Economist: China loses faith in the dollar

[L.A. BRONCOS FAN]

We knew it was coming. And just this a.m. on 'Democracy Now!' Seymour Hersh advised selling everything and buying property in Italy.

http://www.tallahassee.com/mld/tallahassee/business/10740504.htm?template=contentModules/printstory.jsp

Economist: China Loses Faith in Dollar

EDITH M. LEDERER, Associated Press

DAVOS, Switzerland - China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist said Wednesday at the World Economic Forum.

At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar."

But he stressed that the Chinese government is under no pressure to revalue its currency. China's exchange rate policies restrict the value of the yuan to a narrow band around 8.28 yuan, pegged to $1. Critics argue that the yuan is undervalued, making China's exports cheaper overseas and giving its manufacturers an unfair advantage. Beijing has been under pressure from its trading partners, especially the United States, to relax controls on its currency.

"The U.S. dollar is no longer - in our opinion is no longer - (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English. "So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable ... reference ... say Euros, yen, dollars - those kind of more diversified systems," he said.

"High pressure, we don't do it. When the pressure's gone, we forgot," Fan said, to laughter from the audience. "But this time, I think Chinese authorities will not forget it. Now people understand the U.S. dollar will not stop devaluating."

[Bronco_Beerslug]

Nonetheless, William Parrett, chief executive of Deloitte Touche Tohmatsu, told the panel that Chinese companies are making significant progress in becoming global giants, led by state-owned companies.


And they will become the world's most powerful economy because of their government control of their citizens and businesses. No other country will be able to compete with them in the near future.

[L.A. BRONCOS FAN]

Nonetheless, William Parrett, chief executive of Deloitte Touche Tohmatsu, told the panel that Chinese companies are making significant progress in becoming global giants, led by state-owned companies.


And they will become the world's most powerful economy because of their government control of their citizens and businesses. No other country will be able to compete with them in the near future.

Yep.

The implications for our economic future are pretty scary.

Odds are even some of Dim Son's staunchest supporters on this board will be calling for the frat boy's resignation before his second term is over.

As soon as they start taking some really hard economic hits, they'll be demanding that the government do something about it.

[L.A. BRONCOS FAN]

Seymour Hersh: "We've Been Taken Over by a Cult"

There's a lot of anxiety inside the -- you know, our professional military and our intelligence people. Many of them respect the Constitution and the Bill of Rights as much as anybody here, and individual freedom. So, they do -- there's a tremendous sense of fear. These are punitive people.

One of the ways -- one of the things that you could say is, the amazing thing is we are been taken over basically by a cult, eight or nine neo-conservatives have somehow grabbed the government. Just how and why and how they did it so efficiently, will have to wait for much later historians and better documentation than we have now, but they managed to overcome the bureaucracy and the Congress, and the press, with the greatest of ease.

It does say something about how fragile our Democracy is. You do have to wonder what a Democracy is when it comes down to a few men in the Pentagon and a few men in the White House having their way. What they have done is neutralize the C.I.A. because there were people there inside -- the real goal of what Goss has done was not attack the operational people, but the intelligence people.

There were people -- serious senior analysts who disagree with the White House, with Cheney, basically, that's what I mean by White House, and Rumsfeld on a lot of issues, as somebody said, the goal in the last month has been to separate the apostates from the true believers. That's what's happening. The real target has been “diminish the agency.” I'm writing about all of this soon, so I don't want to overdo it, but there's been a tremendous sea change in the government. A concentration of power.

Read the whole thing:
http://www.democracynow.org/article.pl?sid=05/01/26/1450204#transcript

http://www.bartcop.com/by-whitecross2.jpg

[W*GS]

We knew it was coming. And just this a.m. on 'Democracy Now!' Seymour Hersh advised selling everything and buying property in Italy.

Good ol' Seymour either has property to sell in Italy, or else he's been hitting the sauce way too hard.

I can't imagine LABF living in Italy - where the nation's richest man nearly completely controls the media, literally, and is also the prime minister. He'd have a stroke before the plane landed in Rome.

[W*GS]

And they will become the world's most powerful economy because of their government control of their citizens and businesses. No other country will be able to compete with them in the near future.

Gee, real optimistic about your fellow Americans there, BB.

We should all just roll over and die in face of the Yellow Menace, eh?

[Bronco_Beerslug]

Gee, real optimistic about your fellow Americans there, BB.

We should all just roll over and die in face of the Yellow Menace, eh?
The Chinese are looking at an expanding economy for decades.
I see the facts and don't cast them aside like some are doing.

----------------------------------------------------
IBM sells PC group to Lenovo
IBM will sell its PC division to China-based Lenovo Group and take a minority stake in the former rival in a deal valued at $1.75 billion, the companies announced Tuesday.

http://news.com.com/IBM+sells+PC+group+to+Lenovo/2100-1042_3-5482284.html

[W*GS]

You are aware that China faces a demographic crunch as bad as most European countries in the coming decades - the "4-2-1" problem. Plus, the imbalance of men and women will pose some serious problems that tells me that China is not the globe-striding behemoth, or the boogeyman, that some people think it is and will continue to be.

[L.A. BRONCOS FAN]

http://www.bartcop.com/mmail-by2.jpg

You are aware that China faces a demographic crunch as bad as most European countries in the coming decades - the "4-2-1" problem. Plus, the imbalance of men and women will pose some serious problems that tells me that China is not the globe-striding behemoth, or the boogeyman, that some people think it is and will continue to be.

Whistling past the graveyard with Smirk and Dick.

W*GS can still deny reality and deflect for Team Smirk with the best of 'em.

If China Shuns Dollar, Look Out U.S. Bonds

http://www.bloomberg.com/apps/news?pid=71000001&refer=columnist_pesek&sid=aEBBmwvtNuxA

Sinking Dollar Dominates Davos Debate

By Mark Landler, New York Times

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

DAVOS, Switzerland, Jan. 26 - Two things were as clear as the Alpine air on the opening day of the World Economic Forum on Wednesday: The relentlessly sinking dollar is Topic A, and anyone hoping for an answer to when it will stop dropping is likely to come away disappointed.

Economists, politicians and business executives voiced deep unease about the imbalances in the global financial system, which are reflected in the dollar's steep fall against the euro and other currencies.

But most expressed skepticism that the Bush administration would reduce the trade and budget deficits, which have fed those imbalances. The White House has said that it does not view these issues as a major problem because foreigners still view the American economy as an attractive investment.

Some at the forum said they doubted that China, which is financing much of the American debt, would bow to pressure to allow its currency to rise against the dollar this year.

"The U.S. current-account deficit is a problem for the whole world," said Jacob A. Frenkel, a former governor of the Bank of Israel. But, he said, "I don't see the budget deficit being taken seriously."

The Bush administration, which dispatched Vice President Dick Cheney and Secretary of State Colin L. Powell to past Davos meetings to defend the Iraq war and other foreign policy actions, has not sent a similarly prominent economic policy maker to this gathering. That absence has lent the proceedings an imbalanced tone.

"In fairness, it's a transition period in Washington," said Representative Barney Frank, Democrat of Massachusetts, who supplied the American voice on a panel about American leadership. He added, however, "The administration doesn't really have anyone they trust enough to send here."

Mr. Frank, the ranking Democrat on the House Financial Services Committee, said that he worried that the United States was not paying enough attention to the risks of its growing indebtedness. The repercussions of a weak dollar, he said, had barely registered with the White House.

Other critics were blunter.

"There's nobody home on economic policy in America right now," said Stephen S. Roach, the chief economist at Morgan Stanley. The twin burdens of household and public debt in the United States, he said, are unsustainable. Describing American consumers as "an accident waiting to happen," he asked, "When does the music stop?"

With the dollar already trading at $1.30 to the euro - near the level of economic unacceptability for Europe - Mr. Roach said the United States could not rely on currency markets to right the imbalance between it and the Asian countries that finance American deficits by buying Treasury bills.

The answer, he said, lies with the Federal Reserve, which he said would have to raise rates aggressively to curb the spending binge. Whether it could do that without triggering a recession is an open question.

Few here held out hope for international coordination of the kind that stabilized the dollar in the 1980's.

"The Bush administration doesn't listen to people," said Laura D. Tyson, who served as an economic adviser to President Bill Clinton. "There's no hope of changing U.S. fiscal policy."

Professor Tyson, who is dean of the London Business School, said European leaders needed to stop worrying about the actions of other countries and set about streamlining their own economies. She pointed to recent wage negotiations in Germany, in which the unions agreed to longer hours and more flexible work rules, as a hopeful sign of change.

Certainly, Europe cannot rely on Asia to take the pressure off the euro. While people here said they were guardedly optimistic that China would eventually allow its currency, the yuan, to rise against the dollar, few were willing to hazard a guess as to when - or to what extent.

"That will need a political commitment and a political will, and I don't see that happening this year," said Takatoshi Ito, a specialist in international economics at the University of Tokyo.

Some economists warned that the expanding trade deficit and weak dollar could cast a shadow over negotiations to liberalize world trade, which have been dragging for various reasons in the last year.

China's record trade surplus with the United States could fuel protectionist forces in the United States, said C. Fred Bergsten, the director of the Institute for International Economics in Washington. He said he could foresee moves to impose import barriers on Chinese wood and shrimp. "This is a poisonous environment for trade policy and for domestic politics in the United States."

In the last couple of years, with the White House's march to war in Iraq, Davos itself has been a rather poisonous environment for Americans. Those tensions have ebbed this year.