which could lock consumers and businesses out of loans for years to come. American families are saving more and relying less on borrowed money. In this global recession, no part of the world appears poised to lead a buoyant recovery. And the U.S. government's aggressive stimulus efforts -- including special Federal Reserve lending programs and full-throttle government spending -- may need to wind down before the economy returns to solid footing.

Typically, a deep downturn is followed by a robust recovery, as happened with the steep recession of 1981-82, the most severe since World War II, which was followed by explosive growth through the rest of the decade. Many -- but not all -- of the world's top economists doubt that a boom will follow this time...

"Traditional economic models are built like a rubber band: You pull it hard and it will snap back," said Martin Neil Baily, an economist at the Brookings Institution. "I find it hard to see where that will come from in this case."


In other words, the downturn may be so severe, global and transformative that this time, the rubber band popped.

READ IT ALL...

Dos años de crisis financiera: Entre aires de recuperación

A dos años vista, los últimos datos del desempleo en EE. UU. han dado un apunte de recuperación: la tasa de paro quedó situada en el 9,4% en julio, por debajo del 9,5% de junio.

Estas cifras respaldan la teoría de un número creciente de economistas que señalan que la crisis está tocando fondo y pronostican que Estados Unidos podría volver a crecer en el segundo trimestre del 2009.

La Reserva Federal (Fed), a su vez, indicó recientemente que la hay señales de estabilización en distintas regiones del país.

Obama dijo que su gobierno ha salvado a la economía de Estados Unidos del colapso pero que aún hay trabajo por hacer "tenemos que subir una montaña muy empinada y empezamos en un valle muy hondo". Habrá que tener fe.

LEER TODO...

The good and bad news in the World Banks China Quarterly (from The Council on Foreign Relations)

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Recovery In Sight For China
Analysis and discussion with Liu Yang of Atlantis Investment Management MD, she tackles about the economy of China. (Asia Confidential)


World Bank President sees China spurring global recovery

China's stellar growth could help pull the world out of its current economic slump, the head of the World Bank said on Monday, while hailing the yuan's progress toward becoming a global reserve currency. With Chinese growth in the first quarter of 2009 exceeding most expectations, World Bank president Robert Zoellick said China could act as a catalyst for a global economic resurgence. "Any forecast in this environment is hazardous, but I think China is likely to surprise on the upside," the former US trade envoy said, speaking at a conference in Canada. "By and large (China's growth) has not only been a stabilizing force, but a force that will pull the system (out of the downturn)." China's meteoric rise as a global economic player has boosted world trade in manufactured goods and provided western companies with an enormous new market for their products and services.

BBC HOST: U.S. WOULD USE MILITARY ACTION SHOULD CHINA PUSH TOWARD GLOBAL CURRENCY
video

China airs fears on US debt, dollar

Senior Chinese leaders have privately voiced fear over the soaring US budget deficit and are increasingly looking to diversify from the dollar, a Republican congressman said. "We heard across the board -- in private -- substantial, continuing and rising concern," Representative Mark Kirk said after a trip to China that included talks with government officials and central bank chief Zhou Xiaochuan. "It's clear that China would like to diversify from its dollar investments," the lawmaker said at the Center for Strategic and International Studies, a Washington think-tank. (Click to read full article)

 

 

Top China banker calls for U.S. sales of yuan bonds

A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency. "I think the U.S. government and the World Bank can consider the possibility of issuing renminbi bonds in the Hong Kong market and the Shanghai market," said Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), the world's second-biggest bank by market value. In an interview with Reuters, Guo said it was in American interests to see the yuan, also known as the renminbi, become a currency that is traded across the globe. He said that is largely because of the symbiotic relationship between U.S. purchases of Chinese goods and China's purchases of U.S. assets with the proceeds. (Click to real full article).
CHINA & RUSSIA LOOK TO BUY IMF BONDS
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...both China and Russia make no secret of their desire to have a greater say in how the IMF commits money....China is actively considering buying up to $50bn of International Monetary Fund bonds, the countrys State Administration of Foreign Exchange has said. John Lipsky, IMF first deputy managing director, confirmed the Chinese proposal, which follows one by Russia to buy $10bn (7.1bn, £6.2bn) in IMF bonds...earlier this year, Chinas central bank governor caused a stir in global currency markets when he proposed replacing the US dollar as the worlds reserve currency with Special Drawing Rights, the IMFs unit of account...(Click to read article)

La crisis aupará a China como segunda potencia económica y la acerca a EEUU

China superará a Japón como segunda potencia económica mundial antes de que acabe el año y obligará a una mayor interconexión con la primera, Estados Unidos, según pronósticos de los miembros de la principal institución de la banca internacional. "La interdependencia entre China y EEUU va a crecer aún más", explicó Jing Ulrich, directora general de China Equities, J.P. Morgan, en el primer día de la Reunión de Primavera de Miembros del Instituto de Finanzas Internacionales (IIF, en inglés), entidad que representa a los 390 mayores bancos del mundo. "China superará a Japón antes de finales de este año" por valor nominal de PIB, vaticinó Ulrich. En 2008 el PIB de China se situó en 3,9 billones de dólares estadounidenses, mientras que el de Japón alcanzó los 4,8 billones, según datos del Fondo Monetario Internacional (FMI), pero su crecimiento este año será muy inferior al chino.

“[P]art of our discussion when we were in China was the issue of fiscal responsibility. Fiscal discipline is one of the key components of how we go forward — health care, energy, fiscal discipline. This was our conversation with the president a couple of days ago. It’s been our ongoing conversation, and it was part of our conversation in China to impress upon the Chinese that we’re very, very serious about passing legislation, PAYGO* — making it statutory — reducing spending, reducing the deficit, not heaping mountains of debt on to future generations.”...House Speaker Nancy Pelosi upon her return from China

What Does China Do When The Stimulus Well Is Dry?

There is no shortage of cleverness among the bureaucrats who run China. Exports in May fell more than 26% according to the countrys customs agency. That rate was worse than the 22.6% decline in April. To balance the drop in exports, the Chinese government has continued to pump what it says will be $585 billion into the national economy. That helped May capital investment spending to jump almost 39%. Economists began to talk about the miracle of the Chinese government when GDP in the worlds most populous nation began to pick up substantially two months ago. Most analysts stayed away from the issue of the central governments ability to prop up economic expansion. No one from outside China can know when the $585 billion being pumped into the economic and financial system will run out or whether the government will increase that figure to keep internal consumer and business demand at relatively high levels. The problem with the Chinese solution to offset slow exports and faltering GDP is that, once the investment is over, the economy comes crashing back to earth.

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“He visto tres Chinas diferentes”, dice un estadounidense

En la década de 1970, los estadounidenses ahorrábamos 14 centavos del dólar que habían ganado. Sin embargo, en la actualidad, sus ingresos no cubren los gastos en la vivienda, muebles, televisores y automóviles. E incluso, hace cuatro años, para colmo los gastos superaban los ingresos en un 3 por ciento, o sea, si teníamos un dólar de ingreso, debíamos pedir prestados tres centavos para cubrir los gastos por valor de 1,03 dólares. 

La actual recesión económica ha obligado a los estadounidenses a “dejar de gastar dinero” por el momento. Las recientes cifras económicas demuestran que los estadounidenses depositamos cuatros centavos del dólar ganado, lo que significa que estamos volviendo al camino justo. Vale la pena hacer una comparación tomando la República Popular China como referencia. La gente del país asiático ahorran la cuarta parte de su ingreso y la deposita en el banco para el ulterior desarrollo. 

Estuve en China en tres ocasiones. Cuando yo visitó el país en 1983, los chinos se desplazaban a pie en la mayoría de las ocasiones, sin disponer de suficiente número de bicicletas. Los caminos erran cenagosos. La mayor parte de los chinos todavía vivía en casas de una sola planta. 

Al volver a visitar China en 1994, ví con mis propios ojos los enormes cambios en el país. Los caminos eran llanos, se veían edificios de múltiples plantas por doquier. Incluso, había un establecimiento de la cadena del restaurante McDonald’s en un poblado por donde recorrí. 

Visité China por tercera vez a principios de 2009. Los cambios operados en el país me han sido sorprendentes. El avión a cuyo bordo arribé a Shanghai, aterrizó en uno de los aeropuertos más modernos del mundo. La ciudad tiene una poblción de 22 millones de habitantes. El edificio más alto de la ciudad en 1988 tiene 22 plantas. Desde entonces, Shanghai ha construido más de 5.000 edificios de más de 15 plantas. Los chinos son afanosos. Quiero decir que en el mundo actual, nos enfrentamos a un desafío serio. 

Cada vez que nos sentimos decepcionados y comenzamos a recordar los excelentes momentos del pasado en los Estados Unidos, podemos encontrar los medios para hacer mejor el futuro. En 1980, cuando estábamos en la peor decadencia registrada tras la Gran Depresión, la economía japonesa estaba próspera. Creíamos que Japón nos quitaría el desayuno, almuerzo y cena. Aún podemos recordar que un grupo de obreros de la industria automovilística de Deriot destruyó a martillazos carros de fabricación japonesa. A su parecer, lo que ha hecho podría impedir a Toyota. En aquel entonces, estábamos convencidos de que la compañía japnesa vencerá a todos nosotros. 

Sin embargo, hemos salido airosos de los momentos díficiles y hemos hecho bien. Ahora, nos volvemos a recuperar. Puedo afirmarles que también será dura la competencia con China, tal como hicimos con los japneses hace 29 años. Sin embargo, podemos hacer bien, ya que sabemos hacer innovaciones y escarnamentar en cabeza ajena. Esto es lo más importante.

(El autor del artículo es Clark Howard, de Estados Unidos -- nota de la redacción) (Pueblo en Línea) 31/05/2009

A Chinese company is to buy Hummer, the General Motors brand known for its military-inspired off-road vehicles and seen as a symbol of gas-guzzling, road-hogging American excess.

Click here to read about planned sale of Hummer

Chinese President Hu Jintao says he appreciates US efforts to work together with China to combat the global financial crisis. His comments came Tuesday in a meeting with visiting U.S. Treasury Secretary Timothy Geithner... "I think we have already demonstrated the capacity of our two countries to work together on the global stage to lay a foundation for economic recovery. And I think, partly because of the strength of the actions that have been put into place by your government and by President Obama, we are starting to see some early signs of stabilization and recovery in the global economy," said Geithner. In a round of interviews with Chinese media Tuesday, Geithner said one of his main goals was to reassure Chinese officials that Washington is determined to bring down the size of its deficits, once the current crisis has passed. China is America's largest creditor, with Treasury securities holdings worth $768 billion. This year's U.S. budget deficit is expected to surpass $1.8 trillion, four times the previous single-year record.



Which nation is winning the global financial crisis? Watch out future challenges for China, US, India, and world! Is global financial crisis leading to new world wars ahead? Which nation is to emerge as the next global leader, China, India, US, or Europe? How to walk out current traps of employment, shrinking business, and leadership crisis? Should entrepreneurship lead politics and competition? China's declining wealth and power vs Global Financial Crisis>>>>Today, the world economy and the marketplace are deeply stuck in the mud of a far-reaching recession. What is China's real exposure to the global financial crisis? Can this emerging nation sustain the crisis? The answer: on one hand, China is experiencing vast pains; on the other, China can still manage the problems arising from the crisis. In short, this increasingly globalized China must take the same boat along with the rest of the world community. China's real exposure to the global financial crisis is huge and has many dimensions. First, the country's growth in this era, especially in the past two decades, has depended heavily on international trade, which accounted for US$2.56 trillion as of 2008, as well as foreign direct investment, accounting to over $870 billion. Second, China's foreign reserves stand at about $1.95 trillion, with more than half invested in US government and agency bonds. Third, over 25 million Chinese employees now work for overseas companies inside China...(Click here for all).

China warns Federal Reserve over 'printing money'

China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds. Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature." "I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal. His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons. (Click to read full article).

Issue Guide: China and the Global Financial Crisis

Some experts saw signs that China's economy might have been overheating even before the financial crisis erupted, and the crisis only exacerbated these concerns. China's leading stock indices declined rapidly beginning in late 2007, shedding well over half their value by the end of 2008. Despite Beijing's passage of an economic stimulus package valued at nearly $600 billion, the country's economy limped into 2009, showing rapid declines in economic growth and absolute declines in exports. In early 2009, Chinese year-on-year economic growth fell to 6.1 percent, well below the growth rates the country had averaged for most of the prior decade. Rising unemployment posed a separate concern for Beijing.

US DEBT HELD BY CHINA $ 739,600,000,000  AT JAN. 31, 2009
 
$ 739.6 BILLION

Over the course of fiscal year 2008, changes in economic conditions, financial markets, and fiscal policy as well as a reduction in nonmarketable debt issuance have caused an increase in the Government’s marketable borrowing needs. Financial market strains have impacted the real economy, and the nation has experienced lower economic growth, lower receipts, and increased outlays. The Government has responded to the increase in marketable borrowing requirements by increasing issuance sizes of regular bills, the frequency, terms, and issuance sizes of cash management bills, and the issuance sizes of nominal coupon security offerings. (from notes to US Government Financial Statements)____________________________________________________

China foreign exchange reserves at $1.954 trillion


Apr 11, 2009
BEIJING (AP) - China's central bank said Saturday that its foreign exchange reserves rose 16 percent year-on-year to $1.9537 trillion by the end of March. China's reserves, already the world's largest, increased by $7.7 billion in the first quarter - $146.2 billion less than the same period last year, the People's Bank of China said in a notice on its Web site. That rise was substantially less than the fourth quarter increase of almost $45 billion, according to China's official Xinhua News Agency, showing the impact of slowing exports due to the financial crisis. In March, the reserves increased by $41.7 billion, it said, $6.7 billion more than the same period last year. Analysts believe China holds up to 70 percent of its foreign reserves in U.S. dollar-denominated assets, including Treasury securities...AP

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CHINA CALLS FOR NEW RESERVE CURRENCY China's central bank...proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund....... Reform the International Monetary System by Zhou xiaochuan of the The People's Bank of China... The outbreak of the current crisis and its spillover in the world confronted us with the long existing but still unanswered question, i.e., what kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the IMF? There were various institutional arrangements in an attempt to find a solution, including the Silver Standard, the Gold Standard, the Gold Exchange Standard and the Bretton Woods system. The above issue, however, as the ongoing financial crisis demonstrates, is far from being solved, and has become even more severe due to the inherent weaknesses of the current international monetary system. (Click to read the entire essay)

As Detroit Crumbles, China Emerges as Auto Epicente

America's auto titans are dismantling their global empires. But across the Pacific, it's as if the global economic forces that have pummeled Detroit never struck. Chinese auto sales are up, and this year China is projected to displace Japan as the world's largest car producer. Now, the auto world is buzzing that China's auto industry may try to pick up the pieces of Detroit -- at a bargain. Chinese companies have tried to dampen speculation, issuing regulatory filings that deny bids to buy Ford's Volvo or General Motor's Saab. But there's little doubt among analysts that Chinese automakers are interested in the United States and that Detroit's automakers are interested in them.

David Miliband...described China as the 21st century's "indispensable power" with a decisive say on the future of the global economy, climate change and world trade...The (British) foreign secretary predicted that over the next few decades China would become one of the two "powers that count", along with the US, and Europe could emerge as a third only if it learned to speak with one voice.. the most direct acknowledgement to date from a senior minister, or arguably from any western leader, of China's ascendant position in the global pecking order...the only major power still enjoying strong growth (expected to be 8% this year), backed by substantial financial reserves..."Historians will look back at 2009 and see that China played an incredibly important role in stabilising global capitalism. That is very significant and sort of ironic," Miliband said. "There's a joke that goes: 'After 1989, capitalism saved China. After 2009, China saved capitalism.'"... in contrast to America's 20th-century ascent, which eclipsed Britain, Miliband said China would not displace the US but rather join it at "the new top table", and because of its low per capita income, it would not rival the US as the world's leading superpower for at least a generation.

DR. DOOM: China's yuan 'set to usurp US dollar' as world's reserve currency

YUAN RISING >>> The Chinese yuan is preparing to overtake the US dollar as the world's reserve currency, economist Nouriel Roubini has warned.<<<Professor Roubini, of New York University's Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan's ascendance. Known as "Dr Doom" for his negative stance, Prof Roubini argues that China is better placed than the US to provide a reserve currency for the 21st century because it has a large current account surplus, focused government and few of the economic worries the US faces.

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ROUBINI ARTICLE IN NYT>>>THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollars status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.

China's first-quarter economic data, which showed 6.1% year-on-year GDP growth and a significant acceleration in quarter-on-quarter expansion, triggered a flood of reports suggesting that a sharp V-shaped recovery is under way. With the release of April's more mixed data, however, the celebratory champagne that was being poured has gone a bit flat. It's now clear that the economy still faces huge challenges, and in the second half of the year the acceleration in growth is likely to be gradual rather than explosive.

FROM THE ECONOMIST>>>the new global monetary system will be unable to operate without the approval of China, a creditor country that has capital controls and a managed currency. It has been assumed that China will have to move towards the Western model. But why not the other way round? Western countries adopted free capital markets, as the British adopted free trade in the 19th century, because it suited them. Will China now be able to call the shots? Uncomfortable as it might be for the West, the next monetary order is more likely to be made in Beijing than in New Hampshire.

CHINA & BRAZIL CONSPIRING?

Brazil and China eye plan to axe dollar

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazils central bank and aides to Luiz Inácio Lula da Silva, Brazils president. The move follows recent Chinese challenges to the status of the dollar as the worlds leading international currency. Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, Chinas president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month

Brazil and China: Moves Towards a New Economic order?

Brazilian President Lula is the latest world leader (after Wen Jiabao and Vladimir Putin) to call for moving away from the US dollar in trade and and for a new monetary and financial order. On the eve of his trip to China this week, Lula suggested in an interview with Caijing(and other news sources) that the two countries should conduct more of their trade in their own currencies rather than the US dollar. Between Brazil and China, we need to establish a trade that is paid for in our own currencies. We don't need dollars. Why do two important countries like China and Brazil have to use the dollar as a reference, instead of our own currencies? We've already started doing this with Argentina. Our trade is taking place in our own currencies. Otherwise, we'll be in an absurd situation, where the country that caused this crisis will be the country that gets the most dollars. It's crazy that the dollar is the reference, and that you give a single country the power to print that currency. We need to give greater value to the Chinese and Brazilian currencies. Early this year, China supplanted the U.S. to become Brazils largest trading partner, as its commodity demands resumed and Brazils trade with the U.S. slumped. At the moment, Brazil is one of the few countries with which China runs a significant deficit which rose to $11 billion for all of 2008. Chinese imports are almost all raw materials...

LOS VINCULOS BRASIL-CHINA
Una relación que ha crecido al ritmo de la crisis financiera internacional

El arribo de Lula a Beijing encuentra a China convertida en la principal socia comercial de Brasil, tras terminar, en abril, 80 años de liderazgo absoluto de Estados Unidos. Las exportaciones brasileñas al mercado chino crecieron 65% en el primer trimestre del año (pasaron de 3.400 millones a 5.600 millones de dólares); y 77% de la pauta exportadora son tres commodities: mineral de hierro, soja y petróleo, que crecieron 51,3%, 70,1% y 251%, respectivamente, en ese período. Para Brasil -y América del Sur- la puerta de entrada a la globalización es el mercado mundial de commodities; y la novedad fundamental -a partir de 1991- es que este mercado no está más unido al ciclo estadounidense (como ocurrió entre 1945 y 1991), sino que es una función de la demanda china/asiática: China es hoy la mayor consumidora de cuatro de las cinco principales materias primas. China tiene más importancia que EE.UU. en el proceso de globalización, tanto para Brasil como para el conjunto de los países de América del Sur, grandes exportadores de materias primas, entre ellos la Argentina. El superciclo mundial de commodities post 1991 -resultado directo de la irrupción de China en el comercio internacional-, revirtió la tendencia secular al "deterioro de los términos de intercambio", que afectó duramente a América Latina en los 50 y 60. Ahora -China mediante- no hay "deterioro de los términos de intercambio", sino boom mundial de commodities de largo plazo.

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Whenever you find you are on the side of the majority, it is time to pause and reflect

                     --- Mark Twain

We have never observed a great civilization with a population as old as the United States will have in the twenty-first century; we have never observed a great civilization that is as secular as we are apparently going to become; and we have had only half a century of experience with advanced welfare states...Charles Murray

Kella
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